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Entrepreneurship in Peru and Ecuador: ecosystems that have yet to turn startups into unicorns

Latin America

Latin America has become the cradle of several startups that in the last year – many of them driven by the pandemic – have managed to take that long-awaited leap and become unicorns. This is the case of Ualá, Aleph, Mural or Tienda Nube, from Argentina; Kavak and Clip, from Mexico or Notco, from Chile, which reached a valuation of over US $ 1 billion. And the list of more startups that would be the next unicorns is long. This is demonstrated by an investigation by the venture capital firm ALLVP, which accounts for the club of soonicorn, or Latin American startups with the greatest potential to become unicorns. The report considers companies founded after 2012 with a valuation greater than US $ 100 million or that in their last round of investment have raised more than US $ 20 million of capital. Countries like Brazil, Mexico, Colombia or Chile stand out for having a list of several candidates. However, the story in Ecuador and Peru is different. In the first country they only have one startup aimed at the world of unicorns (the fintech Kushki), while Peru has two options: the edtech Crehana and the Favo food marketplace. And although Argentina follows these Andean countries with four startups, the land of tango is already home to several unicorns, such as the emblematic Mercado Libre and OLX. 

In the case of Ecuador and Peru, Both have ecosystems with similar characteristics that have delayed the generation of unicorn pasta startups. “Ecuador’s entrepreneurial ecosystem is in an initial stage and we are missing some factors to have unicorns or sonicorn companies, in this case. On the one hand, we don’t have as many entrepreneur support organizations such as incubators, climbers, mentoring programs and support programs for the development of knowledge and skills of entrepreneurs, which are so important for their startups to be successful ”, says Justin Schwartz, managing partner of the investment fund Impaqto Capital. On the other hand, the executive says that the venture capital industry is very small. “We only have five venture capital funds of different types, they are all small. Some invest in Ecuador and others in the region. There is definitely an access to capital gap for early-stage startups. Another point is that Ecuador is a small market, a startup cannot be successful or reach the level of a unicorn only with a focus on this country ”, he says. For Mauricio Andújar, CEO and co-founder of the digital transformation agency Liquid, the Peruvian entrepreneurship and innovation ecosystem is immature and still lacks time to reach the level of others, such as the Chilean or Colombian. “In the Chilean ecosystem, Startup Chile and the Production Development Corporation (Corfo) are two government vehicles that have made this dynamic. In Peru, in the last two years – with a pandemic and a political and economic crisis in between – government support has slowed. Programs like ProInnóvate have frozen aid and there are no new generations of nascent ventures and that is worrying. 

There are not so many new ventures coming out and my hypothesis is that it happens because there are not so many incentives for that to happen ”, he says. Additionally, Karen Montjoy, Entrepreneurship and Innovation coordinator of the Innova ESAN incubator, says that tax benefits are also necessary for more investors to invest in the ecosystem, make alliances with incubators and international events that promote entrepreneurship.

 

SOURCE: America Economy

The Air Freight Boom: Latin America’s Missed Opportunity?

Latin America

The solution is in the air. This thesis belongs to the shipping giant AP Moller-Maersk. Yes, the world’s largest cargo ship company is looking in the air for a way out of bottlenecks in the face of the container shortage that has kept seaports congested since the beginning of the year. The idea seems paradoxical, but it has worked. Between the months of April and May, when protests broke out in Colombia that caused blockades and the closure of ports such as Buenaventura, the distribution platform for youth lifestyle brands, Accur8 Distribution, was unable to move its cargo for the Vans brand from Asia, where it was dammed. 

Their inventories in the South American country began to run low and the time to fulfill their commitments was running out. Faced with this challenge, the shipping company responded by using an alternative mode of transport in which it combines maritime with air and Accur8 was able to deliver its merchandise on time. “What we are doing is providing a solution to customers,” explains Juan José Ballesteros, Maersk’s product management director for the West Coast of South America. Maersk’s case is not the only one. The high demand for consumer goods and manufacturers eager for parts has large markets such as North America, Asia and Europe taking over the cargo flights that come to the rescue –literally– of the merchandise that has been stagnant in ports due to the crisis of port logistics. So much so that according to the International Air Transport Association (IATA), cargo planes flew more crowded this summer than at any time since it began keeping records in 1990. But the overall scenario is more complex because not all cargo can be transported by plane and because there are cargo whose costs they are relatively low and do not support the high prices of air freight, which, like ocean freight, is through the roof due to high demand. Within this complicated scenario, Latin America has lagged behind, and not so much because its needs are different, but because its capabilities are limited and have not allowed it to respond to the feverish demand generated by the e-commerce boom and congestion in the port terminals, according to experts. 

