Investment Institute
Sustainability

Latin America’s minerals: An opportunity for investors amid the global energy transition

  • 29 March 2024 (5 min read)

With the global energy transition underway, Latin America’s minerals market holds investment potential.

Clean energy technologies like EV motors and wind turbines are gaining momentum, with renewable energy solutions projected to make up 95% of global power capacity growth by 2026.1

But specific minerals, like copper and lithium, could provide to be a limiting factor for this growth if there is not sufficient investment in procuring these critical materials. Latin America, with areas rich in material resources, is drawing the attention of investors eager to support and potentially profit from the global shift toward sustainability.

  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9uZXdzL3JlbmV3YWJsZS1lbGVjdHJpY2l0eS1ncm93dGgtaXMtYWNjZWxlcmF0aW5nLWZhc3Rlci10aGFuLWV2ZXItd29ybGR3aWRlLXN1cHBvcnRpbmctdGhlLWVtZXJnZW5jZS1vZi10aGUtbmV3LWdsb2JhbC1lbmVyZ3ktZWNvbm9teSI+SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5IDEyLzAxLzIwMjE8L2E+

Sustainable energy’s soaring popularity fuels mining investments

Global demand for renewable technologies has risen in recent years, as demonstrated by 2022 data:

  • EVs accounted for 10% of passenger vehicle sales, a tenfold increase from 2017.2
  • New wind power capacity grew 9% compared to 2021. 3
  • Solar photovoltaics (PV) took the top spot for renewable tech growth, accounting for three-quarters of global renewable capacity additions.4

Looking ahead, additions to solar PV and wind renewable power capacity are expected to more than double between 2022 and 2028.4

As demand for these technologies grows so does the need for the minerals enabling them. The projection that global overall mineral requirements for clean energy technologies will double by 20405  isn’t a stretch, given the average EV requires six times the minerals of conventional cars, while onshore wind plants will require ninefold more mineral resources compared to gas-fired plants.5

To increase the supply of the key minerals needed in these technologies, mining investments are expected to increase for:

