Regulating Critical Minerals and Economic Security in South America: Brazil, Chile, and Argentina in Comparative Perspective
Authors: Natália de Lima Figueiredo (Assistant Professor, Federal University of São Paolo) & Michelle Ratton Sanchez Badin (Associate Professor, FGV São Paulo School of Law)
Introduction[1]
“Economic security” has quickly become a defining concept in G7 debates on critical minerals. But how does this agenda translate to major producers such as Brazil, Argentina, and Chile?
The answer is: unevenly. In the G7, economic security is tied to resilience, de-risking, and tighter control over strategic technologies. In South America, by contrast, minerals are still framed primarily as tools for development, industrial upgrading, and fiscal gains. This gap is reinforced by the region’s political history, where “security” carries sensitivities shaped by past military regimes.
Rather than being completely absent, economic security takes on a different form. Brazil, Argentina, and Chile operate from a distinct position in the global economy and tend to prioritize openness and flexibility narratives over defensive screening. A comparative perspective helps make this divergence and its implications clear.
The Criticality Paradigm: A Geoeconomic Battleground
The rise of critical minerals marks a shift from peripheral industrial concerns to core questions of global geostrategy. In the context of the energy transition and digitalization, these materials - essential for advanced manufacturing, semiconductors, and defense - now underpin a new “criticality paradigm.”
This paradigm operates along two distinct but interconnected dimensions. First, there is the material dimension: critical minerals derive their value from their functional properties, which make them indispensable to key industrial and technological processes. Second, there is a strategic and governance dimension: their relevance is increasingly defined by the risks associated with securing access and control over supply chains - risks that are actively shaped through policy choices, including licensing regimes, financing mechanisms, and the structures of industrial partnerships and geopolitical alignments.
For G7 member countries, this has translated into a framing of critical minerals as a core economic security concern. For Brazil, Chile and Argentina, however, the same dynamics open only a narrow - and highly contested - window for industrial upgrading.
The concentration of these resources in certain South American countries is an important context. Brazil is globally dominant in niobium, holding nearly 94% of global reserves, and possesses large reserves of graphite, rare earth elements (REE), and nickel. Meanwhile, the “lithium triangle” puts Chile (which is also leader in copper extraction) and Argentina at the centre of the global lithium supply: Latin America as a whole maintains around 52% of world lithium reserves, with Chile alone accounting for 41% of world reserves, and Argentina almost 10%. Concentration across such an important set of resources means that these three countries are illustrative of the region’s critical-minerals landscape.
By 2024 and 2025, the mining sector’s role in these countries has therefore intensified. In Chile, mining accounts for roughly 12% of GDP and over 55% of total exports. Brazil’s mineral sector, while a smaller portion of its diversified GDP (2.5%–3%), generates nearly half of the national trade surplus. In Argentina, mining exports have grown in recent years and represented around 6% of the country's total exports in 2025.
Mapping the Conceptual Gap: Security vs. Development
Our core argument is that G7-style “economic security” is not the lens through which these countries make economic policy. In the US and EU, the term often supports state intervention and protective measures. In South America, the language is different: the focus is usually on development, industrial upgrading, and fiscal gains.
Looking across the legal and policy landscape, we identify three main points of divergence with the US and the EU: first, the constitutional language of the selected countries suggests that national security is traditionally linked to national defense from a territorial perspective. In the Constitutions of Brazil and Argentina, revised in the aftermath of the region’s military dictatorships, “national security” (and related formulations such as the security of society, of the State, national interests, of the national territory, and national defense) is primarily tied to defense of the State and territorial integrity, with only limited entry points into the economic sphere. In Chile’s constitution, by contrast, the concept has historically been broader. It has permitted restrictions on rights, economic activity, and property, partly because the text was promulgated under the military regime. At the level of ordinary legislation, however, operationalization is narrower and more functional, broadly aligned with Brazil and Argentina: it concentrates on specific contexts, like exceptions to disclosure under transparency law, public procurement carve-outs, border-area regulation, intelligence/cybersecurity, and the protection of critical infrastructure. It does this without constituting a general authorization for economic policy.
