Political Risk and Resource Nationalism in Latin American Mining and Minerals

Introduction: One Region, Many Views

Latin America, which we define overall to include Mexico and the Caribbean, is a vast, geographically diverse, resource-rich, multi-cultural, heterogeneous domain. As in other world regions, the long history of human occupation and the evolution from ancient settlements and cultures to modern-day nation-states has been marked by efforts to capture, utilize, and monetize natural resource wealth. The use of minerals and metals across the region was linked to early human detection of occurrences and the discovery of methods to extract and fabricate with them. European contact shifted the paradigm to exploitation for emerging global trade and economic power. Prized minerals and metals have long been part of the fabric of myth and mythology that permeated cultures in the Americas, how these territories were perceived by explorers, and how the pursuit of wealth unleashed by exploitation of natural resources drove behaviors and, ultimately, politics and policy.

Over the past century and more, Latin America’s minerals and mining businesses have contributed to economic development and industrialization but with persistent boom-and-bust cycles. These often-sharp cycles exacerbate inherent governance complexities given the fabric of the countries and cultures in the region. The result has been outcomes that are less robust than many feel warranted given natural resource endowments, affecting opinions and views and spurring various incursions over time in resource politics and less accommodating policies for investment.

Latin America, particularly the South American economies, now figure prominently in yet a new round of natural resource pursuits. This time, attention is on minerals to support technologies bundled into the “energy transition” notion, a shift from fossil fuels with broad decarbonization and “net zero” imperatives. A question is whether a better job can be done to realize and distribute economic benefits from businesses that will continue to be characterized by sharp commodity cycles and robust international competition.

The energy transition paradigm differs from past cycles in that governments and industry are under extreme pressure to demonstrate that mining and processing also can be decarbonized. They also must show operational and commercial success under heightened scrutiny of “responsible sourcing” and emerging requirements to certify that materials are sustainably “green”. Taken all together, the energy transition minerals “rush” appears to be creating expectations that could increase political and country risk factors across the region, invoking “resource nationalism” tendencies. How resource nationalism risks are defined, how these risk factors materialize, and how they might manifest across countries distinctive in traditions and languages will drive future results. These questions are the main focus of our paper.

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