“Latin America is not being able to capture all the capacity. It is not following the growth of demand as Europe and North America are doing, ”says Ballesteros. According to the IATA August report, air cargo transport (measured in ton-kilometers) continued to grow strongly globally with 7.7% in the eighth month of 2021, compared to the same period in 2019, while Latin America maintains this factor in the red with -13.2% (a decrease compared to the previous month in which the drop was 9.8% and an improvement compared to June, when it registered -19.9%), with a reduced capacity in -27.1%. “Today the freight industry is more or less double what it was in 2019, but the amount of tons transported has not increased significantly. That shows you that there is a very large imbalance between the demand that has grown a lot and the supply that has been blocked in its capacity ”, says Andrés Bianchi, CEO of LATAM Cargo. A turbulent outlook even for multinationals like DHL, the largest global parcel company. “Adapting to this new scenario has been a challenge that we continue to face,” acknowledges Alberto Oltra, CEO of DHL Global Forwarding in South America. According to the company executive, the fact that the supply of space is below the level of 2019 while global demand has already recovered and exceeded what was achieved in that same year, has changed the dynamics of the market. “The competition has been tough as spaces are very tight,” he says. In the region, This imbalance is mainly due to the fact that most air cargo is transported in double-aisle passenger planes, and when restrictions were imposed due to the pandemic, airlines left their planes on the ground, affecting the available space. “At first it was not felt so much because the big economies were stopped, but when consumption explodes at a global level and spaces are needed, the slow recovery of passenger flights generated a cut in capacity and therefore an increase in prices”, he explains Nicolás Portenza, CEO of Eternity Group México, a Chinese cargo transportation company. 

With the airline industry recovering very slowly and consumption accelerating due to e-commerce, the region has been overwhelmed. Electronic commerce “is being an important piece in the demand and in the lack of capacity,” says Portenza. And Carlos Ozores, vice president of the consulting firm ICF and director of Aviation for the Americas, endorses it. “The growth of e-commerce is tending to be much more dependent on air due to the promise that the seller has to deliver you in a short time,” he says. So much so, that during the pandemic e-commerce has reflected for the Colombian airline Avianca a growth of 12 times that transported in 2019. “It has been for us one of the products with the greatest increase in exports to Latin America and intra-Latin America” , acknowledges Gabriel Oliva, CEO of Avianca Cargo. A factor that can make the difficult Latin American scenario even more complex considering that the World Trade Organization (WTO) foresees that consumption will accelerate towards the end of the year and world trade will grow 9.5% in 2021. Given this, Alejandro Méndez, Vice President of Aeroméxico Cargo, issues a warning: “The capacity that we as airlines can provide to the monsters of e-commerce is very limited on some routes.” The lag of Latin America vs. the world These are challenging times for international logistics due to soaring costs and slowing down operations. Maersk’s product management director explains that the problem itself encompasses all actors in the chain. “There are fewer airline options, there are congestion in the hubs because the airports are operating with fewer personnel and, therefore, there are fewer flights and the cargo does not connect on time. There is a shortage of personnel, there is a shortage of carriers and that requires planning to be even more critical ”, describes Portenza. And in Latin America, where the restrictions to contain the COVID-19 pandemic have been more durable than in other regions, this reality has had a greater impact. “There has been a reduction in the number of people available for transport and warehouse logistics work and that is why capacity has been lost. The cargo cannot be prepared on time ”, acknowledges the head of LATAM Cargo.

For Eliseo Llamazares, leading partner in Aviation and Tourism for KPMG in Latin America, the equation that explains why Latin America has not grown so much in demand is simple: The restrictive measures have slowed down the recovery of the economy and the cargo business is fueled by economic growth. Furthermore, the fact that the restrictions have been so different within the countries of the region produced an imbalance between supply and demand. But it’s not the only thing that makes the stage difficult. According to Llamazares, the performance of air freight in Latin America has always been worse than in the rest of the world because for years airlines greatly reduced the volume of cargo planes. “Many of the big companies that had pure freighters, they switched to the transport of merchandise in the warehouse of commercial aircraft, which is much more efficient since the cost can be shared between passengers and cargo,” he says. Consequently, In Latin America, this capacity was substantially reduced, so much so that when demand skyrocketed in the midst of the pandemic, airlines had no choice but to convert some of their aircraft. With limited capacity, the logistical challenge for Latin America seemed large, if it were not for the fact that it is a region with a small air import, which moves mainly perishable products. 