Second, our review of mineral policies in Brazil, Argentina, and Chile shows clear differences in governance models and policy instruments. Even so, none of the three explicitly uses or defines “economic security” in law or in strategic policy documents, and certainly not in the US or EU sense of shielding supply chains from foreign control or guaranteeing access to critical inputs for technological or defense industries.
Instead, Brazil and Argentina’s mining policies seek to reduce frictions to the investor. They have streamlined licenses: Brazil relies on financing and capital-market tools, and Argentina provides tax and foreign-exchange stability and predictability for large projects. Chile combines investment facilitation with tighter policy coordination. The state steers the sector via state-owned enterprises and partnership instruments that tie extraction to R&D, and domestic value-addition. Chile also has a progressive royalty regime that serves various social purposes. All three adopt an investor-oriented approach. The operative vocabulary is development and upgrading, diversification, linkages, and fiscal returns, not security. This matters because it suggests that the gap with G7-style economic security is not merely semantic. These countries are building mineral governance around development and value capture, not around defensive screening or supply-chain protection.
Finally, unlike the CFIUS model in the US and similar regimes in Europe, none of these South American countries operate a cross-economy, security-based screening regime for foreign investment. This does not imply a regulatory vacuum; instead, investment control is exercised through a patchwork of longstanding, sector-specific restrictions - particularly in strategic areas, such as critical minerals - often involving ownership limits or prior authorization. Yet, at the discursive level, openness, legal certainty, and investor protection remain the dominant framing, with investment governance oriented more toward facilitating inflows than restricting them.
Why isn’t the Security Frame a ”one size fits all”?
A closer look at critical minerals governance in Brazil, Argentina and Chile reveals several factors that explain why economic security has not become a central organizing principle. First, these countries are primarily positioned in the upstream segments of global value chains. Without a consolidated high-tech frontier to protect, the risk of "technology leakage" - a key driver of investment screening in the Global North - remains limited, reducing incentives to adopt similar control mechanisms
A second structural driver for the region’s distinct path is the nature of its interdependence with China. While the "economic security" doctrines emerging from the US, the EU and Japan are increasingly defined by "de-risking", and the deterrence of Chinese technological and infrastructure advances, Brazil, Chile, and Argentina operate under a logic of pragmatic partnership rather than strategic rivalry. In Brazil, Chile and Argentina, the relationship with China is not viewed through the lens of weaponized interdependence, but rather as a vital pillar of macroeconomic stability, as China is an important trade partner and investor for these countries. China remains Brazil’s primary trading partner; it accounts for over 30% of total exports (dominated by iron ore, oil and soy). However, the United States remains the largest holder of Foreign Direct Investment (FDI) stock, reflecting a deep-seated financial anchoring in the West even as trade orbits to the East.
In Chile, the dependency is even more pronounced: China accounts for nearly 35-40% of all outbound trade. Yet, Western capital, primarily from Canada, US and EU, continues to lead in total investment volume. In turn, Argentina’s main export destinations include Brazil, US, EU and China. Among the main investors are Spain, Brazil, US and China.
This explains why a cross-sectoral investment screening mechanism is absent from the regional agenda. To adopt the Northern security frame would mean treating one of their largest customers, China, as a threat. This is a move that would jeopardize the very economic stability these countries seek to protect.
For these South American states, economic security is not found in shielding themselves from China, but rather in balancing Chinese demand for raw materials with Western financial integration. This is a "security of markets" rather than a "security from actors”. In other words, the priority is to preserve diversified trade, investment, and financing relationships that sustain domestic development, rather than to protect supply chains from a designated geopolitical rival.
Beyond economic pragmatism, a third structural driver is the deeply rooted diplomatic tradition of Active Non-Alignment (ANA). As articulated by scholars like Jorge Heine, Carlos Fortín, and Carlos Ominami (2023), ANA is not a passive or "neutral" stance, but a strategic choice to prioritize national interest by refusing to join exclusive geopolitical blocs.
