• Greater private sector participation, regulatory streamlining, lower corporate taxes expected under Kast
• Sector exposed to community, rising costs, partner, and permitting risks
• Chinese dependence and U.S. pressure constrain critical-mineral strategy

Chile is the world’s largest producer of copper and second-largest producer of lithium – two critical minerals essential to renewable energy technologies, artificial intelligence, and advanced defense systems.

For over 50 years, China has been one of Chile’s most reliable economic partners, buying vast quantities of Chile’s abundant minerals and absorbing close to half of the country’s total exports. Yet the Trump administration’s commitment to reinforce U.S. hegemony in the Western Hemisphere, as shown by the capture of Venezuelan President Nicolás Maduro in January, now threatens to undermine this relationship.

Central to this concept of hemispheric security is countering China’s influence in countries like Chile, which, together with Argentina and Peru, forms the lithium-copper Triangle – a region whose rising strategic importance has introduced heightened political and regulatory risks for foreign investors.

In that context, José Antonio Kast’s ascent to the presidency and his upcoming inauguration on 11 March 2026 mark a decisive rightward step from the outgoing Boric administration, and place Chile within the wider regional trend of right-leaning electoral outcomes.

A controversial figure in Chilean politics who speaks nostalgically about the rule of Chilean dictator Augusto Pinochet, Kast campaigned on law and order, economic renewal, and a crackdown on immigration.

Kast has also campaigned on reforms to Chile’s mining sector, including expanded private sector participation, regulatory streamlining, and lower corporate taxes. Given the industry’s central role in global critical mineral supply chains, how his administration implements these changes will be closely monitored.

Policy shifts and investment upside

Kast plans to accelerate Chile’s permitting reforms and shorten mining project timelines to a three-year-development window by reducing environmental reviews and limiting community appeals, targeting a three‑year timeline.[1]

The Kast administration is also expected to encourage greater private-sector participation by reducing the role of state-owned mining company Codelco and allowing it to enter joint ventures with private companies to stabilize its finances.

Additionally, Kast intends to lower the corporate tax rate from 27% to 23% for medium and large companies and halt proposed royalty increases, though these changes will require congressional approval.

According to Chile’s state-run copper agency, the country’s mining sector is projected to attract roughly USD 105 billion in investment between 2025 and 2034, the strongest ten-year outlook since the 2016–2025 period. With the mining sector receiving 26.8% of Chile’s foreign direct investment (“FDI”), the country remains the leading destination for mining-related foreign investment in Latin America.[2]

Risk factors beneath reform agenda

But while there is significant upside to foreign investment in Chilean mining, risks remain and could even be heightened under a Kast government. The most significant near-term risks, and strategies to mitigate them, are outlined below.

• Conflict with local and indigenous communities: Kast’s hardline approach to community relations—threatening state control over land and labelling resistance as “terrorism”—comes as water scarcity in the arid north pits local needs against mining projects, increasing the likelihood of significant blowback from indigenous communities.
  • Conduct good faith negotiations and ensure that all stakeholders, including local communities have avenues to address resource concerns.
  • Engage professional due diligence services to interview community representatives and local experts to understand potential conflict points.
  • Review public records for documented community disputes before committing capital.

• Strategic influence and partner reliability risk: Chinese state-linked mining firms may be subject to centralized strategic guidance that creates the risk of abrupt shifts in capital allocation, project timelines, and offtake priorities.
  • Map governance structures and voting rights to assess potential channels of strategic influence over project decisions.
  • Evaluate counterparties’ historical joint venture performance, including instances of sudden withdrawal or politically motivated decision-making.

• Regulatory and permitting exposure: Even with streamlined permitting, projects remain exposed to risks if permits were obtained improperly or are subject to political influence, making rigorous verification of permit legitimacy and asset ownership chains essential.
  • Verify the legitimacy and provenance of all permits issued by the Chilean government.
  • Conduct a full audit of asset ownership histories and associated regulatory filings.

• High and rising operational costs: With declining copper ore grades reducing productivity and increasing extraction costs, and with inadequate power and water infrastructure requiring new mines to construct their own desalination and renewable energy systems, only large, capital-intensive megaprojects remain economically viable.
  • Conduct thorough due diligence on the operational viability of brownfield sites.
  • Assess infrastructure requirements early in the investment process to determine whether project economics remain sound.

• Exposure to Codelco and junior miners: Kast’s plan to use private joint ventures to help Codelco manage its debt heightens exposure to corruption, bribery, and fraud risks, while partnerships with junior private firms (smaller exploration-stage mining companies) may also introduce significant reputational and political exposure concerns.
  • Conduct enhanced due diligence on interactions with Codelco to avoid integrity or compliance risks.
  • Perform background investigations on junior partners and their ultimate beneficial owners to identify corruption, fraud, or political exposure issues

But perhaps the most profound and unpredictable source of risk for mining companies, investors, and the industries that rely on Chilean critical minerals stems from the shifting geopolitical environment and the uncertainty surrounding Chile’s political priorities during and after Kast’s term. Considering the long investment horizons of mining projects, Chile’s position at the intersection of intensifying U.S.-China competition creates significant strategic uncertainty for the sector.