  • Lithium: A conventional car doesn’t need lithium, but the average electric vehicle needs 8.9 kg of lithium, so it’s not surprising that demand for lithium is set to grow more than 40 times by 2040.5
  • Copper: Copper is an essential element in solar, hydro, thermal, and wind energy systems due to its status as a highly efficient conduit,6  contributing to the expected 20% boost in global copper demand by 2035.7
  • Nickel: Wind turbines, EVs, battery storage, geothermal systems, hydrogen power, and many other clean energy technologies use nickel for increased strength and resiliency against everything from corrosion to cavitation.8  Consequently, Brazilian mining company Vale’s predicted 44% increase in global nickel demand by 2030 could potentially come to pass.9
  • Cobalt: Since it offers increased longevity, range, energy density, and thermal stability to batteries,10  cobalt is essential for many EVs and renewable energy storage systems.11  The global EV battery market was 75% comprised of cobalt-containing batteries in 2021.12  Plus, cobalt is often used to help create the magnetic fields that power wind turbines,13  meaning future cobalt demand could be six to thirty times higher than today.14
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cud3JpLm9yZy9pbnNpZ2h0cy9jb3VudHJpZXMtYWRvcHRpbmctZWxlY3RyaWMtdmVoaWNsZXMtZmFzdGVzdCI+V29ybGQgUmVzb3VyY2VzIEluc3RpdHV0ZSA5LzE0LzIwMjM8L2E+
  • PGEgaHJlZj0iaHR0cHM6Ly9nd2VjLm5ldC9nbG9iYWx3aW5kcmVwb3J0MjAyMyI+R2xvYmFsIFdpbmQgRW5lcmd5IENvdW5jaWwgKDIwMjMpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9lbmVyZ3ktc3lzdGVtL3JlbmV3YWJsZXMvc29sYXItcHYiPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAobi5kLikgPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9lbmVyZ3ktc3lzdGVtL3JlbmV3YWJsZXMvc29sYXItcHYiPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAobi5kLikgPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9yZXBvcnRzL3RoZS1yb2xlLW9mLWNyaXRpY2FsLW1pbmVyYWxzLWluLWNsZWFuLWVuZXJneS10cmFuc2l0aW9ucy9leGVjdXRpdmUtc3VtbWFyeSI+SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5IChuLmQuKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9yZXBvcnRzL3RoZS1yb2xlLW9mLWNyaXRpY2FsLW1pbmVyYWxzLWluLWNsZWFuLWVuZXJneS10cmFuc2l0aW9ucy9leGVjdXRpdmUtc3VtbWFyeSI+SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5IChuLmQuKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9yZXBvcnRzL3RoZS1yb2xlLW9mLWNyaXRpY2FsLW1pbmVyYWxzLWluLWNsZWFuLWVuZXJneS10cmFuc2l0aW9ucy9leGVjdXRpdmUtc3VtbWFyeSI+SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5IChuLmQuKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly9jb3BwZXJhbGxpYW5jZS5vcmcvcG9saWN5LWZvY3VzL2NsaW1hdGUtZW52aXJvbm1lbnQvcmVuZXdhYmxlLWVuZXJneSI+Q29wcGVyIEFsbGlhbmNlIChuLmQuKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuc3BnbG9iYWwuY29tL2NvbW1vZGl0eWluc2lnaHRzL2VuL21hcmtldC1pbnNpZ2h0cy9sYXRlc3QtbmV3cy9tZXRhbHMvMTAxMDIzLWdsb2JhbC1jb3BwZXItZGVtYW5kLXRvLXJpc2UtMjAtYnktMjAzNS10by0zMC1taWxsaW9uLW10eWVhci1ub3JuaWNrZWwiPlMmYW1wO1AgR2xvYmFsICgxMC8xMC8yMDIzKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly9uaWNrZWxpbnN0aXR1dGUub3JnL2VuL2Jsb2cvMjAyMS9zZXB0ZW1iZXIvd2luZC1hbmQtd2F0ZXItbmlja2VsLWluLWNsZWFuLWVuZXJneSI+Tmlja2VsIEluc3RpdHV0ZSAoOS8yMy8yMDIxKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cucmV1dGVycy5jb20vbWFya2V0cy9jb21tb2RpdGllcy92YWxlLXNlZXMtNDQtaW5jcmVhc2UtZ2xvYmFsLW5pY2tlbC1kZW1hbmQtYnktMjAzMC0yMDIyLTA5LTA3Ij5SZXV0ZXJzICg5LzcvMjAyMik8L2E+
  • PGEgaHJlZj0iaHR0cHM6Ly9hc2VzLm9yZy9jb2JhbHQiPkFtZXJpY2FuIFNvbGFyIEVuZXJneSBTb2NpZXR5ICg5LzIyLzIwMjMpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuY29iYWx0aW5zdGl0dXRlLm9yZy9lc3NlbnRpYWwtY29iYWx0LTIvcG93ZXJpbmctdGhlLWdyZWVuLWVjb25vbXkiPkNvYmFsdCBJbnN0aXR1dGUgKG4uZC4pPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuY29iYWx0aW5zdGl0dXRlLm9yZy93cC1jb250ZW50L3VwbG9hZHMvMjAyMi8wNS9GSU5BTF9Db2JhbHQtTWFya2V0LVJlcG9ydC0yMDIxX0NvYmFsdC1JbnN0aXR1dGUtMS5wZGYiPkNvYmFsdCBJbnN0aXR1dGUgKDUvMjAyMik8L2E+
  • PGEgaHJlZj0iaHR0cHM6Ly9lcGljZW50ZXIud2NmaWEuaGFydmFyZC5lZHUvYmxvZy93aW5kLXBvd2VyLXBvbGl0aWNzLWFuZC1tYWduZXRzIj5IYXJ2YXJkICgxMS8xOC8yMDIyKTwvYT4=
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9yZXBvcnRzL3RoZS1yb2xlLW9mLWNyaXRpY2FsLW1pbmVyYWxzLWluLWNsZWFuLWVuZXJneS10cmFuc2l0aW9ucy9leGVjdXRpdmUtc3VtbWFyeSI+SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5IChuLmQuKTwvYT4=

Investments key to realizing Latin America’s full potential as a mineral supplier

Latin America is crucial in the global mining industry, supplying essential minerals for clean energy technologies. Notably, Mexico, Colombia, Chile, and Peru contribute vital resources to meet the clean energy sector’s ever-growing demands.

