The importance of Latin American mining for the global energy transition

The importance of Latin American mining for the global energy transition

It should come as no surprise that the demand for metals and minerals is set to increase due to the necessary and ongoing energy transition to a low-carbon global economy. Elements such as copper, lithium, manganese, lead and zinc are highly relevant for decarbonisation technologies such as electric vehicles, solar panels, wind turbines and smart electrical systems, among others.

Our study Latin America and the Caribbean 2050: On the way to becoming a global hub for metals and low-carbon solutions, published in 2021, estimates that by 2026, the demand for key minerals for the energy transition will be more than double that registered in 2015.[1] This study also concludes that Latin America and the Caribbean (LAC) has an opportunity to position itself as a world supplier of metals and solutions with low carbon emissions due to the abundance of its mineral resources. This can mean a series of economic benefits for the region, including: (i) higher tax collection – estimated at US$50 billion per year by 2050[2](ii) a greater generation of new jobs and (iii) an acceleration of the demand for services and local technological capabilities.[3]

However, it is difficult to speak only of the benefits without outlining the responsibilities that this opportunity implies for the mining industry. The region must continue building mining that minimizes its environmental footprint, prioritizing both the efficient use of resources and the minimization of the environmental liabilities it generates, as well as the management of emissions and the protection of biodiversity.[4] In addition, it can and should delve into circular economy opportunities applicable to mining, in order to reduce the extraction of virgin ore and still adequately supply the required materials.

See also  The White House will study the environmental impact of Bitcoin mining

At the IDB, promoting the energy transition is part of the action plan to align its operations with the Paris Agreement by 2023, just as combating climate change is a key pillar of Vision 2025, the IDB Group’s roadmap to promote sustainable growth and recovery in the region. Under its new Environmental and Social Policy Framework (ESPF), the Bank recognizes that LAC countries are highly vulnerable to the effects of climate change and the impact of natural hazards, both in the form of physical damage and environmental loss. , social and economic that tend to be concentrated in the most vulnerable populations.

As part of our research agenda on mining, we publish in 2022 the report Leveraging the Growth of Demand in Minerals and Metals for the Transition to a Low Carbon Economy. This research examines the growth in demand for different metals and minerals critical for the energy transition to 2050, considering goals currently established by different countries. Hence, the work evaluates the economic, environmental and social opportunities and challenges that the increase in demand and mining production in LAC countries imply.

Approach to the demand for minerals from the sectors affected by the transition in the 1.5°C scenario, 2020-2015

The importance of Latin American mining for the global energy transition

Source: Own elaboration based on the results of the Vivid Economics model, Leveraging the Growth of Demand in Minerals and Metals for the Transition to a Low Carbon Economy

The results show that, from the demand side, manufactured goods companies are prioritizing reducing their environmental impact – in response to their customers, investors and more demanding regulatory frameworks – and presenting innovative solutions.

See also  How does the demand for electricity in the countries of the region behave during the post-covid economic recovery?

Furthermore, the report Latin America and the Caribbean 2050, mentioned above, evaluated four scenarios of scope 3 emissions – total emissions throughout the value chain – of copper and iron, two minerals where LAC has great comparative advantages. All scenarios analyzed require LAC to invest in low-carbon technology to varying degrees, either by implementing new business models, developing new technologies and products, and/or applying circular economy principles. Thus, the region would not only achieve a successful transition to a low-carbon economy and create opportunities to increase resilience in the face of a broad set of scenarios, but would also develop key capacities and infrastructures to increase its competitiveness in the short, medium, and long term.

Conditions and areas that could support the transition of the LAC region to a global center for low carbon metals and solutions.

The importance of Latin American mining for the global energy transition
Source: Adapted from Urzúa, O, Latin America and the Caribbean 2050: On the way to becoming a global hub for metals and low-carbon solutions

These two reports show that the great changes in the global energy model imply important opportunities for countries rich in natural resources – like many countries in our region – and that support from institutions such as the IDB can drive this effort by leveraging the mining sector for its sustainable development. These opportunities are important and require paradigm shifts, greater innovation and collaboration between all the actors involved, including the private sector and civil society. LAC must take advantage of the momentum, generating social and economic benefits without putting the environment at risk.

See also  This Government Was Able To Earn $1.5 Million From Bitcoin Mining, But Restricted It

[1] Inter-American Development Bank, 2021. Latin America and the Caribbean 2050: Becoming a Global Low-Carbon Metals and Solutions Hub

[2] Inter-American Development Bank, 2022. Leveraging Demand Growth in Minerals and Metals for the Transition to a Low-Carbon Economy

[3] As technological capabilities we understand the knowledge and skills to acquire, use, absorb, adapt, improve and generate new technologies.

[4] Inter-American Development Bank, 2022

Leave a Comment

Your email address will not be published.