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1. Coronavirus, Oil and Latin America: The Urgency of Economic Diversification and Energy Transition

Author:
Carlos Monge
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Key messages: Companies are demanding temporary bailouts, requesting that governments subsidize them with breakeven prices over sale prices, and allow them to postpone tax and royalty payments and agreed investments. Such actions may be necessary to preserve jobs and ensure domestic energy supplies. Governments are considering lowering social and environmental standards, fast tracking procedures and providing long-term subsidies to support ongoing projects and to attract new investments. For an industry already facing its twilight, these actions are not justified. Governments must urgently move ahead with economic diversification and energy transitions to ensure the availability of jobs, energy and fiscal incomes that the oil industry currently provides.
Topic:
Energy Policy, Oil, Diversification, Renewable Energy, Coronavirus, and COVID-19
Political Geography:
Colombia, South America, Central America, Mexico, and Peru

2. Coronavirus, Mining and Latin America: A Baseless “Race to the Bottom”

Author:
Carlos Monge
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Mining companies are asking governments to make consultation and environmental procedures more flexible to mitigate production risks and attract new investments. However, there is no real reason to slacken regulations in order to promote mining in Latin America. Conversely, the region should strengthen these standards to prepare for a possible new mining cycle fueled by the transition to clean energy. In the event of a new mining cycle, governments should safeguard against overreliance on commodity exports and the use of fossil fuels. Instead, governments and companies should explore ways in which the mining sector can contribute to economic diversifications and energy transitions. Demand and prices for minerals produced in the region have fallen as a result of the global recession. Logistical issues resultant from pandemic-related lockdowns have slowed internal production. Consequently, mining taxes and royalties will likely fall this year. Prices have not fallen enough to threaten the commercial feasibility of current projects, the global investment budget remains robust, and the region is attractive to mining investors. Furthermore, the global transition to clean and sustainable energies will most probably increase the demand and prices for the critical minerals (copper, silver, lithium and others) produced in the region.
Topic:
Energy Policy, Commodities, Mining, Coronavirus, and COVID-19
Political Geography:
Latin America