Already, 40% of the world’s copper comes from Latin America, with Chile accounting for 27%, Peru providing 10%, and Mexico offering 3% of the world’s copper production.15  Additionally, Latin America’s increased share of global copper exploration expenditure from 35% to 45% in the last ten years signals high demand, meaning existing copper producers could continue ramping up production.15

Several Latin American countries are well-known for mining lithium, such as Chile, Brazil, and Argentina (which supply 35% of the world’s lithium).15  What’s more, Mexico, which is currently responsible for 3% of global copper production, could also expand into lithium mining.15

With increased investments and government-established and -enforced frameworks, regulations, and incentives, Latin America's role as a mineral supplier could expand further. The region holds substantial potential in nickel, graphite, and manganese production, especially as Latin America currently receives just 7% of the world’s exploration budget for nickel and rare earth elements.15

  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9jb21tZW50YXJpZXMvbGF0aW4tYW1lcmljYS1zLW9wcG9ydHVuaXR5LWluLWNyaXRpY2FsLW1pbmVyYWxzLWZvci10aGUtY2xlYW4tZW5lcmd5LXRyYW5zaXRpb24iPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAoNC8zLzIwMjMpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9jb21tZW50YXJpZXMvbGF0aW4tYW1lcmljYS1zLW9wcG9ydHVuaXR5LWluLWNyaXRpY2FsLW1pbmVyYWxzLWZvci10aGUtY2xlYW4tZW5lcmd5LXRyYW5zaXRpb24iPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAoNC8zLzIwMjMpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9jb21tZW50YXJpZXMvbGF0aW4tYW1lcmljYS1zLW9wcG9ydHVuaXR5LWluLWNyaXRpY2FsLW1pbmVyYWxzLWZvci10aGUtY2xlYW4tZW5lcmd5LXRyYW5zaXRpb24iPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAoNC8zLzIwMjMpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9jb21tZW50YXJpZXMvbGF0aW4tYW1lcmljYS1zLW9wcG9ydHVuaXR5LWluLWNyaXRpY2FsLW1pbmVyYWxzLWZvci10aGUtY2xlYW4tZW5lcmd5LXRyYW5zaXRpb24iPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAoNC8zLzIwMjMpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuaWVhLm9yZy9jb21tZW50YXJpZXMvbGF0aW4tYW1lcmljYS1zLW9wcG9ydHVuaXR5LWluLWNyaXRpY2FsLW1pbmVyYWxzLWZvci10aGUtY2xlYW4tZW5lcmd5LXRyYW5zaXRpb24iPkludGVybmF0aW9uYWwgRW5lcmd5IEFnZW5jeSAoNC8zLzIwMjMpPC9hPg==

Investment challenges and opportunities

Investments in Latin America’s mining and materials sector, which fuels the growth of clean technology, play a crucial role in achieving global emissions targets. However, investors should be mindful of particular investment obstacles on a local scale.

Notably, mining poses a considerable risk of environmental harm and can adversely impact local communities, causing everything from biodiversity loss to water, soil, and air pollution.16  Combined with a history of incidents, including 2014’s sulfuric acid spill in Mexico17  and 2019’s deadly tailings dam disaster in Brazil,18  resistance to mining operations remains strong in some areas.

Mining projects that adhere to high ESG standards and minimally impact the local community may mitigate risk and have a higher rate of success for investors.15  Notably, the region’s abundant hydropower, solar, and wind resources could enable the development of low-carbon mining operations.15  Investors who support Latin American mining companies that have earned the local community’s acceptance and approval have the potential to reap financial gains while promoting responsible and ethical mining practices.

