Why LatAm mining sectors need not worry about the US election

No matter who wins the November 5 presidential elections in the US, Latin American mining countries will remain a focus, as Washington tries to counter China's dominance in the global supply chain.

Both Donald Trump and Kamala Harris agree on increasing critical mineral stock in the US.

They are "promoting on-shoring and have similar policies in the sense of bringing critical minerals, such as lithium, copper, graphite or rare earths, to strengthen the domestic manufacturing and processing of minerals and metals to reduce dependence on China," Botir Sharipov, vice president of the credit and corporate finance office of Moody's Investors Service, told BNamericas.

Sharipov expects either administration to continue to deploy protective tariffs, loans or grants through programs such as the Inflation Reduction Act (IRA) or new intergovernmental agreements to keep Chinese products or foreign products that use Chinese minerals and metals out of the market.

The current Biden-Harris administration recently signed MOUs with Latin American mining countries, such as Peru and Argentina, to strengthen cooperation.

Likewise, the US maintains technical and commercial exchange related to minerals with Brazil as part of the IRA, and regarding value-added products from Chile that contain lithium.

Republicans and Democrats agree on policies that ensure a stock of basic inputs for domestic manufacturing of clean technologies and to guarantee national security and defense.

While global copper demand will almost double in the next decade due to the energy transition, demand for minerals such as copper, lithium, nickel and cobalt in the US will grow 23 times by 2035 compared to 2021, according to a report by S&P Global.

While Trump has criticized the IRA and vowed to remove unspent resources from the climate law, he has not promised to dismantle it. He even proposes a government efficiency commission to conduct financial audits to root out potential fraud or improper payments.

Although US group Society for Mining, Metallurgy and Exploration advocates a return to centralized national mining management to increase production and reduce dependence on imports, such a move would not pose a risk for Latin America, at least in the short term, even though the US nowadays is "reliant on foreign sources for 49 critical minerals. In 1995, [it] was similarly dependent on foreign countries for just 24 minerals." 

Developing a mining project, from discovery to production, takes 29 years in the US, second only to Zambia, according to S&P Global.

In addition, last year the US was among the countries that invested the least in exploration, compared to mining jurisdictions in Latin America, Australia, Canada and Africa, according to the IEA.