A quarter-century after initial discussions about a free trade agreement between the European Union and the Mercosur nations (Argentina, Brazil, Paraguay, and Uruguay), the initiative reached its final stage today, Friday, in Montevideo. In the Uruguayan capital, EU Commission President Ursula von der Leyen held final talks with her counterparts Lula, Milei, Peña, and Lacalle Pou.
The agreement reached today still requires approval from the EU Council, the European Parliament, and the national parliaments of the 26 member states. Opposition to the deal exists in France, where farmers fear competition from cheaper agricultural products from South America. Italy had also previously announced its intention to reject the agreement.
Supporters of the deal, however, hope for significantly improved access to critical raw materials. Argentina boasts large reserves of lithium, a key battery metal, while Brazil is home to promising deposits of rare earth elements.
Bolivia, which joined the Mercosur bloc in 2024, also seeks to develop its mining of this group of raw materials. However, it will not initially be part of the agreement with the EU. Bolivia holds the world’s largest lithium reserves, which have also attracted China’s interest. Recently, a contract was signed with a Chinese company to build processing facilities. In Brazil, meanwhile, companies from the People’s Republic are expanding their investments in mining, securing access to critical resources. This includes rare earth mining, as highlighted by the late-November acquisition of Mineração Taboca by the China Nonferrous Metal Mining Group. For Europe, therefore, the free trade agreement is not an automatic path to swiftly diversify its raw material supply chains away from China.
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