Resource nationalism puts mining in Latin America at risk

A rise in resource nationalism in Latin America is driving up metal prices by hurting the region’s ability to supply raw materials for the energy transition, according to the head of the Mining Council of Chili.

Proposed tax hikes on copper mines in Chile and plans for a new state-owned lithium company, as well as growing social unrest in Peru and Panama’s intervention in a huge mine are all part of an effort to use a most of the mining profits in social spending.

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While reducing inequalities is a noble goal, creating cumbersome operating environments that scare away investment is counterproductive in the long term, said Joaquín Villarino, president of the Mining Council, whose members include BHP Group and Anglo American Plc and which represents 95% of Chile’s copper production.

In an interview on Monday, Villarino said that Latin America is consumed by an ideological discussion that is paralyzing development.

The head of the entity described a Chilean government bill that would raise the total tax burden for copper mines to almost 50% as a short-term initiative and plans for a new state-owned company to enter mining and copper processing lithium as wrong. Allowing red tape is one of the reasons for the low production in the largest producing country, Villarino said.

Although developed countries such as Australia and Canada have realized the urgency of increasing the efficiency of the State to supply the necessary materials to move away from fossil fuels, Latin America is missing a great opportunity that will have implications for the transition, he said.