Prepared by: Harris M. Gomez
Date: May 2026
Executive Summary
The global mining industry is experiencing a significant shift driven by the energy transition and rising geopolitical tensions. Copper, traditionally regarded as a key industrial metal, now gains strategic importance for national security. As the US and its allies vigorously pursue “friendshoring” strategies to separate critical mineral supply chains from China, Latin America, especially Chile and Peru, has become a key focus for investment and resource security.
This whitepaper explores the structural shifts in the global copper market, examines the implications of the U.S. government’s unprecedented investment spree in Latin American mining, and offers a strategic roadmap for international engineering firms, Mining Equipment, Technology, and Services (METS) companies, and investors aiming to capitalise on this new paradigm. The era of purely commercial mining transactions has ended; success in Chile and Peru now requires a sophisticated understanding of geopolitical alignment, navigating government grants, and supply chain resilience.
The Structural Deficit and China’s Chokehold
The fundamental economics of copper currently feature a severe and growing structural deficit. The International Energy Agency (IEA) forecasts that global copper demand will nearly double by 2035, mainly driven by the electrification needs of the energy transition and the large infrastructure demands of artificial intelligence data centres [1] [2]. In stark contrast to this rising demand, the IEA cautions that the market could face a 30% supply shortfall by 2035, making copper one of the most at-risk parts of the global supply chain [3].
This physical shortage is worsened by a serious geopolitical weakness: China’s dominance in the midstream processing sector. Although copper mining is spread across various locations, China has steadily established a near-monopoly on refining capacity over the last twenty years. Today, China controls more than 50% of the world’s copper refining capacity [4]. This centralisation causes a significant bottleneck. The United States and its allies see that depending on a strategic competitor for processing a metal vital to both green energy and advanced defence systems is a significant national security threat.
The market has responded strongly to these changes. In January 2026, LME cash copper prices hit a record high of $13,300 per metric ton, showing a 50% year-on-year rise [5]. While prices are forecast to settle to an average of $10,800 to $11,000 per tonne during 2026, they still remain high by historical standards, significantly impacting the economics of project development and technology deployment [6].
The U.S. Response: Friendshoring and the Capital Tsunami
In response to China’s dominance of the supply chain, the United States has launched an assertive industrial strategy focused on “friendshoring”—the process of relocating supply chains to countries that are geopolitical allies. Since January 2025, the U.S. government has invested over $1 billion to acquire stakes in critical mineral companies around the world [7]. This marks a significant shift: the U.S. government now plays an active role as both participant and investor in the global mining sector.
The scale of this intervention is unprecedented. In February 2026, the U.S. unveiled “Project Vault,” a $12 billion critical minerals stockpile aimed at shielding domestic manufacturers from supply shocks and boosting overall resilience [8]. Additionally, U.S. agencies and multilateral development banks are actively deploying capital in Latin America. Notable examples include the Inter-American Development Bank providing a $100 million loan for an Argentine lithium project, and the U.S. Export-Import Bank extending a $317 million debt package to Chilean Cobalt Corp. to expand a cobalt-copper project in northern Chile [7].
These financing agreements increasingly include explicit conditions requiring that minerals be sold to “friendly” jurisdictions, directly reinforcing supply chain security [7]. For international METS and engineering firms, this government-backed capital represents a massive opportunity, provided they can align their operations with these strategic objectives.
The Latin American Epicentre: Chile and Peru
Chile and Peru, as the world’s leading and third-largest (recently second) copper producers respectively, are the natural beneficiaries of this geopolitical realignment. However, both countries present different opportunities and challenges for international operators.
Chile: The Established Giant Pivots
Chile remains the clear leader in global copper production and is actively expanding its portfolio. Up to seven new copper projects are expected to start in 2026, with a combined investment of $7.1 billion, adding nearly 500,000 tonnes of yearly capacity. An extra six projects, valued at $7.7 billion, are scheduled to begin construction [7].
In January 2026, the Chilean government launched its National Critical Minerals Strategy, signalling a clear intent to move up the value chain [9]. The strategic focus in Chile is no longer just extraction but localised processing and sustainable operations. With 52% of global copper mines situated in high water-stress areas—a severe issue in northern Chile—technologies related to desalination, water efficiency, and sustainable processing attract premium valuations [3].
Peru: Navigating Complexity for High Reward
Peru continues to occupy a central position in global copper supply chains, with its copper mining market expected to reach $2.5 billion by 2030 [10]. However, the country faces significant operational challenges. In late 2025, Peru experienced an 11.2% year-on-year decline in copper production, highlighting vulnerabilities related to social conflict and regulatory bottlenecks [11].
