I. The Era of Mineral Diplomacy
Every era of great-power competition has revolved around a vital resource.
For the 19th century, it was coal. For the 20th, oil. For the 21st, it is critical minerals—the rare earths, lithium, cobalt, nickel, and graphite that underpin every modern technology from electric vehicles to hypersonic missiles, artificial intelligence data centres, and renewable power grids.
These minerals are the building blocks of the digital-industrial revolution, yet their production is far from evenly distributed. Just as the Persian Gulf once defined the geopolitics of energy, today the Andean highlands and the Brazilian interior are emerging as the fault lines of the new global order. At the crossroads of this transition stands Latin America—a region whose mineral endowments have long served the ambitions of others, but whose strategic agency is now being rediscovered.
The accelerating contest between the United States and China for access to these minerals is reshaping old alliances and reviving dormant doctrines. It is no longer simply about resource extraction. It is about who sets the rules of the next energy economy—and whose values, systems, and security architectures will dominate the mid-21st century.
II. China’s First-Mover Advantage
Beijing understood the strategic importance of critical minerals long before Washington did.
Beginning in the late 1990s, as globalisation pushed Western firms to outsource “dirty” processing industries, China quietly built a vertically integrated supply chain: mining at home, buying assets abroad, and investing in refining, separation, and alloy production.
By 2025, China accounts for nearly 70 per cent of the world’s rare-earth output and over 85 per cent of processing capacity. Its control is even higher in midstream stages, where ores become oxides and metals are transformed into the magnets essential for wind turbines, missile guidance systems, and electric motors. In short, China does not merely mine critical minerals; it controls their life cycle.
Supported by state development banks and a web of Belt and Road projects, Chinese companies moved aggressively into Latin America in the early 2000s—often in countries where Western investors were reluctant to tread. In Bolivia, after the 2006 nationalisation of hydrocarbons, Chinese firms accepted terms Western multinationals rejected, gaining access to the Uyuni salt flats, the world’s largest lithium deposit. In Peru, they acquired major copper mines, while Beijing’s state-owned COSCO Shipping is building the $3.6 billion Chancay Port, designed to channel minerals directly across the Pacific.
This is a deliberate strategy: not simply resource extraction but strategic entrenchment.
By financing the roads, ports, and power grids that make extraction possible, China ensures that trade flows—and political influence—are structurally bound to its economic orbit.
It is resource diplomacy fused with infrastructure dependency.
III. Washington’s Late Awakening
The United States, by contrast, is playing catch-up. For decades, it assumed that market efficiency would secure supply chains. But when China began restricting exports of gallium, germanium, and rare-earth magnets in the mid-2020s, Washington confronted a sobering truth: it no longer controlled the inputs for its own defence industrial base.
Under President Biden, the Inflation Reduction Act and CHIPS and Science Act sought to rebuild domestic processing and manufacturing capacity through subsidies and incentives.
Yet bureaucratic inertia, environmental litigation, and local opposition slowed progress.
Only a handful of U.S.-linked projects—such as MP Materials’ rare-earth mine in Nevada and Lithium Americas’ Thacker Pass project—are on track for production later this decade.
The return of Donald Trump to the White House in 2025 marked a shift from climate framing to national-security framing. The administration began taking equity stakes in strategic mineral firms and negotiating direct government-to-government deals in Ukraine, the Democratic Republic of Congo, and elsewhere. But in Latin America, Washington’s approach remains ambivalent: a mix of commercial engagement, tariff threats, and rhetorical nods to a revived Monroe Doctrine—language that evokes the colonial paternalism many in the region resent.
The consequence is that U.S. influence, once unchallenged in the Western Hemisphere, now competes with a China that offers infrastructure without lectures and financing without conditionality. Latin American policymakers are exploiting this rivalry to demand better terms, diversify partners, and, for the first time in generations, exercise strategic choice.
IV. The Lithium Triangle and Beyond
At the heart of the contest lies the Lithium Triangle—Argentina, Bolivia, and Chile—which together hold more than half the world’s known lithium reserves. Lithium is the linchpin of battery technologies; without it, the global green transition stalls.