“The cargo dynamics in South America is different from other regions due to the mix of commodities that move. Furthermore, while regions such as Asia and the United States transport finished products by air, what we export the most (by air freight) are perishable products, ”says Bianchi. Only Brazil and Mexico move large volumes by air, and neither country completely stopped its air operations during the pandemic. In fact, the performance of Mexico stands out as the only one with a performance similar to that of the large markets. According to the IATA report, the country experiences the same growth trend in cargo transport as other regions, with a 12% increase in the first half of this year. The association, in fact, estimates that at least 30% of the total income of Mexican airlines will come from freight transport, something that has not been seen for a decade. Nicolás Portenza, who directs the Mexico – Asia logistics corridor for Eternity Group, reports on this growth and how airplanes are transporting merchandise that would normally go by sea. “We have seen very high demand for a product from our importers in Mexico to meet the market, and despite the high cost of the air, it was decided to fly,” he says. Although, due to confidentiality, he did not reveal details of the clients who have chosen this route, he did comment that many industries are having record sales of household appliances, white goods, and that retail has had a significant consumer boom. “When companies need some components to manufacture, meet quotas, they have changed their operations to air,” he reiterates. In the case of Aeroméxico, the increase has been very marked by the transfer of auto parts. In fact, Méndez affirms that many of the “express requirements” that they have had to attend to in recent months correspond to this sector and with greater dynamics on routes that cover the Asian continent. “We are reaching destinations that we never thought we were touching,” acknowledges the VP of Aeroméxico Cargo. Some of the routes that they cover and that are not part of their passenger offer are the Chinese cities Shenzhen, Hong Kong and Wuhan, as well as the Russian capital, Moscow. This transfer of cargo from one modality to another has also been seen in DHL and, according to Oltra, it is a phenomenon that clearly responds to an urgency to replenish stock. “This represents a break for the sector since in 98% of the cases the companies try to minimize the logistical cost giving priority to the maritime transport”, says the CEO for South America of the German company. A sample of how the dynamics in general have changed. “Today the market is more spot and shipment by shipment […] and the possibility of hiring charters for its own operation has become a solution,” he adds. The Maesrk experience is no different. “We are ensuring air capacity with charter flights for flows from Asia to Central and South America,” says Juan José Ballesteros. According to the executive of the shipping giant, in his case it is a proactive rather than reactive strategy. 

“We do this transfer in a coordinated way with the client and for that we ask for great planning,” he assures. The “mutation” of airlines to respond to demand Airlines in Latin America have done their best to adapt and respond to high demand. Many of them responded by transforming some of their passenger planes into cargo planes. Even so, capacity remained limited because, first, that adaptation cannot be done with all models, and second, the modifications fail to decompress much of the load. “If a commercial airline takes a Boeing 787 airplane and makes modifications to it to turn it into a cargo plane, it would be able to fly between 30 and 40 tons. That is half of what a Jumbo 747 can carry ”, says the CEO of Eternity México. Now, from a business point of view, it has been a great opportunity for airlines because it has allowed them to alleviate the impact that the pandemic had on the airline industry. And the ones that have known how to take advantage of it best –according to the consultant Carlos Ozores– are those that carry the cargo business in their DNA, such as LATAM and Avianca. The numbers of the Colombian holding show the good results. During the pandemic period, Avianca Cargo increased the use of freighters by 19% and cargo flights by 13%, compared to 2019, with an increase in frequencies in the markets of the Southern Cone. These are the highest levels of cargo fleet utilization for the airline, according to the company’s chief. “We quickly adapt to new market conditions, modifying our network according to demand, increasing frequencies to Europe up to seven flights per week and launching a new multimodal maritime and air service to improve our connectivity”, explains Oliva. Between January and August of this year, Avianca saw its capacity decrease by 30% compared to 2019, mainly due to the reduction in passenger flights, but the load factor increased 8 points to 68.4% and revenue per ton-kilometers available (ATK) increased 70%. “The high demand has been constant in all markets, however, the most representative have been concentrated in flower routes, specifically from Colombia and Ecuador to the United States, with a growth of 21%”, adds the head of the cargo unit of Avianca. In the case of LATAM Cargo, at least half of its cargo capacity came from passenger planes, so the restrictions caused it to lose a good part of it. Given this scenario, Andrés Bianchi details, they focused on three points in order to meet the demand: increase the utilization of the cargo fleet, maintain as many passenger flights as possible, and fly cargo-only passenger aircraft. These measures have allowed it to keep the business afloat, which in August of this year registered an occupancy of 61.9%, which represents an increase of 7.4 percentage points in relation to 2019.

