Being one of the leading producers of copper in the world, Latin America is comfortable knowing that demand for the metal is not going to slow down any time soon. Among the LatAm countries, Chile occupies the premier position in copper production, followed by Peru.
At this crucial juncture in 2026, Latin America has to decide whether to carry on with its traditional boom-bust cycle or emerge as the global Green Engine. The region’s enormous mineral and energy richness has spawned a contentious discussion as the global energy transition gathers up speed: is the present price spike only a brief period of geopolitical exuberance, or are we witnessing a real, decades-long Commodity Supercycle?
Being one of the leading producers of copper in the world, Latin America is comfortable knowing that demand for the metal is not going to slow down any time soon. Among the LatAm countries, Chile occupies the premier position in copper production, followed by Peru. Surveys show that the global demand for copper will jump by 70% by 2050 as demand for renewable energy infrastructure increases. In the past thirty years alone, production has nearly doubled as a result of the metal’s use in solar panels, wind turbines, batteries and electric vehicles.
Similarly, lithium is yet another element whose demand is rapidly rising due to its use in lithium-ion batteries (LIBs) as decarbonisation and electrification gain more traction. With its Lithium Triangle (Chile, Argentina and Bolivia), the LatAm region accounts for over half of the world’s lithium resources. Despite being resource-rich, the region lacks the necessary systems and infrastructure to develop its indigenous high-end technologies. It exports raw materials and imports these essential technologies.
A 2025 study by the International Council on Clean Transportation (ICCT) and Centro Movilidad Sostenible (CMS) has estimated that if Chile alone can expand its supply chain to include cathode production and cell manufacturing, its annual gross product could reach $12.3 billion and generate up to 32,600 jobs by 2035, assuming that it is the sole supplier of EV batteries across the LatAm market.
The region is also blessed with vast crude oil reserves, and in December, the US Energy Information Administration estimated that in 2026, global crude oil production will increase by 0.8 million barrels per day (b/d), and Brazil, Guyana, and Argentina’s supply will comprise 0.4 million b/d of the expected global growth. It is also important to note that since 2023, global crude oil growth has been driven by non-OPEC+ countries.
The introduction of new Floating Production Storage and Offloading (FPSO) vessels around offshore deepwater oil resources, like Equinor’s Bacalhau field in October, which is the first project in Brazil to be managed by an international operator, led to a notable increase in Brazil’s crude oil production in 2025.
Between 2020 and 2025, Guyana’s oil production was expected to expand tenfold. This expansion was primarily driven by oil finds in the offshore Stabroek block, where corporations deployed FPSO vessels similar to those used in Brazil. ExxonMobil oversees production in Guyana in collaboration with Hess and the China National Offshore Oil Corporation (CNOOC).
While oil production was declining in Argentina before 2021, the growth from the Vaca Muerta has helped it become the fourth-largest oil-producing country in South America, behind Brazil, Venezuela, and Guyana.
Latin America’s market was relatively closed off to Asia in the early years of the millennium. However, in 2024, the region’s trade with China grew to a record $518 billion, with economists predicting that it could exceed $700 billion by 2035. Beijing stands as South America’s top trading partner and the second largest for Latin America as a whole, following the US.
The primary outbound shipments to China include vegetables like soybeans, animal products, copper, petroleum, oil, and other raw materials used to further industrial development. However, like most trade relationships with economic giants like the US and China, Latin America has been receiving the short end of the stick. Local industries are suffering as cheaper imports from China are flooding the market.
Having signed free trade agreements with Chile, Peru, Costa Rica and other countries in the region, China has also been successful in bringing in over 20 countries across LatAm and the Caribbean to the Belt and Road Initiative (BRI). With Trump’s unpredictability regarding tariffs, it can be ascertained that these countries will look at China as a more favourable trade partner.
Despite a year-long global economic crisis incited by tariffs and geopolitical tensions, Latin American currencies have surprisingly managed to maintain a 5.8% average increase. However, while this number seems favourable, the reality is that increasing currency rates are not synonymous with economic growth.
With the dollar staging a fall, Latin America’s main alternative remains currency diversification to ensure forex stability. Most of the region’s international financial assets are in USD, and while diversification is recommended, economists have deterred against concentrating local currencies. This is to avoid higher volatility in the market and other risks, such as significantly lower growth across all countries and further monetary easing. This will inevitably reduce the local yields.
Along with forex, the banking sector in LatAm is also undergoing rapid transformation. The fintech industry is thriving in the region, producing 30% of the world’s fintech companies. The region is determined to prioritise the banking sector, as over 50% of LatAm’s adult population are unbanked or underbanked.
To resolve this, much effort has been poured into modernising the traditional banking system to bring it up to international standards. Since 2020, digital banking in the region has surged by 40%, although nearly 60% financial institutions in LatAm primarily rely on traditional banking technologies.
While credit and debit cards have been launched on new platforms, and financial experts have suggested modified versions of ‘buy now, pay later’ schemes, particularly to help small businesses, there is still a long way to go to revamp the banking sector in these countries.
Latin America is undoubtedly at a pivotal point of progress. Despite having substantial amounts of lithium, copper, and oil, which are the fundamental building blocks of the global energy shift, the region’s future depends on ending the long-standing extractivist cycle. Latin America must shift from exporting raw materials to building upscale local infrastructure and value-added businesses if it is to genuinely become a Green Engine.
The area can turn erratic commodity spikes into long-term, sustainable sovereignty and economic resilience by deftly navigating the complex trade relations between the US and China and utilising its resource power by developing suitable infrastructure and employing modern technologies.
