Escalating Middle East conflict and arms buildup could raise demand for Latin American minerals

Copper, lithium, molybdenum and other minerals have increased their strategic value as inputs for the arms industry amid the escalation of the conflict in the Middle East between Israel, United States and Iran. A crisis that could reinforce Latin America’s relevance to defense needs.

The crisis, which has remained active since February 28, has driven up the price of oil and threatens a new global inflation, while keeping the mining sector on alert, since a prolonged conflict would increase the demand for critical minerals for the military applications.

The war is weakening electric vehicle sales and clouding demand for non-strategic uses. In contrast, rare earths and other metals essential for high-tech industries such as aerospace, defense and semiconductors would become a priority in national security plans.

The manufacture of fighter jets, tanks, submarines, warships, artillery, ammunition, torpedoes and rifles requires aluminum, graphite, copper, iron, lithium, molybdenum, vanadium, cobalt and several other minerals that are produced or included in Latin American mining projects.

In line with a defense industrial base comprising more than 60,000 companies and a global network of over 200,000 suppliers, the US Department of Defense has been negotiating agreements to secure a steady supply of mineral resources with countries in the region.

At the same time, it was planning the military operation dubbed Epic Fury, which has already enabled it to strike Islamic command facilities and Iran’s defense capabilities.

The United States has revealed its interest in forming a trade bloc independent of China, which dominates the market for several critical minerals. However, it still depends on the Asian country, as well as on several other foreign nations. 

In 2025, US imports of metals and processed materials reached US$185bn, more than double the figure recorded in 2024, according to the US Geological Survey’s (USGS) 2026 Mineral Commodity Summaries report.

Chile, Argentina, Peru and Bolivia rank among the main sources of these resources. The USGS report notes that in 2024 Chile supplied 54% of US lithium imports and Argentina 43%.

It also states that Chile accounted for 68% of refined copper imports and 74% of ferromolybdenum supply, while Peru provided 69% of molybdenum ore.

Chile also supplied silver, rhenium and selenium; Peru provided refined tin and zinc; and Bolivia supplied refined tin and tungsten.

Although the US attack on Iran could be linked to the Islamic republic’s position in China’s economy - given that around 90% of Iranian oil exports go to China - Washington’s military strategy has multiple effects, including a reshaping of trade flows and a consolidation of minerals’ pivotal role in the global economy.

"Lithium and copper top the list of the largest projected deficits, but nickel, graphite, tin and rare earths could reach critical levels without preventive measures by governments and industries,” Afonso Sartorio, EYs Latin America mining leader, told BNamericas, warning of serious implications for the global order.

An intensification of the conflict in the Middle East could limit “the production of critical minerals through actions or blockades, reducing supply and pushing prices higher. This may mean higher revenues for lithium and copper producers such as Chile, but it also poses challenges such as higher energy costs, while global supply chains are temporarily reshuffled,” political scientist Gastón Alvear told BNamericas.

(The original version of this content was written in Spanish)