“We have seen in our cargo planes that It is typical of the maritime sector and that it moves by air only in urgency, such as certain parts of cars, tires… we have even carried a brick charter ”, says Bianchi to exemplify how the business is moving. Amid this boom, LATAM Group announced a plan under which it expects to gradually add 10 Boeing 767-300s over the next three years, to total a fleet of 21 cargo aircraft by the end of 2023. “The cargo business has weathered the crisis very well, so much so that LATAM will double its fleet within two years. This is because they recognize the opportunity that exists in this business and that a slower recovery of long-range international flights is coming ”, comments the ICF vice president. Although Bianchi affirms that the plan was devised before the pandemic, he acknowledges that the fact that the business is going through a very auspicious moment, “makes it important to execute it well and quickly.” Unlike Avianca and LATAM, Aeroméxico does not have the cargo business in its DNA, so its effort was focused more on adapting this model. “We are a cargo division of a passenger airline, therefore our planes fly depending on the demand for passengers. But at the beginning of the pandemic, it was not flying and there was a need to transport cargo. That led us to start with a model that previously did not exist in the [Aeroméxico] group, ”highlights Alejandro Méndez. Thus, in March 2020 Aeroméxico carried out the first cargo charter flight in its history. At the time of the interview for this report, Méndez reported flight number 398 and assured that it would reach 400 charters before the end of the week. “We do not adapt airplanes, what we did was load the cargo in the passenger cabin and fly,” says the executive. The historical gap in maritime and air prices is reduced Historically, maritime transport has been more competitive than air. And it continues to be the case, the gap between the two modes has not been reversed, but it has narrowed. The increase in maritime freight prices has been so exponential since the beginning of the pandemic – in the order of 800%, according to Portenza of the Eternity Group – that it has cut the difference with air, which has seen its prices increase between 100% and 120% depending on the route. “Now the difference, which was 12: 1, has gone to 6: 1,” says Gabriel Oliva. 

Hence, IATA claims that air freight is becoming more competitive. The increase in rates is a simple effect of the law of supply and demand. But more is also being paid to move planes with just half their capacity, explains the CEO of LATAM Cargo. “As a result of the pandemic, commercial flights are canceled and there is not enough cargo fleet to respond, therefore, the only option has been to fly passenger planes without passengers… but since I can’t carry cargo on the seats, you end up flying only with the hold. So you are paying the cost of moving the entire plane, using only half the capacity ”. In the case of LATAM, until August 2021 the cargo rate had risen almost 60% compared to 2019. Very similar to the 50% on average that they have seen reflected in Aeromexico. According to Juan José Ballesteros, at the peak of the pandemic the air freight rate went from US $ 4 to US $ 20 per kilo, and is currently between US $ 7 and US $ 12. It is not very different from what it reports. Nicolás Portenza, from Eternity. “At the air level, the rates for the Asia-Mexico route in the pre-Covid season ranged from US $ 4 in low season and from US $ 6 to US $ 7.5 per kilo in high season. Right now we are flying cargo with rates between US $ 12 and US $ 14 per kilo, ”he says. And can the market pay the high costs? Yes, because the operation covers it. “It is still a business for importers to fly and comply, because eventually the final consumer pays for it. There is an inflationary impact on the destination markets because they are costs with a significant increase compared to what happened years ago ”, explains Portenza. Alberto Oltra, from DHL, acknowledges that this impact on the final cost of the product is inevitable when prices have doubled, but also warns that if rates continue so high, nearshoring may occur (that a company decides to transfer its business processes to a geographically close foreign country). “This situation would have an effect on local economies, where the production of goods intensifies, as is already happening with some auto assembly plants in Mexico, which have returned to produce there, ”he highlights. For better or for worse this condition will not clear up anytime soon. Analyst Carlos Ozores indicates that airlines in the region will place emphasis during their recovery on single-aisle aircraft, which are smaller and have less cargo capacity. “(Therefore) there will continue to be a gap in space available for cargo planes,” he says. The truth is that this rise in airfares has represented a great relief for airlines. In the last year and a half, the cargo business went from being between 5% and 10% of total revenue to a much more relevant part (between 30% and 40%), making it a valuable source of cash and a way to offset part of the losses in the airline industry, which IATA estimates will exceed US $ 48 billion this year. “The cargo business has worked as a countercyclical compensation for what has happened with passenger flights,” acknowledges Bianchi. Before the pandemic, cargo represented approximately 10% of LATAM Group’s revenues, and in the last semester they accounted for 40%. 

