Snippet from Latam investor31 Oct 2023 09:37
Critical metals have become an important geopolitical issue; does that impact investors?
MWS: Yes, geopolitics is a big theme that is definitely very real for investors. We are very cognisant of that – especially when it comes to planning an exit. When we start producing at a Latin American mine, we know that we can get buyers from China, North America or Europe. Each country is competing for security of supply and they win it by providing the lowest cost of capital or pay the best price. China obviously has a headstart in securing critical metals and I think the West can close the gap by providing sources of more attractive financing. After all, the Chinese companies are getting low-cost funding from their government, so the West needs to back its champions.
Latin America stands to benefit from these geopolitical trends. The Inflation Reduction Act is encouraging EV manufacturers to build assets in the US, which will encourage smelters and processing plants to set up throughout the Americas. Mexico seems to be the main beneficiary but any Latin American country with a trade deal with the US and good transport links will also do well. Unlike Africa, which has higher political risk and attracts mostly Chinese investment, Latin America is attractive to the US, China and the EU. So Latin America can attract all bidders.