For international firms, Peru’s challenges represent a distinct commercial opportunity. The decline in production creates an urgent demand for METS companies offering technologies that enhance operational efficiency, automate processes, and mitigate community impact. Furthermore, Peru is actively engaging in trilateral discussions with Chile and Argentina to coordinate strategic mineral policy with the United States, indicating a regional push to solidify their status as preferred suppliers in the friendshoring ecosystem [12].
The Role of METS and Engineering Firms in the New Paradigm
The shift from a purely commercial mining setting to one driven by geopolitical strategy places particular demands on international METS and engineering companies.
Overcoming Execution Friction
While capital flows into Latin America, execution remains a major obstacle. International firms often encounter “execution friction”, the gap between securing a contract and successfully deploying technology or building infrastructure in complex regulatory environments. This friction shows up in challenges related to local labour laws, difficult union negotiations, strict environmental compliance, and the need for strong intellectual property protection.
The Value of Localised Expertise
To succeed, international firms must go beyond the traditional export model. Having a local presence is no longer optional; it’s a must for taking part in the friendshoring ecosystem. This localisation approach demands expertise in corporate structuring, cross-border tax optimisation, and local content needs. Firms that can smoothly combine their global skills with local execution strategies will secure a larger share of the value created by the critical minerals supercycle.
Strategic Imperatives for International Firms
The convergence of record copper prices, U.S. government financing, and Latin American resource wealth presents a unique opportunity. However, capitalising on this value requires a shift away from traditional business models. Harris Gomez Group highlights three key imperatives for engineering firms and METS companies operating in or entering the region.
- Align with the “Friendshoring” Architecture Companies must proactively review their technology pipelines and project portfolios to ensure alignment with U.S., Canadian, and Australian critical mineral strategies. Securing cross-border funding or export credit agency support (e.g., U.S. DFC, Export Finance Australia) requires complex legal structuring to show that the project enhances supply chain resilience outside of China. Firms capable of navigating this framework will access highly subsidised capital.
- Localise Manufacturing and IP The era of the purely export-focused model is coming to an end. To navigate disrupted global shipping routes and reduce the risk of future tariffs, international METS companies need to set up local manufacturing or assembly hubs in Chile and Peru. This involves establishing sophisticated legal frameworks for technology transfer and IP licensing, which protect parent company patents while fulfilling local content requirements and responding to the geopolitical push for regional supply chain growth.
- Master the ESG and Regulatory Matrix Political risk and environmental compliance are now central concerns; they are the main factors determining project viability. Engineering firms must incorporate ESG compliance—especially regarding water rights, community relations, and renewable energy procurement—into their core EPC and EPCM contract structures. Managing these risks legally and commercially is a key competitive advantage.
Conclusion
The geopolitics of copper have fundamentally changed the rules of engagement in the Latin American mining sector. The United States’ aggressive friendshoring strategy and the deployment of billions of dollars in government capital have created an environment where geopolitical alignment is as vital as geological endowment.
For international engineering firms, METS companies, and investors, the opportunities in Chile and Peru are extensive but challenging. Success depends on a partner who comprehends the complex mix of international trade policies, local regulations, and the commercial realities of project execution. Harris Gomez Group, with nearly thirty years of experience and a physical presence in Australia, Chile, and Peru, offers the strategic advisory and “Soft Landing” support needed to navigate this new global mining landscape and realise the long-term value of the critical minerals supercycle.
References
[1] Wood Mackenzie. (2025). Soaring copper demand an obstacle to future growth.
[2] BHP. (2024). BHP Insights: how copper will shape our future.
[3] International Energy Agency (IEA). (2024). Copper – Analysis: Outlook for key energy transition minerals.
[4] Discovery Alert. (2025). China’s Copper Refining Supply Chain Dominance.
[5] The Oregon Group. (2026). Can copper hit $15000 in 2026?
[6] Natixis. (2026). Commodities Markets: Exploring Key themes for 2026.
[7] White & Case LLP. (2026). Washington’s US$1 billion critical minerals spree reshapes Latin American mining.
[8] Reuters. (2026). US turns multilateral in search of critical mineral security.
[9] DLA Piper. (2026). Chilean government launches National Critical Minerals Strategy.
[10] Grand View Research. Peru Copper Mining Market Size & Outlook, 2022-2030.
[11] Mining.com. (2026). Peru’s copper production down 11.2% year-on-year in November.
[12] Veridicor. (2026). Peru, Chile and Argentina Discuss Strategic Minerals with the United States.