In the case of Avianca Cargo, so far in 2021 it has had an increase in its freight income of 19%, and these represent 32% of the total income of the holding company. For Aeroméxico, the reality is not very different, although its levels are below those of LATAM and Avianca. “In 2019, cargo represented 6% of the Group’s total income. In 2020 it was 16% and today it is in the order of 13% ”, explains Méndez. That is why the IATA forecasts on this factor are quite optimistic. According to the agency, revenues from the global aviation sector from the transport of goods have doubled to 30% of pre-pandemic levels and are estimated to rise to a record $ 175 billion in 2021. A resilient and necessary business for the region One of the realities that have emerged in the midst of the crisis in the airline industry and the boom in demand for cargo flights, is that Latin America is in debt in this business, so it is imperative to increase its limited capacity in these times of high consumption driven by e-commerce, a phenomenon that will not stop until at least 2024, according to data from the Statista Digital Market Outlook. In fact, for Eliseo Llamazares the great hopes for the region are precisely in e-commerce and he hopes that it will become a significant source of freight transport. “Just as Amazon is an important player in the United States, in Latin America we have Mercado Libre taking its first steps in the air cargo market and it can become a significant player,” says the KPMG analyst. In any case, the important thing now is that the industry not only begins to create strategies to sustain itself in this situation, but also projects how to benefit its distribution chain in an increasingly demanding world, considers Oltra. DHL’s leader for South America believes that the implementation of technology and continuous improvements such as those they have been implementing to track shipments at each stage and online quotes is essential for this. In other words, companies must adapt and prepare for the times to come. Above all, considering that it is a business “resistant to shock like that of the pandemic”, assesses the ICF consultant. For this reason, in recent months the demand for aircraft conversion has increased, which shows the interest of airlines in this market. “What LATAM is doing only indicates that it is preparing for a ‘V’ growth of the economy,” says Llamazares, who insists that airlines should take advantage of economic growth and develop the cargo business. And in Aeroméxico they are considering it. Although Alejandro Méndez could not reveal details of what they plan to do as an airline group, he acknowledges that the new scenario has led them to rethink the need to maintain this model. “We are evaluating it very seriously. The niche is there, it is not an occasional demand, it will continue there. 

This is a requirement that has to be met and we have to be there ”, says the vice president of Aeroméxico Cargo. What he did advance was that they are betting heavily on the transport of pharmaceutical products, a niche in which they want to be leaders; and for this they are making the necessary operational and infrastructure adjustments. But it is not a job only for the airlines. The other reality is that the region lacks an adequate airport and logistics infrastructure that allows it to generate greater cargo capacity. In this regard, Méndez states that the Mexico City International Airport -the main one in the country- is a clear example of these challenges. “The space issue is a serious matter, we have structural limitations that become bottlenecks and prevent us from taking advantage of opportunities,” he says. And he is not the only one with this critical view. For Andrés Bianchi, it is necessary “to have better airports, greater warehouse capacity and authorities more open to listening to proposals for improving productivity that would make the business work better.” For now, this dynamic of high demand will continue for at least one more year, according to experts’ estimates, but the region will remain limited with a slow growth rate. “In Latin America we will continue to see a lower expansion than other markets,” says Llamazares. The cargo business in Latin America will grow, but still not enough to close the gap with other regions. Globally, IATA estimates that air cargo demand will close this year at 7.9% above 2019 levels and that in 2022 it will grow by 13.2%. And if last summer was a record period for the transport of air cargo, the Christmas season is coming as the biggest challenge. The International Air Cargo Association (TIACA) has warned: “We face unprecedented challenges in meeting the demand for air cargo services forecast for the fourth quarter of the year.” Given this, urged governments to streamline ad hoc freight permits and initiate planning. “Resources and capacity will be a problem, also handling, the space of the facilities, delivery and drivers,” warns Steven Polmans, president of the organization, through a statement released last September. At Maersk they are aware of this challenge and have been preparing for it. “We believe that this campaign (the last quarter) may come 30% stronger than last year,” says Ballesteros. In general, he adds, it is a very demanding period on the west coast of South America because fruit shipments coincide with the Christmas season. “In Chile, the cherries campaign is going to be critical towards the end of the year. This is demanding not only maritime capacity, but also air capacity ”, he comments. To face this challenge, the airlines will not be able to count on the recovery of air traffic that will allow them to absorb this peak in demand, so we are on the verge of a strong rise in demand on a capacity that is already quite overextended. 

