The Mining Industry’s Two Latin Americas | Sheinbaum and the United States

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We welcome you to the Greater Caribbean Monitor (GCaM). In this issue, you will find:

•The Mining industry’s bifurcated Latin America

•Mexico’s new president won’t alter its dangerously corrupt course in US relations

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•The Mining Industry’s Bifurcated Latin America
718 words | 4 minutes reading time

Energy transition talk has grown fashionable, yet zealous environmentalists remain resolute in their opposition to mining. This has led to a bizarre bifurcation of Latin America; mineral wealth, evenly spread throughout the region, is unevenly extracted, with more northerly countries normally showing greater skepticism.

Data. The region holds 61% of the world’s lithium—arguably the greenest of metals—and is responsible for 29% of global production. Similar figures emerge with other minerals deemed essential to the energy transition: Latin America possesses 38% of world copper reserves and 45% of global production, along with 38% of both global nickel reserves and production. 

• Silver mining, concentrated in South America, is also very promising. The region overperforms in this regard, being responsible for 48% of global production despite holding a mere 39% of world reserves.

• Assuming ambitious energy transition goals remain untouched, which is increasingly unlikely in light of important players seemingly softening their ESG commitments, Latin America would have to increase its lithium production tenfold in the next 20 years.

North. Marcel Niedergang, Le Monde’s fabled international correspondent, often probed the very existence of Latin America as a coherent unit. His book, The 20 Latin Americas, is perhaps slightly off the mark, but the region is undoubtedly split into two, namely an anti-mining north and a pro-mining south.

• It would seem incongruous to deem Mexico—a prominent crude, gold, and silver producer—an anti-mining nation. Mexico is a sui generis case, since its leftist government has shown a measure of pragmatism, but president-elect Claudia Sheinbaum is likely to pass AMLO’s last will and testament, a package of reforms that includes a ban on open-pit mining.

• Conditions for the industry are far worse in Central America; most of its countries have restricted mining to the point of effectively banning it. Guatemala and Panama now face international arbitration suits, with the latter standing to lose $20 billion after shuttering the Cobre Panamá mine.

• Tempted by gold reserves, El Salvador, the first country in the world to enact an outright ban, is now reconsidering. Nicaragua is arguably Central America’s sole mining state; gold is its second-largest export. The country has a habit of exporting more gold than it produces, passing off Venezuelan gold as its own. 

South. The “pro-mining south” begins past the Amazon, not the Darién Gap; it is limited to the south of South America. Colombia and Ecuador have both moved to restrict mining and oil operations, despite being unusually reliant on these industries for their exports. Indeed, one may be wont to forget, but above all, Colombia is an oil and coal exporter.

• Copper remains Peru and Chile’s largest export. In 2022, they exported a combined $57.22 billion in copper, including both raw and refined forms of the mineral. Lima is currently pitching $55 billion in new mining projects, with $5 billion expected to begin development in the next two years.

• Argentina, with the world’s third-largest lithium reserves after Australia and Chile, is a relative newcomer. Surprisingly, Argentine lithium mines face only light-touch regulations and are managed at the provincial level. The country expects to quintuple its production by late 2025, with the United States fearing unnerving levels of Chinese involvement in Argentina’s lithium sands.

• Brazil’s state-owned energy giant, Petrobras, continues betting on expanding oil operations; in April, it assigned $73 billion to exploration and production efforts. Brasilia has also sought to back its nickel producers, who have been hard hit by falling global prices owing to an Indonesian-led supply glut.

The Future. The trend is identifiable. The Southern Cone, Andean countries, and Brazil are much more vigorous in their support for extractive industries. There are, of course, exceptions: pro-mining Bolivia’s internal political turmoil has put a brake on industry expansion, whereas the Dominican Republic, caught in a generally anti-mining portion of Latin America, counts gold among its key exports.

• In a sense, the roster of pro-mining players is hardly surprising. Countries like Peru and Brazil have for decades been large-scale commodities exporters, whereas many more northerly states have proved far less skilled as exporters, maintaining vast commercial deficits and relying on tourism and remittances.

• For Central American states, the neglect for mining carries two risks: the first and most pressing one is simply the squandering of a promising, in vogue development opportunity; the second is found in international courts, since these countries have often broken contracts with mining firms, leaving them at risk of enormous arbitration settlements. 

