"Development of rare earth and critical minerals projects is no longer just a matter of energy transition, but rather, energy security," Tiago Abreu, chief development officer of Brazilian Rare Earths, told delegates at a summit in Belo Horizonte, Brazil in June 2025.

Latin America has emerged as a strategic linchpin in the global race for critical minerals, with copper, lithium and rare earths all playing strategic roles. Brazil and Argentina are at the forefront of lithium production.

Under the auspices of the second Trump administration, the mining sector is experiencing a transformation, driven by a combination of geopolitical tension, government-backed financing and the growing importance of these minerals for core infrastructure, clean energy and defense technologies.

Over the past year, the United States has taken a markedly more proactive approach to securing access to critical minerals. Projects in Brazil and Argentina have attracted direct attention from US agencies and multilateral development banks through loans, equity stakes and structured offtake agreements.

Since January 2025, the Trump administration has invested more than US$1 billion to acquire stakes in critical mineral companies globally. A study by US-UK research venture Transition Security Project, published in December, revealed that the Pentagon was stockpiling critical minerals for use in military equipment, and had earmarked several billions more to invest in further projects.

Key deals include the Inter-American Development Bank providing a US$100 million loan to a US$2.5 billion lithium project in Argentina, while in Brazil, it has been reported that the Development Finance Corporation is considering investing US$465 million to expand Serra Verde's operations in the state of Goiás.

These investments reflect a clear priority: aligning Latin American supply chains with US strategic objectives, ensuring that minerals flow into "friendly" supply chains—primarily those supporting US manufacturing and defense requirements. Alongside lithium and rare earths, copper remains central to these strategic calculations, given its indispensable role in power grids, defense systems and large-scale electrification.

While these interventions echo longstanding practices in global project finance, the immediacy and scale of US involvement in the mining & metals sector are unprecedented. And nowhere is this more evident than with lithium, for which Latin America holds roughly 60 percent of the world's reserves.

Policy and market momentum

In Brazil, home to the world's second-largest reserves of all rare earths, after China, such projects have experienced a surge of interest. In parallel, Minas Gerais has emerged as a hub for critical minerals, with its northeastern belt often dubbed "Lithium Valley" due to the concentration of lithium projects there.

There is huge growth potential: Brazil holds 23.3 percent of global rare earth reserves, but represents just 0.02 percent of production.

While Brazil's rare earth potential has drawn increasing attention, investment momentum has been most visible in lithium. In 2023, Chinese electric vehicle giant BYD secured two lithium plots in the region through its subsidiary, Exploração Mineral do Brasil.

In Argentina, lithium development has benefited from the government's RIGI program, launched in July 2024 to attract large-scale foreign investment. The Incentive Regime for Large Investments offers tax, customs and foreign exchange stability for projects above US$200 million. British-Australian mining giant Rio Tinto became the first company approved under RIGI in May 2025 for a US$2.5 billion project in Salta.

The recent midterm elections in Argentina have strengthened the ruling administration, providing political mandate to advance these projects and draw in foreign capital.

The country is home to LatAm's largest number of lithium projects, with seven already active. Its national lithium output capacity grew from 75,500 tons per year in 2023 to approximately 186,000 t/yr in 2025. The government has said it expects that figure to reach 658,000 t/yr by 2035, which would represent a 253 percent increase on 2025 figures.

Despite the optimism, lithium prices have remained volatile. Following a prolonged period of depressed prices over the past 12 to 18 months, the market appears to be turning a corner, driven in part by the rapid expansion of energy storage systems, as utilities and developers scale grid capacity. The pace of the global energy transition, slower than some initial projections, has constrained demand, but signs of recovery suggest that projects previously put on hold may now progress.

As of early January 2026, battery-grade lithium carbonate—the key commodity underpinning both EV and energy storage demand—is trading at around at US$18,200 (CNY 127,500) per ton, reflecting a recent rebound.

US influence is also shaping corporate behavior, with some mining companies reorienting operations to align with the Trump administration's priorities in an effort to secure long-term supply chain reliability in a geopolitically sensitive environment.