Chile, historically the world’s second-largest lithium producer after Australia, is grappling with how to balance foreign investment with state control.
The debate in the 2025 presidential race—between Jeanette Jara, who favours expanding the state-owned miner Codelco, and José Antonio Kast, who advocates private-sector openness—captures a broader ideological struggle across the region: sovereignty versus efficiency, nationalism versus pragmatism.
Argentina has taken the opposite path. Without a state-owned mining company, it grants provincial governments authority to license projects, encouraging foreign capital.
In 2024, mining exports exceeded $4.6 billion, and the sector is projected to surpass $5 billion this year. Yet this decentralised model raises concerns about uneven regulation and environmental oversight.
Bolivia, after the August 2025 elections ended two decades of rule by the Movement for Socialism, is poised to reopen its lithium sector to Western and Asian investors beyond China and Russia. Its challenge will be building investor confidence while maintaining public ownership stakes and respecting indigenous land rights.
Beyond lithium, Brazil has re-emerged as a rare-earth powerhouse. In 2025, a former asbestos mine in Minaçu began producing neodymium, praseodymium, dysprosium, and terbium—the first commercial-scale rare-earth operation outside Asia. The government now offers tax breaks and financial guarantees to attract investment in refining and magnet manufacturing, seeking to avoid the “raw-material trap” that has long haunted Latin American development.
V. The Power Demands of the AI Age
The mineral race is not driven solely by green energy. It is increasingly shaped by the energy intensity of artificial intelligence. As AI training models and data centres proliferate, electricity consumption is rising exponentially—up nearly 12 per cent annually since 2017, according to the International Energy Agency, and projected to grow 15 per cent per year through 2030. By then, AI-specific data centres could account for three per cent of global power demand.
Meeting that demand requires not only energy generation but the metals that make it possible: copper for transmission lines, nickel and lithium for batteries, and rare-earth elements for high-efficiency turbines. In this sense, AI and green technology are converging into a single geopolitical ecosystem—and Latin America, endowed with both resources and renewable potential, sits at its centre.
For Latin American states, this convergence represents an opportunity to link mineral extraction with energy transition. Hydroelectric power in Brazil, solar fields in Chile’s Atacama Desert, and wind corridors in Patagonia can anchor processing industries powered by clean energy—allowing the region to move from resource provider to technology enabler.
VI. Between Hegemons: Latin America’s Strategic Dilemma
Latin American governments are acutely aware that resource wealth can be a curse as well as a blessing. Their history is littered with examples—from the silver mines of Potosí to the oil booms of the 1970s—where external dependency bred instability rather than development.
Today, the challenge is to convert mineral abundance into strategic autonomy.
Most regional leaders do not wish to choose sides in the U.S.–China rivalry. Mexico has tilted toward Washington due to trade integration under USMCA, while Brazil under President Lula da Silva has sought to balance relations with both powers, championing “multipolar mineral diplomacy.” Smaller states such as Peru, Ecuador, and the Dominican Republic calibrate their positions issue by issue, extracting concessions from both sides.
For many, China’s appeal lies in its promise of non-interference and rapid financing; for others, U.S. engagement still offers institutional predictability and access to Western markets. But both powers carry baggage: China’s record on environmental standards and debt sustainability; the United States’ reputation for conditionality and political intrusion. Navigating this dual dependence will define Latin America’s diplomacy in the 2020s.
VII. Resource Nationalism Revisited
The resurgence of resource nationalism is not simply ideological. It is a rational response to past asymmetries. Governments now demand local processing, technology transfer, and value-addition clauses. They are imposing royalties linked to global prices, mandating local hiring, and renegotiating legacy contracts signed under less favourable terms.
This assertiveness carries risks. Excessive regulation or abrupt policy shifts can deter investors, while under-regulation invites exploitation and social backlash. The sweet spot lies in transparent, predictable frameworks that balance national interests with investor confidence.
Environmental governance will be equally critical. Lithium mining, for example, is water-intensive, threatening fragile ecosystems and indigenous livelihoods. Without credible oversight, Latin American states risk a domestic legitimacy crisis even as they gain global clout.