On 22 December 2025, President Xi congratulated Kast on his election victory while also celebrating the longstanding bilateral relationship between China and Chile, which began in 1970 when Chile became the first South American country to establish diplomatic ties with the PRC. The message arrived as the U.S. moves to expand its authority in Latin America and curb China’s influence, drawing Chile and its critical natural resources deeper into great power competition.

Chile’s geopolitical dilemma

Since the late 1990s, Chile has offered China secure access to its copper and, more recently, lithium deposits, which have been critical to China’s industrial and energy ambitions. In exchange, Chinese firms have offered long-term purchase agreements, infrastructure investments, and equity participation in Chilean mining companies. Today, roughly 40% of Chile’s total exports flow to China. Ports in northern Chile channel copper concentrates and lithium carbonate to China, where the downstream value creation occurs.

While the partnership has brought significant investment and predictable export revenue, some Chilean policymakers have argued that the depth of Chinese integration into the mining sector has begun to constrain Chile’s strategic and economic flexibility. What began as a mutually beneficial relationship has morphed into structural dependence. As long-term contracts and equity investments secure Chinese supply chains, Chile’s ability to capture downstream value has remained limited.

The outgoing Boric administration attempted to recalibrate this relationship in 2023, when its National Lithium Strategy proposed increasing state ownership to 50.1% in strategic mining projects. The goal was to capture a greater share of mining value for the Chilean economy, while stopping short of outright nationalization.

Kast campaigned against this proposal, arguing that increased state involvement would deter investment and allow mining competitors such as Argentina and Australia to erode Chile’s market share. However, Kast recognizes the same structural problem: Chile needs to diversify trade relationships and enhance domestic value capture without abruptly destabilizing the deep trade ties it has built with China.

The U.S., however, appears unlikely to allow Chile to evaluate its relationship with China on its own timeline.

The Trump administration has aggressively pursued its ambition to establish U.S. hegemony in the Western Hemisphere, combining direct pressure on countries maintaining close ties to Beijing with significant economic incentives that make alignment with Washington more attractive.

On 4 February 2026, The U.S. hosted the Critical Minerals Ministerial, bringing together 54 countries to announce the creation of the Forum on Resource Geostrategic Engagement (“FORGE”).^[3] The proposed framework commits USD 30 billion to supporting partner countries through investments backed by the US Export-Import Bank and private capital, price floor mechanisms, and preferential access to subsidies under the U.S. Inflation Reduction Act. The underlying objective is to both secure U.S. access to critical minerals and encourage Latin American countries to join its effort to resist Chinese leverage over global trade flows.

The Boric administration did not attend the event, reflecting caution at the end of its term. Kast, however, will need to decide whether Chile will participate in a U.S.-led framework.

Thus, Kast’s recent decision to accept Trump’s invitation to the “Shield of the Americas” summit in Florida is notable, considering that one of the summit’s central objectives is countering Chinese influence in Latin America. Along with reinforcing his personal affinity for Trump, his attendance reflects a recognition that Washington seeks reassurance that Chile is not siding with China by default.

However, this reassurance may not be enough. Last month, the U.S. State Department announced that it would impose visa sanctions on three Chilean officials involved in a proposed undersea fiber-optic telecommunications cable linking Chile to Hong Kong.^[4] The sanctions were imposed after the U.S. accused the project, which would establish the first trans-Pacific data route to bypass North American routing, of “undermining regional security.” How Kast chooses to handle the telecom cable dispute will be an early test of his strategy for balancing relationships with the U.S. and China.

Any public alignment with the U.S.-led framework will draw scrutiny from Beijing and force a reassessment of the reliability of its trade relationship with Chile. Chinese companies have already begun diversifying their lithium supply sources and developing advanced sodium-ion and solid-state battery designs that would significantly reduce reliance on lithium.

The deeper concern for Kast and his administration will be that Chile’s autonomy could face pressure from both great powers. On one hand, Chile’s export structure leaves it heavily dependent on Chinese demand and investment. On the other, the U.S. has established its readiness to deploy coercive economic and diplomatic tools to secure strategic alignment in the Western Hemisphere.

As competition between Beijing and Washington continues to intensify, Chile’s ability to play both sides to foster its development will become increasingly difficult to maintain. These uncertainties surrounding Chile’s mining sector will present complex risks to not only mining companies and their investors, but also the entire ecosystem of industries that rely on Chilean critical minerals.

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[1] https://www.mining.com/chile-cuts-mining-permitting-times-by-up-to-70/

[2] https://unctad.org/system/files/official-document/wir2024_en.pdf

[3] https://www.state.gov/releases/office-of-the-spokesperson/2026/02/2026-critical-minerals-ministerial

[4] https://cl.usembassy.gov/visa-restrictions-on-chilean-nationals-undermining-regional-security/