“I'm very accepting with my age. It's like notches on your belt: experience, wisdom, and a different kind of beauty.” - Zoe Saldaña (Dominican-American Actress)

MARKETS

July 11, End Of Day

• Argentina
  • S&P MERVAL Index = 1,705,676.49 (YTD = 83.46%)
• Brazil
  • BOVESPA Index = 128,293.61 (YTD = -4.39%)
• Chile
  • S&P IPSA Chile = 3,548.09 (YTD = 2.32%)
• Colombia
  • MSCI COLCAP = 1,376.35 (YTD = 15.16%)
• Mexico
  • IPC Mexico BMV = 54,422.59 (YTD = -5.16%)
• Peru
  • S&P/BVL Peru = 30,295.40 (YTD = 16.70%)

BUSINESS

White Gold Rush

In the race to transition towards a greener, more sustainable future, lithium has emerged as a cornerstone element. Often referred to as "white gold," lithium is integral to the batteries that power our smartphones, laptops, electric vehicles (EVs), and renewable energy storage systems. Its unique properties make it a key player in the global shift from fossil fuels to clean energy, underpinning technologies that are essential for reducing greenhouse gas emissions and combating climate change.

Amid this global rush for lithium, LatAm holds about 60% of the world's identified lithium resources, with Bolivia, Argentina, and Chile forming the 'lithium triangle. Bolivia has the largest identified reserves, but Chile leads in commercial production.

1. Policy and Governance:

• Chile is moving towards nationalizing lithium as a strategic mineral, requiring partnerships between private companies and state entities.
• Argentina’s decentralized, province-controlled lithium sector has attracted diverse foreign investments due to favorable regulatory conditions.
• Bolivia's political instability has hindered its ability to attract investment and develop its lithium industry.

2. Economic Potential and Investment Challenges:

• The lithium triangle offers significant economic opportunities. There is a need for substantial foreign investment to transform these reserves into commercially viable production.
• Argentina and Bolivia lag in production due to geographic and investment challenges, whereas Chile has established a more conducive environment for lithium extraction.

3. Environmental and Social Concerns:

• Lithium extraction, particularly from salt flats, is water-intensive and poses risks to local water supplies and fragile ecosystems.
• Indigenous communities are affected by water depletion and contamination, necessitating sustainable mining practices.

4. Sustainability and Technological Development:

• There is a push for more sustainable lithium extraction technologies, such as direct lithium extraction (DLE), to reduce environmental impacts.
• Recycling of lithium batteries is seen as a crucial strategy to meet future demand sustainably.
• Investing in the entire lithium value chain, including refining and battery production, is necessary for LatAm countries to maximize economic gains.

5. Future Outlook:

• The rapid growth in demand for lithium offers a limited window of opportunity for Latin American countries to capitalize on their resources.
• The success of these countries in harnessing their lithium resources will depend on sustainable governance, investment in technology, and balancing economic development with environmental protection.

Fundraising picks of the week

Caligenia: Caligenia’s innovative approach converts organic waste into products that improve agricultural yields, transforms degraded soils into productive fields, sequesters carbon to reduce global warming, and generates renewable energy as a byproduct. Dive deeper into the case here.

Food4You: Food4You utilizes a biotech platform to enhance the texture, flavor, and nutritional profile of products. With significant interest from industry giants like Grupo Harmony and NotCo, Food4You is leading the way in biotech solutions for plant-based foods. Dive deeper into the case here.

Lizit: Their platform is designed to streamline the management of rental assets, offering a comprehensive booking interface for both in-store and online reservations. A notable achievement includes securing a long-term contract with Sodimac Colombia. Dive deeper into their case here.

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Dive deeper into other fundraising firms in LatAm here.

CURRENT AFFAIRS

Peru: Peru will receive a €300 million credit from Germany's KfW Development Bank for a digital transformation program. The 15-year loan will be charged at a 6-month Euribor rate plus a fixed margin. Details of the program were not disclosed. Peru's economy grew between 4.5% and 5% year-on-year in May.

Colombia: Deforestation fell 36% to a 23-year low in 2023, with deforested areas dropping to 792 square kilometers, driven by reduced destruction in the Amazon. President Gustavo Petro's government prioritizes environmental protection and advocates for debt cancellation in exchange for conservation. Despite progress, Environment Minister Susana Muhamad cautioned that challenges remain. Colombia will host the COP16 U.N. biodiversity summit in Cali later this year.

Argentina: President Javier Milei signed a pact with 18 provincial governors to support economic reforms and strengthen his minority government. The agreement aims to address Argentina's severe economic crisis, with measures including a balanced budget, cuts in public spending, and tax and labor reforms. Despite initial market optimism, the economy has slid into recession, and inflation nears 300%. The pact aims to stabilize the situation and gain broader political support for Milei's agenda.

FURTHER READING

Check our recently published insights here. Recent post:

🌾 AgTech Challenges in Latin America

Latin America's agtech sector is positioned for growth but still faces significant hurdles.

Key Challenges:

1. 📡 Infrastructure and Connectivity: Poor internet access and unreliable power in rural areas hinder the effective use of agtech solutions, affecting data collection and operational continuity.
2. 🚧 Regulatory Complexities: Varying regulations across countries complicate the implementation of agtech, requiring careful navigation to avoid compliance issues.
3. 💼 Access to Capital: Despite available funding from various sources, financial barriers remain due to perceived risks and information gaps in emerging markets.

🔍 Read more here.