In the context of economic security, this helps explain what we call the “CFIUS dilemma.” The dilemma is not simply whether to adopt investment screening, but whether adopting a security-based screening model akin to CFIUS would reduce the strategic flexibility these states seek to preserve. In the US and, increasingly, the EU, investment screening is framed as a defensive tool to protect strategic sectors, critical technologies, and infrastructure from foreign influence or control. In parts of South America, however, transplanting this model may carry a different political meaning: it may be read as a move toward U.S.-style geopolitical alignment, especially vis-à-vis China.
As Eugenio Sánchez argues in the CELIS Non-Paper No. 15/2025, adopting security-based screening regimes risks being interpreted as "yielding to U.S. pressure," which could trigger trade retaliation from China or deter vital productive capital. For these states, the absence of a "Latin American CFIUS" may not be a technical failure but a sovereign choice. By maintaining what Sánchez describes as a flexible legal architecture, these countries avoid the "alignment trap" and preserve their "security of choice", that is, the ability to leverage competition between major powers for industrial upgrading without being forced into a binary economic alignment that would inevitably stifle growth.
What emerges, then, is not an absence of strategy, but a different one: a more flexible model of resource governance that seeks to preserve openness to investment while retaining room for domestic value capture and policy manoeuvre.
This does not mean these South American countries are indifferent to strategic sectors or foreign influence. However, they deal with it differently, for instance, through a fragmented system of sector-specific restrictive laws, regulatory approvals, and complementary governance tools.
Last but not least, the memory of military regimes (1960s–1980s) makes 'National Security' a politically toxic brand in Brazil, Chile and Argentina. While the Global North adopts 'Economic Security' as a shield against foreign competitors, in those countries, the term remains haunted by the National Security Doctrine, which weaponized the state against its own citizens. Adopting it today as an economic principle, even under the format of “economic security” could be perceived as a retreat into authoritarian governance models, especially if employed by far-right-wing governments.
Conclusion - from access to sovereignty: redefining economic security for South America
The shift toward economic security among G7 members has produced far-reaching geoeconomic spillovers across the global economy, and critical minerals regulation. By framing minerals through a security lens, high-income jurisdictions are legitimizing extraordinary measures such as tariff, export controls, and domestic-processing mandates that risk pushing producer countries back into the role of raw materials suppliers. The likely outcome is a new form of "green extractivism," with South American countries once again locked into upstream positions in the energy transition.
Economic security and investment screening are not neutral policy tools—they reflect specific structural advantages. Transplanting them wholesale ignores how differently-positioned economies operate.
In Brazil, Argentina, and Chile, four factors explain this divergence. First, these economies still rely on foreign investment as a pillar of growth and stability, not as a vulnerability to be contained. Second, China is seen less as a systemic threat and more as a key partner and source of capital. Third, domestic institutional frameworks - especially in natural resources - remain geared toward enabling investment, not filtering it through centralized security regimes. Fourth, the region’s historical experience with military rule tempers the appeal of expansive and opaque “security” rationales.
As a result, these countries have largely resisted adopting cross-economy screening regimes and continue to favour more open, investor-oriented approaches - even as concerns over sovereignty and resource control begin to surface. This does not mean that security concerns are absent from the region. In Brazil, recent policy developments suggest a distinct turn toward sovereignty and territorial defence in the treatment of natural resources. But this reflects a different logic from the G7’s focus on access, de-risking, and screening.
The challenge for Brazil, Chile and Argentina, then, is not to import the G7 economic security frameworks wholesale, but to shape mineral governance in ways that expand domestic capabilities and preserve policy autonomy. If Europe’s answer to critical minerals is to securitize access, it should not be surprising if the Global South’s response is to securitize control.
This blog post is part of the CELIS-L&G special blog series and draws on the working paper presented at the CFIS 25 Side Event: Academic Workshop: Conceptualizing Economic Security: A Multidisciplinary and Comparative Debate, organized by the CELIS Institute and Law & Geoeconomics on October 22, 2025.
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[1] We acknowledge the support FAPESP Grant N. 2024/09358-0 for this research.
