The transition to a sustainable, low-carbon economy is fundamentally dependent on the availability and efficient use of critical minerals. These minerals, such as copper, cobalt, lithium, nickel, and graphite, are essential components in various technologies that drive clean energy and industrial innovation. In Latin America, a region rich in these resources, understanding the demand dynamics and their relationship with the sustainable development goals (SDGs) is crucial for shaping future industrial policies and economic strategies. This study explores a relatively under-investigated topic such as the projected demand for key energy transition minerals in Latin America and evaluates how the most critical minerals (i.e., copper, nickel, cobalt, graphite, and lithium) align with the region's progress toward achieving the SDGs. To do that, we use empirical data applied to a novel method called “Sequential Interactive Modelling for Urban Systems” (SIMUS) to assess the contribution to SDGs and the ranking of each of the critical minerals demand projected for Latin America over the period 2030–2050. The structure of this paper is as follows: Section 2 introduces a literature review on critical minerals and SGGs, including the relationship between the two; Section 3 depicts the data sources, processing, and construction of the Initial Decision Matrix, as well as the data validation and limitations; Section 4 describes in detail the novel SIMUS methodology used to assist policymakers in making decisions under complex scenarios based on the Initial Decision Matrix constructed before; Section 5 presents the final results of employing the SIMUS methodology for both the Unweighted and SDG-Weighted contributions of critical minerals to the SDGs, thus showing the ranking for each critical mineral in achieving (simultaneously)
the SDGs. This section also calculates the validation of the final results; Section 6 discusses the most relevant results from an economic and environmental viewpoint; and Section 7 derives some policy implications, particularly relevant for the Latin American region.

To conclude, macroeconomic policies in resource-rich nations play a pivotal role in optimizing the economic and developmental benefits derived from natural resources, including critical minerals. To achieve stability, mitigate volatility, and ensure equitable benefit distribution, an integrated approach that harmonizes fiscal and monetary policies is essential. For instance, Chile's structural balance rule, which adjusts government spending based on long-term copper price projections, has effectively smoothed public expenditure over price cycles. Similarly, Colombia has incorporated escape clauses into its fiscal framework, providing the government with the flexibility to respond to adverse economic shocks while maintaining a well-defined fiscal structure (UN DESA 2025).

These examples underscore that there is no universal model:

1. Effective industrial and innovation policy packages require political and macroeconomic stability, sustained political commitment, and adequate long-term financing. Particularly, macroeconomic and political stability is fundamental for attracting multinational investment in critical minerals.
2. Aligning the typically short duration of political cycles with the longer timelines necessary for implementing industrial and innovation policies is imperative for the successful development of critical minerals.
3. The effectiveness of individual policy measures often depends on their interaction with others, emphasizing the need for policy coherence.
4. Targeted incentives and conditionalities—established either as ex-ante eligibility criteria or performance-based requirements—can enhance policy effectiveness. Ultimately, there is no one-size- fits- all solution.

Countries must tailor their policy frameworks to their unique circumstances, institutional capacities, and economic and geopolitical priorities. Industrial and innovation policies must integrate into a broader national strategy encompassing economic, environmental, and social dimensions. A critical decision for countries involves selecting an appropriate diversification strategy. Potential opportunities include upstream diversification through backward linkages in the mining equipment, technology, and services sector, midstream opportunities such as smelting, refining, and producing intermediate products, and, for a select few, downstream activities like manufacturing components for renewable energy, electronics, high-tech industries, or EVs. Achieving these objectives requires carefully designed industrial and innovation policies aligned with specific diversification goals. However, as evidenced in countries like Argentina, Brazil, and Peru, insufficient incentives for domestic firms to acquire advanced technologies and develop supplier capabilities have been limiting factors. For instance, the countries of the “lithium triangle”—Argentina, Bolivia, and Chile—are pursuing distinct strategies for lithium development. Chile emphasizes a flexible, state-led approach to maximize public benefits, mandating public–private partnerships with majority state ownership for larger and more strategic salt flats under its National Lithium Strategy. Bolivia, on the other hand, prioritizes stringent state control across the entire value chain. In Argentina's federal system, national and provincial governments share regulatory responsibilities, while private companies spearhead lithium operations. However, inconsistent mining regulations in recent decades have posed challenges to sustained development.

In 2024, Argentina introduced the Grand Investment Incentive Regime, a policy framework designed to attract both foreign and domestic investment. This regime offers substantial long-term guarantees and incentives, including tax reductions, exemptions from export duties, and the removal of import tariffs on capital goods, among other benefits. While these measures are expected to draw significant investment, the lack of other industrial-promoting productive linkages may impede the growth of local production capacities. More importantly, such an investment regime has been designed and formulated with little, if any, coordination with environmental and social policies, which may hinder its effective implementation.

Papa, J. & Munier, N. (2025) “The Contribution of Critical Minerals in Advancing the Sustainable Development Goals (SDGs) in Latin America”. Sustainable Development , 16th March 2025, John Wiley & Sons Ltd, US. https://doi.org/10.1002/sd.3408