ASIATODAY.ID, PARAGUAY — As geopolitical tensions and supply chain disruptions reshape the global economy, the race for critical minerals and energy resources is intensifying.
Speaking at the annual meetings of the Inter-American Development Bank, Nigel Clarke, Deputy Managing Director of the International Monetary Fund, said Latin America and the Caribbean are uniquely positioned to become a strategic hub in the global supply chain for energy and critical minerals.
In his keynote address in Paraguay, Clarke highlighted that the region possesses a rare combination of abundant clean energy and vast mineral resources, both of which are crucial for the global energy transition.
Today, roughly 69 percent of electricity generation in Latin America and the Caribbean comes from renewable sources, making it one of the cleanest power mixes in the world. At the same time, the region remains a major energy producer, with oil production reaching about 9.7 million barrels per day in 2024.
But the region’s greatest strategic advantage lies in critical minerals.
Countries such as Chile, Peru, and Mexico account for roughly 37 percent of global copper mine production. Meanwhile, the so-called “lithium triangle”—spanning Argentina, Bolivia, and Chile—holds about half of the world’s lithium resources, a key component for electric vehicle batteries and energy storage technologies.
Fragile Global Supply Chains
Clarke warned that global supply chains have become increasingly fragile and concentrated over the past two decades.
In many critical mineral markets, the top three refining countries control about 86 percent of global processing capacity, creating dangerous chokepoints that could disrupt the global economy if supply shocks occur.
Recent crises—from the COVID-19 pandemic to geopolitical conflicts—have shown that supply chain disruptions are no longer just logistical issues. They can quickly translate into higher inflation, slower growth, reduced investment, and declining business confidence.
Clarke noted that recent tensions in the Middle East serve as another reminder of how vulnerable energy and strategic commodity markets are to geopolitical shocks.
A Strategic Opportunity for Latin America
Against this backdrop, Clarke said Latin America and the Caribbean face a historic opportunity.
The region can both strengthen domestic resilience and emerge as a trusted global supplier of critical minerals and energy inputs.
However, he emphasized that the region should move beyond exporting raw materials.
Instead, countries should focus on climbing up the value chain by expanding mineral processing, refining industries, and manufacturing sectors linked to copper, lithium, and clean energy technologies.
Diversification, Not Protectionism
Clarke stressed that closing markets and adopting protectionist policies would increase supply risks rather than reduce them.
Instead, diversification and regional integration are key to building resilient supply chains.
He cited the example of Chile, which faced a major energy supply shock in the mid-2000s when pipeline gas imports from its main supplier were curtailed.
Chile responded by developing LNG import terminals at Quintero and Mejillones, giving it access to global gas markets and strengthening its energy security.
The same diversification strategy could be applied to critical mineral supply chains, he said.
Clarke also welcomed the EU–Mercosur trade agreement, which would create a combined market of around 720 million people, representing nearly 21 percent of the global economy.
Economic modeling suggests the agreement could increase Mercosur exports to the European Union by nearly 17 percent over time, while encouraging higher-value and more diversified exports.
Investment Needs Policy Stability
To seize the opportunity, Clarke emphasized that strong and predictable policy frameworks are essential to attract long-term investment.
Investors need confidence in: low and stable inflation, sustainable public finances, predictable tax regimes, transparent regulations, strong and credible institutions.
Governments and the private sector must work together, he said. While governments create the conditions for investment and competition, the private sector brings capital, technology, and operational expertise needed to build integrated supply chains.
The New Global Race for Strategic Resources
Clarke concluded that Latin America and the Caribbean stand at a pivotal moment.
With the right policies and investment strategies, the region could transform itself into a reliable global hub for both raw and processed strategic resources, helping stabilize global supply chains while boosting its own economic growth.
In an era defined by the global race for critical minerals and clean energy, the region now faces a historic choice: remain a supplier of raw materials—or emerge as a major industrial powerhouse in the new energy economy. (AT Network)
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