Andrés Martínez-Fernández
•Mexico’s new president won’t alter its dangerously corrupt course in US relations
721 words | 4 minutes reading time

This opinion piece first appeared in the New York Post. The author, who has consented to its syndication in GCaM, is a senior policy analyst in the Heritage Foundation’s Allison Center for National Security.

Claudia Sheinbaum, the hand-picked successor of President Andrés Manuel López Obrador, will be the next president of Mexico.

Unfortunately, that means US-Mexico relations remain on a dangerous course which has empowered drug cartels and brought skyrocketing overdoses and uncontrolled migration to the United States.

Sheinbaum owes her victory almost entirely to the highly popular Lopez Obrador government, leaving little chance that she will distance herself from the man universally known as AMLO.

Under the incumbent’s government, US-Mexico relations have seen a dangerous deterioration. New threats have emerged on the border—ranging from fentanyl, weaponized mass migration and terrorist networks—and important opportunities for collaboration, such as nearshoring supply chains from China, have been largely squandered. Worse still, deepening narco-corruption adds a powerful force working against a necessary change of course in Mexico.

All this means that if the vital relationship between the US and Mexico is to stabilize, the Biden administration must right the ship. To date, Washington has largely been a passive observer of the relationship’s continued collapse. This is best evidenced by the utter breakdown of counter-narcotics cooperation with Mexico.

Opioid overdoses, facilitated by the free flow of Chinese precursor chemicals to Mexico’s cartels, continue to kill over 100,000 Americans each year. Nevertheless, the Biden administration has stood by as AMLO has repeatedly denied Mexico’s role in the fentanyl crisis. Even when Mexico’s government terminated the longstanding Merida Initiative, upending counter-drug cooperation with US law enforcement, President Biden remained silent.

American permissiveness goes back years, through multiple presidential administrations. In 2020, under President Trump, US law enforcement agents arrested former Mexican defense minister Salvador Cienfuegos after uncovering his collaboration with the drug cartels. Yet after substantial diplomatic pressure from Mexico, the US released Cienfuegos, whom AMLO subsequently decorated with a medal honoring his service.

In 2011, the Obama administration even dropped a DEA investigation revealing credible narco-corruption directly implicating AMLO, then a presidential candidate. However, surging US fentanyl deaths make the Biden administration’s willingness to ignore Mexico’s security backsliding far more egregious.

And it’s not just narcotics. The Biden administration has also been a largely passive observer of major trade disputes, expropriation of US companies in Mexico and even threatening actions against American journalists by the Mexican government.

Minimizing confrontations with Mexico serves two purposes for the Biden administration. First, it lets Washington focus on its other preferred foreign policy projects. Second, it allows President Biden to secure transient support from the Mexican government on migration.

With migration spiking this year, for example, the Biden administration has been beseeching Mexico to crack down on migrant caravans before they reach the southern border.

Mexico, realizing that a second Trump administration would be a much more aggressive counterpart—in 2023 President Donald Trump promised to use US special forces to confront cartels, for example—has responded with a major increase in border enforcement.

But any short-term advantage Biden is gaining from this approach to Mexico is accompanied by long-term negative consequences for Americans. Fentanyl inflows to the United States tripled between 2021 and 2023. Illegal migration has also skyrocketed during this period. Over time, AMLO’s willingness to undermine American interests has become more and more brazen—and that trend isn’t likely to change under Sheinbaum, his chosen successor.

The next presidential administration shouldn’t accept this status quo. Maintaining a strong relationship with Mexico is vital for Americans’ prosperity, and Washington can take simple actions to improve the current crisis.

First and foremost, the US should stop outsourcing migration enforcement to the Mexican government. Doing so would not only improve security at the southern border, but also deny the Mexican government the invaluable leverage that AMLO and his allies have wielded over the United States for years. 

Next, the US should reassert its national security and economic interests in the bilateral relationship. If Washington linked American trade and remittances to national security and migration, for example, Mexico would be forced to take more responsibility for our shared border. The scheduled 2026 review of the USMCA trade agreement is a key opportunity to change this dynamic. 

Finally, if Sheinbaum’s government continues to pursue the same narco-friendly agenda as her predecessor, the White House should seriously consider how it can deploy US military assets to confront the criminal cartels facilitating the mass flow of migration and bringing in the fentanyl that’s slaughtering our sons and daughters.

It’s time to tell Washington that taking control of our relationship with our southern neighbor must be a top priority.