Geopolitics reshapes markets

Indeed, the geopolitical dimension is particularly delicate. Latin American governments must navigate investments from both US and Chinese entities. While Chinese capital remains a dominant force in processing capacity—particularly for rare earths, where more than 90 percent of global processing occurs in China—the countries in the region remain pragmatic, welcoming investment from both sides.

Inter-American Development Bank president Ilan Goldfajn told the Financial Times in December 2025 that LatAm governments were highly focused on building out regional supply chains for processing critical minerals in order to reduce reliance on Asia.

"We are hearing from countries from left to right, independent of the political inclination, that [. . .] this is the moment for them to increase the value added to their critical minerals," Goldfajn said. "On the other side, I see the US wanting also to have the whole supply chain here in the region."

Argentina and Brazil, while politically aligned to varying degrees with the US, continue to balance foreign investment, recognizing that development of their mineral deposits requires substantial capital and expertise. These countries can't close the door on China, particularly in the mining sector, but must walk a tightrope, balancing geopolitical alignment with practical investment considerations.

These geopolitical pressures are filtering directly into regulatory and transaction timelines. Political risk has become a pervasive factor for all involved. Unlike traditional perceptions of risk based solely on emerging versus developed jurisdictions, now regulatory approvals, merger control processes and broader geopolitical tensions directly influence the pace and structure of projects.

An illustrative case involves what most would have previously considered a straightforward transaction in Brazil—MMG's acquisition of Anglo American's nickel business there—now caught in EU merger control Phase II, reflecting how decisions in Brussels or Washington can affect operations thousands of miles away.

Strategic importance beyond energy

Clean energy remains a central driver of lithium demand, but critical minerals are increasingly valued for broader strategic applications. Defense, aerospace and even emerging technology sectors have highlighted the need for secure supply chains. In LatAm, many mining companies are highly focused on supplying the defense industry in the US, with this emphasis on the wider use of critical minerals accelerating project development in Brazil and Argentina.

The Trump administration has used various levers to encourage alignment, including explicit conditions in loans and financing agreements. These can specify that minerals be sold to "friendly" jurisdictions, reinforcing supply chain security. While such measures are not unprecedented in project finance, their scale and immediacy in the mining sector are new.

Regulatory and domestic policy evolution

Domestic reforms have complemented these international pressures, from Argentina's RIGI program to Brazil expanding capacity in both lithium and rare earths. Governments in both countries have sought to streamline aspects of their mining frameworks and improve investor protections, including revisions to royalty rules and access to dispute-resolution mechanisms.

Results have been mixed: Argentina has moved faster with regulatory simplification and investment incentives, while Brazil's updates have been more incremental and, in some cases, have increased compliance obligations rather than reduced them.

Political risk and community engagement remain critical. Resource nationalism, environmental considerations and bureaucratic hurdles continue to shape project timelines, even as US-backed financing mitigates some investment risks. While political risk mitigation has always been a factor in mining transactions, there is now a broader global context affecting projects in Brazil and Argentina.

Outlook for 2026

Looking ahead, lithium is expected to play an increasingly important, albeit secondary, role in driving new projects in Latin America. Copper remains the primary commodity shaping investment pipelines, with iron ore also contributing to growth strategies. Nevertheless, the combination of US-backed financing, supportive government policies and renewed market interest suggest that lithium projects in Brazil and Argentina will continue to expand.

The interplay between the US and China adds a layer of strategic fragility. While countries in Latin America remain open to investments from both powers, the US is actively signaling the benefits of closer alignment, particularly for projects critical to defense and emerging technology sectors. The result is a complex, but increasingly transparent, investment landscape in which geopolitical considerations and market fundamentals intersect.

In sum, the lithium sector in Brazil and Argentina is benefiting from a unique confluence of factors: geological endowment, rising global demand for critical minerals, US strategic engagement and supportive domestic policies. For companies and investors, understanding the nuances of this environment—where regulatory clarity, financing structures and geopolitical sensitivities converge—is now as important as evaluating the natural resources themselves.

The Latin American lithium story is, in essence, a microcosm of the new global mining order, shaped by the second Trump administration, supply chain geopolitics and the growing strategic imperative of critical minerals.

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