  • PGEgaHJlZj0iaHR0cHM6Ly9jbGltYXRlLWRpcGxvbWFjeS5vcmcvbWFnYXppbmUvZW52aXJvbm1lbnQvY2xpbWF0ZS1zZWN1cml0eS1hbmQtY3JpdGljYWwtbWluZXJhbHMtbWluaW5nLWxhdGluLWFtZXJpY2EtaG93LWNhbi1idXNpbmVzcyI+Q2xpbWF0ZSBEaXBsb21hY3kgKDMvMTcvMjAyMyk8L2E+
  • PGEgaHJlZj0iaHR0cHM6Ly9yZXNvdXJjZWdvdmVybmFuY2Uub3JnL2FydGljbGVzL21pbmluZy1lbnZpcm9ubWVudGFsLWRpc2FzdGVyLW1leGljby1zcGFya3MtbmF0aW9uYWwtZGViYXRlIj5OYXR1cmFsIFJlc291cmNlIEdvdmVybmFuY2UgSW5zdGl0dXRlICg5LzE4LzIwMTQpPC9hPg==
  • PGEgaHJlZj0iaHR0cHM6Ly93d3cucmV1dGVycy5jb20vYnVzaW5lc3MvYnJhemlscy12YWxlLWZpbmVkLTE3LW1sbi1icnVtYWRpbmhvLXRhaWxpbmdzLWRhbS1kaXNhc3Rlci0yMDIyLTA4LTE1Ij5SZXV0ZXJzICg4LzE1LzIwMjIpPC9hPg==
  • SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5ICg0LzMvMjAyMyk=
  • SW50ZXJuYXRpb25hbCBFbmVyZ3kgQWdlbmN5ICg0LzMvMjAyMyk=

Clean tech introduces opportunities for investors looking at the Latin American mineral market

Demand for clean energy solutions is rising – and the minerals that enable this technology are becoming increasingly essential. As the energy transition gains traction, Latin America has the opportunity to become a major player in clean tech mining, presenting potentially profitable investment opportunities.19

  • PGEgaHJlZj0iaHR0cHM6Ly93d3cuc3BnbG9iYWwuY29tL21hcmtldGludGVsbGlnZW5jZS9lbi9taS9yZXNlYXJjaC1hbmFseXNpcy9sYXRpbi1hbWVyaWNhLWtleS10aGVtZXMtdG8td2F0Y2gtaW4tMjAyNC5odG1sIj5TJmFtcDtQIEdsb2JhbCAoMS85LzIwMjQpPC9hPg==

Risk Warning

Investment involves risk including the loss of capital. The information has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. This analysis and conclusions are the expression of an opinion, based on available data at a specific date. Due to the subjective aspect of these analyses, the effective evolution of the economic variables and values of the financial markets could be significantly different for the projections, forecast, anticipations and hypothesis which are communicated in this material.

Boom boom pow
Asset Class Views Viewpoint CIO

Boom boom pow

Investment Institute
Nasdaq-100 Index® - Beyond technology?
Future Trends Technology

Nasdaq-100 Index® - Beyond technology?

  • by AXA Investment Managers
  • 29 March 2024 (5 min read)
Investment Institute
Latin America: A new frontier for ESG-driven investors
Sustainability

Latin America: A new frontier for ESG-driven investors

  • by AXA Investment Managers
  • 27 March 2024 (7 min read)
Investment Institute
Glittering prize
Asset Class Views Viewpoint CIO

Glittering prize

Investment Institute

    Disclaimer

    This document is being provided for informational purposes only. The information contained herein is confidential and is intended solely for the person to which it has been delivered. It may not be reproduced or transmitted, in whole or in part, by any means, to third parties without the prior consent of the AXA Investment Managers US, Inc. (the “Adviser”). This communication does not constitute on the part of AXA Investment Managers a solicitation or investment, legal or tax advice. Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Are you an IFA or other Professional Investor ?

    Are you a financial advisor, institutional, or other professional investor?

    This section is for professional investors only. You need to confirm that you have the required investment knowledge and experience to view this content. This includes understanding the risks associated with investment products, and any other required qualifications according to the rules of your jurisdiction.