Chile, Argentina, Bolivia and Peru on Aug. 28 signed an agreement to deepen their cooperation on critical minerals. The countries are seeking to increase investment and development in critical minerals as well as launch joint calls for research and projects. What are the most important ways the four countries can work together in order to advance investment and development in critical minerals? To what extent could country-level differences, such as varying regulatory frameworks, impede progress under the agreement, and how can those differences be reconciled? How economically important is the agreement to the four countries’ economic development and to the region’s ability to supply critical materials to other parts of the world?
Edward Verona, former president of Greenfield Resources: “The quadripartite agreement signed last month in Santiago is a welcome harbinger of regional economic cooperation and a step toward improved security of the global supply of critical minerals. The worldwide demand for copper, lithium, rare earth, and a host of other critical minerals is growing almost exponentially, and the four signatory countries account for a disproportionately large share of worldwide output and reserves. Combining forces would enhance their negotiating leverage with major buyers of those commodities and create the potential for economies of scale that would enable the four countries to increase their share of the mineral processing value chain. The goals outlined in the agreement make economic sense, but all four governments will need to muster the domestic political will to enact the necessary legislation. However, the mining sector has faced social and political opposition in all four countries. Competition for land and water, and negative environmental impacts have led to major confrontations at mines throughout the region. These pose major challenges for investors, especially foreign companies, and without them the goals in the agreement are probably unachievable. One crucial step toward implementing the agreement would be shared infrastructure, such as railways and ports, though this may present problems, such as the historic Bolivian resistance to joint projects with Chile, which it still claims as its own. Joint development and ownership of mineral processing facilities would be of great potential advantage to all four countries, lowering costs and creating shared revenue flows. Could such a consortium survive the political vicissitudes that have characterized all four countries in recent decades? Or would greater interdependency be a stabilizing factor in the region?”
Graham Davis, professor emeritus of economics and business and faculty fellow at the Payne Institute for Public Policy at the Colorado School of Mines: “Chile, Argentina, Bolivia and Peru have much potential to grow their already established mineral sectors. What is needed is foreign expertise in exploration and project design and development, along with foreign investment in these endeavors. Investors in critical minerals mining projects seek, among other things, low infrastructure costs and investment guarantees. The latter are typically investor-state specific, and the Chile, Argentina, Bolivia and Peru agreement will have little to no impact on the investment guarantees that each nation is able to offer investors. However, infrastructure, such as ports, roads, rail, power and water, is often at its lowest cost for any given mining project when it is coordinated across borders. This is where the collaborative agreement is likely to have the most impact. It remains to be seen how Peru’s 2024 memorandum of understanding with the United States, strengthening cooperation on critical mineral supply chains, an agreement that is starting to be implemented, affects this agreement. Certainly, nations hoping to extract, refine, and export critical minerals need technical assistance. Critical minerals are often by-product minerals and metals that are difficult to recover economically given existing metallurgical technologies. Developed nations such as the United States have much to offer in terms of transfer of new technologies, with advanced critical mineral extraction technologies currently being developed at universities in the United States with extensive financial support from the U.S. government. Such transfer could then extend to critical minerals recovery in Chile, Argentina, and Bolivia via the agreement.”
Pía Marchegiani, deputy executive director and director of environmental policy at Fundación Ambiente y Recursos Naturales (FARN) in Argentina: “Although the cooperation agreement between Argentina, Bolivia, Chile and Peru could be seen as a sign of collective action on transition minerals and shared learning to advance a joint framework including ecological, social and economic dimensions, it currently raises questions on these countries’ ability to set beneficial conditions for their populations. The outcome seems to be the opposite: They are competing over foreign capital by granting fiscal and tax benefits, and unfavorable international arbitration for dispute resolution. Most of them are subscribing to agreements with the Global North and China that hinder the value addition, technological exchange, and advancement the agreement claims to seek. Incentives for investments in mining are pursued at the sake of environmental and human rights regulation, credibility, equity, and justice in the minerals supply chains. The priority seems to be fast-tracking projects instead of advancing strategic environmental planning tools (such as environmental cumulative and strategic assessments at watershed level), implementing mining exclusion zones due to their critical biodiversity or cultural value, or ensuring that free, prior, and informed consent and other participatory mechanisms are applied beyond a mere formality. Environmental defenders should be at the center of decision-making, instead of at the frontline of violence. Last but not least, civic space is shrinking in these countries, and many of these policy decisions lack a robust democratic debate. If these four countries want to become critical players, they need to join forces to negotiate better conditions, including the protection of their socioecological riches while demanding a lower pace of global mineral consumption.”
Mariano Machado, principal analyst for the Americas at Verisk Maplecroft: “The joint declaration gives South America the contours of a regional critical minerals strategy, just when investors are looking to new markets. The region’s geology is central to realigning global critical minerals supply chains, just as Western efforts to reduce exposure to China mean mining investors are looking beyond established suppliers. Verisk Maplecroft’s country risk data show that most of these jurisdictions are attractive options in political and regulatory terms, but capital will only move where permitting, fiscal stability and policy continuity hold. The quadrilateral agreement will matter only if coordination moves from ministerial language to investor-grade rules. The practical work needed is clear: shared geological information, joint research and project bidding, supplier development, skills pipelines, and multilateral finance aligned with the rules that investors need. Bilateral protocols forcross-border mining projects between Chile and Argentina, signed nearly simultaneously, will test whether shared geology is more important than sharply different regulatory systems. Country-level differences will bite hardest when governments compete to capture the industrial upside. Clearer cross-border rules could ease planning, but unions, communities and governments will push to keep more refining, suppliers and jobs at home. Brazil’s freshly approved National Policy on Critical and Strategic Minerals shows the wider regional trade-off: roughly$1 billion in incentives to build refining, batteries and magnets, paired with tighter state control over foreign partnerships, ownership changes and mining titles.”
The Latin America Advisor‘s daily Q&A features expert analysis from leading policymakers, analysts, scholars, and industry leaders to offer diverse perspectives on one of the region’s most pressing issues. It is available to members of the Dialogue’s Corporate Program and others by subscription.
