How Latin America’s uprisings could be good for copper and lithium
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It has been a tumultuous time for miners in Latin America with protests breaking out in Chile in the past week.
More than a million people protested in Santiago’s public squares last week and it has led to President Sebastian Pinera overhauling his entire cabinet.
In the rural areas, some of the big miners have been affected with workers walking off the job with the same demands as their fellow protestors in the cities.
There have been reports of Chilean indigenous communities surrounding Chile’s Atacama salt flats, which have the world’s richest lithium reserves, blocking access to operations.
“We hope to continue protesting until the state hears us and attends our legitimate demands,” Sergio Cubillos, president of a local Indigenous council, said.
The majority of the big miners have denied being affected, with the worst of the protests over – for now.
The company that appeared to be most affected was Antofagasta, which said protests would cut its production by 5,000 tonnes — but that isn’t even 3 per cent of third quarter output.
Chile is not the only country suffering protests. Ecuador and Bolivia have also seen protests over similar concerns about poverty.
One prominent American market commentator, Lobo Tiggre — CEO of the Independent Speculator, said that this was not some kind of ‘Latin Spring’.
But still he advised investors to take note and keep their eyes on the situations.
“All of these countries experiencing social unrest pose many risks to capital,” he said.
“Those range from roadblocks and other transportation disruptions, to physical destruction of plant and property, to draconian currency controls, and to outright nationalisation of productive assets.
“I don’t currently expect any of these uprisings to turn into armed revolutions, but I wouldn’t rule that out, either.”
Tiggre said Chile was particularly important to watch, being home to substantial copper and lithium resources.
“Trouble in Chile could boost copper prices if it lasts long enough — possibly even lithium as well,” he said.
“The country would have to go up in flames to have a lasting impact on commodity prices, but this is something to watch for.”
Tiggre said one of these countries slipping into chaos may not have an impact, but if multiple developing countries did it could make investors fearful of the entire developing world.
“This so-called Latin Spring poses systemic risk to the global financial order,” he said.
“Enough simultaneous problems could destabilise the IMF and other major institutions.
“Private sector lenders and investors in wealthier countries who suffer major losses would become negatives for those countries as well.
“I want to be clear: I am not saying the financial world is about to collapse.
“But our fragile, interconnected global economy doesn’t need anyone knocking about with financial sledgehammers, and that’s exactly these uprisings are.”