Latin America: Mining and Energy Macro Trends

Latin America plays a preeminent role in the supply chains of raw materials useful for the energy transition, and even contributes to global sustainability by saving in case the climate helps lower hydrocarbon prices due to its heavy use of hydroelectricity.

This region has two geologically driven development tracks: 1) the Atlantic front specializing in hydrocarbons and 2) the Pacific front specializing in copper and lithium.

There are other minerals and rare earths. The differentiations are not exclusive, but they influence the markets. The help of the massive use of hydroelectricity and its little industrialization actually help to free these raw materials for export, if the climate helps.



Future Trends

China is beginning to take advantage of space to develop its electric vehicle industry in the Southern Cone and from there connect to Mexico, which serves North America, Central America and the Caribbean. Brazil and the lithium triangle will be key to China's development of this industry.

The region also has the greatest hydrocarbon potential when the slowdown in hydrocarbon investment will play an important role in high oil prices in 3 or 4 years. In terms of energy security, the fact that large hydrocarbon reserves are close to North America and that there are no hostile straits or navies obstructing the flow to Europe allows the region to position itself as a key supplier in the event of a generalized war in the Middle East or a deterioration in relations between NATO and the Eurasian powers.

 

Obstacles and Threats

For Western powers, the Russian, Chinese, and Iranian presence in the region may pose a threat, especially in terms of access to hydrocarbons in the early stages of the energy transition. Hydrocarbons will still be needed in 20 years or so as the energy transition takes shape, so the influence of Eurasian powers on governments with large reserves, such as Venezuela, is important. There is no better deal for the West than to overthrow Maduro and install a free-market democracy that will make these resources available to NATO, thus balancing crude oil prices while the energy transition takes place.

These Eurasian powers with their political allies of the Puebla Group in each country and regimes such as Cuba, Venezuela and Nicaragua can affect the supply chains of strategic minerals in the Pacific Rim through sabotage within their armed forces, promotion of organized crime or irregular groups. It would be enough to affect the roads to the ports, thus limiting exports from these countries. Petro practiced this method two years before he became president, with the help of anti-Western powers and Colombian irregulars. Nothing is easier than to blockade the countries of the Pacific Rim: Colombia, Ecuador, Peru and Chile.

 

What to expect?

The West looks down on Latin America. The Eurasian powers, i.e. Russia, China, India, Iran and the petro-Arab states, are much more cautious and know the value of the region. If the West does not want to be surrounded, it must become more involved in Latin America (EU-Mercosur agreements or more aggressive initiatives from Washington could be a key measure to counter the Chinese advance, which is the most aggressive). Otherwise, it will have its best source of food, minerals and hydrocarbons as a threat that is difficult to manage.





Comments

Post a Comment

Popular posts from this blog

Argentina and the evolution of South America's gas geopolitics

Image
  According to Bolivia's state-owned oil company YPFB, Bolivia's natural gas exports to Argentina have ceased following almost two decades of trade. This is due to a decline in production in Bolivia and Argentina's increasing status as a fuel exporter. This marks the end of the Kirchnerist and Evista (Evo Morales) era, as well as the true nature of the evolution of Bolivian fields and disinvestment in exploration and development in the Andean country. It is important to recall that during the Kirchners' initial period of statist rule, significant damage was done to Argentina's gas capabilities in the areas of exploration, development and transportation. Following the expropriation of foreign private companies exploring and establishing production capacities, Bolivia was able to capitalise on the results of their work in the gas industry. The Bolivians failed to capitalise on the opportunities presented to them and are now facing challenges. The Argentine turnaroun...
Read more

The unimportance of Venezuelan oil

Image
  Venezuela's century-old oil industry is living its worst hours not because of sanctions but because of Chavismo's incompetence. Hugo Chávez came to power with the monetary and political support of Arab kingdoms that saw a defiant Venezuela growing its oil production before 1998. Had Hugo Chávez not come to power, Venezuela would be close to 8 million barrels per day right now. 25 years later, they are celebrating if they reach 900,000 barrels per day, after receiving a production capacity of 3.5 million barrels per day in 1999. The Saudis and other kingdoms wanted Venezuela to stay part of OPEC. They wanted to keep the same levels of production and helped Chávez come to power. But then he betrayed them by working with the Persians, although he was still employed with the task at hand. Chávez did the dirty work of not only keeping production levels the same but destroying them, which benefited his Arab, Russian, North American, Latin American, African etc. oil competitors....
Read more

Latin America: conflict and energy

Image
  Latin America is affected by remote conflicts. The region also has its own conflicts, but they are not as affected by this as conflicts in regions that sell or consume raw materials. These are the Middle East and Asia. Verisk Maplecroft says that conflict-affected areas have grown by 65% since 2021. They now cover 4.6% of the world's land, up from 2.8% three years ago. That's almost twice the size of India. The upsurge in conflict is having a significant impact on people, migration, geopolitics, the economy and international trade. More people are dying in violence. By the end of the year, there will be more than 200,000 deaths from conflict, which is 29% more than in 2021. The Middle East and Ukraine are the most intense war zones. Both could get worse. Twenty-seven countries, including Ecuador, Colombia, India, Indonesia and Thailand, have seen a big rise in risk since 2021. But sub-Saharan Africa has seen more conflict than any other region. The Indo-Pacific region is ...
Read more