VIII. Toward a Latin American Minerals Compact
One promising path would be a regional minerals compact—a coordinated framework for production quotas, pricing, and technology sharing akin to an “OPEC for critical minerals.”
Such an alliance could strengthen bargaining power vis-à-vis external investors and prevent a race to the bottom among neighbours.
Efforts are nascent. In early 2025, officials from Argentina, Bolivia, and Chile reopened talks on a “Lithium Triangle Alliance” to harmonise environmental and fiscal regimes.
Brazil and Mexico have floated proposals for a hemispheric supply-chain initiative linking South American resources with North American manufacturing. If realised, these initiatives could embed Latin America more deeply in global industrial ecosystems rather than keeping it at the periphery.
Yet regional cooperation has historically been fragile. Divergent ideologies, economic rivalries, and infrastructure gaps complicate integration. To succeed, the region will need visionary diplomacy, transparent governance, and a shared recognition that minerals can be a foundation for collective power, not merely national gain.
IX. The Governance Challenge
Critical-mineral governance will test Latin America’s institutions as severely as the oil booms once did. Three imperatives stand out:
- Institutional capacity. Governments must build regulatory agencies capable of monitoring environmental impact, ensuring fiscal transparency, and managing sovereign wealth funds that capture windfall revenues.
- Social licence. Communities must see tangible benefits—jobs, infrastructure, revenue sharing—if projects are to avoid the social unrest that plagued earlier extractive cycles.
- Technological capability. Latin America cannot rely indefinitely on foreign processing.
Partnerships with universities, research institutes, and private firms—domestic and foreign—are essential for moving up the value chain.
Without these, the region risks repeating the historical pattern: exporting raw materials while importing finished technology.
X. The New Cold War of Commodities
The struggle for critical minerals is fast becoming the economic core of what some analysts call a “new Cold War.” Unlike the ideological bipolarity of the twentieth century, this contest is waged through supply chains, standards, and data.
Its battlegrounds are not Berlin or Pyongyang, but lithium brines, processing plants, and port concessions.
For China, mineral dominance ensures control over the technologies that will define the next industrial age. For the United States, regaining parity is a matter of strategic survival: without secure mineral access, even superior innovation risks strategic paralysis.
Latin America’s leverage lies in the geography of its geology. If managed wisely, it can translate mineral abundance into political agency. If mismanaged, it could become once again the object, rather than the subject, of history.
XI. Toward a New Mineral Order
As the global energy transition accelerates, critical minerals will determine not only who leads technologically but also who governs geopolitically.
Latin America’s role will be decisive.
To turn resources into power, the region must: Forge strategic pluralism—engaging multiple partners to prevent dependency on any single power. Insist on reciprocity—ensuring foreign investment comes with technology transfer and value-chain integration. Institutionalise sustainability—embedding environmental and social safeguards into law, not discretion. Pursue regionalism—building cross-border infrastructure, shared data, and collective negotiating mechanisms.
If Latin America succeeds, it could redefine the Western Hemisphere’s place in global politics: from backyard to backbone, from periphery to pole. If it fails, the continent’s resources may once again be extracted for the ambitions of others.
XII. The Geography of Tomorrow
The tectonic plates of global power are shifting beneath the soil of Latin America. Where the colonial powers once sought gold and silver, and the Cold War superpowers sought ideological converts, the new century’s contest is fought over lithium and rare earths—materials invisible to the naked eye yet indispensable to modern life.
The question is not whether Latin America has these resources; it is whether it can convert them into leverage, prosperity, and sovereignty. In the end, the true measure of power in the critical-minerals age will not be who possesses the mines, but who controls the value chain—from geology to geopolitics.
For the first time in decades, Latin America has a chance to shape that chain rather than simply feed it. The world’s factories, armies, and data servers may soon depend on decisions taken in Santiago, Brasília, La Paz, and Buenos Aires. How those decisions are made will determine whether the region remains a frontier—or becomes a force—in the new mineral order.
