Latin America’s Mining Backlash Has Global Implications

Latin America’s Mining Backlash Has Global Implications
A demonstrator stands in front of police blocking access to the National Assembly during a protest against a recently announced contract for the Cobre Panama copper mine, in Panama City, Panama, Oct. 20, 2023 (AP photo by Arnulfo Franco).

Fears of a commodities trap are once again inflaming politics across Latin America as the world enters a new period of high commodity demand. The latest illustration of the tensions and tradeoffs at the heart of these confrontations comes from Panama, where recent protests have forced the country to restrict new mining projects and may shut down a mine responsible for over 1 percent of the world’s supply of copper.

Of course, the problem extends beyond Panama and traces back centuries. Latin America produces commodities. The world consumes them. This has been both a blessing and a curse throughout Latin American history. Commodities are a potential engine for economic growth and can produce significant benefits for countries during boom times—the growth generated by Chinese demand for commodities in the first decade of the 21st century being a prime example. However, there is always a fall when the cycle ends.

These boom-bust cycles create their own challenges. It makes it difficult to generate sustainable and equitable economic development even in boom times. Once economies become dependent on commodity exports, it becomes difficult to grow other sectors—the infamous “Dutch disease.” Additionally, commodity extraction often comes with secondary costs, polluting the environment and distorting political systems. For these reasons and more, over decades and centuries, Latin America’s economic dependence on commodity exports has been seen as a type of trap that has held back the region’s development and affected its political stability.

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