The world of transportation is making a steady shift towards electric vehicles (EVs). In the next few years, the demand for EVs and batteries (not just for cars, but also for phones and electricity grids) will mean that massive amounts of lithium and copper will be needed—demand is expected to double by 2025. This could drive an investment boom in Latin America (LatAm), which has long been a favorite for foreign investments.

The region is a sizeable producer of numerous metals and minerals, from iron ore in Brazil, to gold in Peru and Argentina and silver in Mexico. Chile has the biggest global reserves of copper, and Chile, Argentina and Bolivia hold more than 50% of the world’s lithium, which is why they are known as the “Lithium Triangle”. Most importantly, LatAm offers unprecedented scaling potential.

Driving the global economy

Thanks to abundant resources, relatively stable and increasingly business-oriented governments, favorable regulations for overseas investors and many opportunities for international collaboration, many LatAm countries—particularly Chile, Peru, Mexico, Brazil, Colombia and Argentina—have become major drivers of the global economy. And many of these countries are rated investment-grade by reputable credit rating agencies.

In fact, according to S&P Global Market Intelligence, Latin America has been the leading destination for mining exploration since 1994. The region received nearly 30% of total global mining investment in 2016—more than 90% of which went to Chile, Peru, Brazil, Mexico, Argentina and Colombia.

FDI hits a roadblock

But things haven’t been so rosy until recently. Over the past few years, exploration decreased across the whole region on the back of low commodity and mineral prices, difficult access to financing and sluggish markets. The United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) even warned that LatAm FDI inflows have been dropping and would decline by nearly 5% in 2017—one of the biggest losers was the natural resource sector, which saw an 18% drop in FDI revenue between 2010 and 2015, thanks to low resource prices.

The one exception to this trend has been lithium exploration, which has massively increased in the Lithium Triangle over 2016 and 2017 and looks all set to rise higher in 2018 and beyond. Particularly if the demand for EVs and batteries grows, lithium production will boom, which will in turn drive investments into plant construction and operation.

Which countries to watch?

Chile is increasingly being talked about as a very strong investment destination, particularly thanks to its massive resources in copper and lithium, which will be crucial. It has already attracted a lot of investments in its mining sector and many companies have started buying huge tracts of land in Chile—as well as in Argentina, Chile’s biggest competitor for lithium.

Meanwhile, Peru’s Energy and Mines Ministry predicts that the country’s mining pipeline stands at nearly $50 billion in the first half of this year. The country has also been actively working to improve its business environment to invite exploration of its massive, as yet unexplored, reserves.

Brazil (driven mainly by iron ore) and Argentina (lithium, as well as copper) remain strong attractors of investments, but the surprise contender in the mining sector will be Ecuador, which has been known more for its oil. It is believed that less than 10% of its territory has been explored. A recent BMI Research report predicts mining in Ecuador will grow from about $1 billion in 2017 to hit nearly $8 billion by 2021, making this country one of Latin America’s mining hotspots.

In light of all this, it’s clear that LatAm—despite certain issues in some countries—will present a very good investment environment in the coming years.