SOURCE: America Economy

The outpost of the lithium Triangle: Argentina, Bolivia and Chile monopolize global investments

Latin America

Jujuy, Salta and Catamarca. Three provinces located in the northwest of Argentina that have become an important enclave for the extraction and production of lithium. Such is the wealth of this metal in this area, that at the beginning of October the governors of these provinces signed an interprovincial treaty for the creation of the Lithium Mining Region. “In this way we advance so that the three provinces offer the same opportunities for those who want to invest, with clear rules, legal certainty and predictability,” said the governor of Salta, Gustavo Sáenz, after announcing the creation of this region. The Salta authority knows that with electromobility stepping on the accelerator in the world, time is money (in this case white). Thus, in recent months this province has managed to attract large investments, as is the case of the world’s most important lithium company, the Chinese Ganfeng Lithium, which announced an investment of US $ 580 million to carry out the Mariana project in the Salar del Llullaillaco, southwest of the Los Andes department, in Salta. In the neighboring province of Catamarca, another Chinese giant, this time Zijin Mining, one of the largest gold and copper producers in the Asian country, recently announced an agreement to acquire all of Canada’s Neo Lithium, focused on the exploitation of its mine. of lithium from Tres Quebradas. The amount of the transaction: US $ 740 million To date, Argentina has a portfolio of 20 lithium projects and their progress is diverse. In addition, Investors come not only from the mining sector, but also from the automotive and technology industries. This is the case of Toyota, which confirmed an investment of US $ 400 million to increase the production of lithium carbonate for the manufacture of batteries through the company Sales de Jujuy – where Toyota Tsusho owns 25% in association with the mining company Orocobre ( 66.5%) and the Jujuy state company Jemse (8.5%) -. BMW, for its part, signed a contract in March 2021 with the US mining company Livent for US $ 334 million for the purchase of lithium from the project that the company has in the Salar del Hombre Muerto located in Catamarca. With this agreement, Argentina would become the German automaker’s second lithium supplier from 2022, behind Australia. Thus, Argentina, which is part of the famous Lithium Triangle, A region that concentrates more than 50% of this resource in the world, also made up of Chile and Bolivia, is emerging as one of the few countries that is able to respond to the growing demand for this input for the production of ion batteries. Rechargeable lithium, a key part for the operation of electric vehicles. Chile and Bolivia also meet this profile, although in the Altiplano country, despite having the largest amount of reserves in the world (21 million tons), it still cannot extract it. 

THE DREAM OF ELECTROMOBILITY COME TRUE Before the pandemic, electromobility sounded like a dream far from being realized. Changing a gasoline car for one that needs electricity to function in a world that still does not have the recharging infrastructure to guarantee its operation and when its price that can be up to 100% more expensive than a conventional car, were not the best incentives to opt for an electric car. Today the panorama is different. The pandemic quarantine gave a break to the world automobile fleet and the reduction in the use of fossil fuels brought a considerable improvement in air quality, causing many countries to take seriously their electromobility plans that would be reflected in a greater demand for electric cars together with other efforts to slow the advance of climate change. According to a report prepared by the Ultima Media consultancy for the Swiss group ABB, the global battery manufacturing capacity expected by 2030 will not be sufficient to meet the demand from the automotive industry. This is due to the fact that electric cars will exceed those of combustion in sales in 2036, the year in which 80 battery factories will be in operation around the world. “There is concrete data and evidence that allows us to visualize that there is a strong accelerated trend of electromobility cannibalism on internal combustion in the transportation industry. Therefore, being this one of the largest industries in the world, this technological mutation will imply unthinkable changes in our lives and civilization. For all this, I consider the enthusiasm on the subject justified and even timid, ”says Jaime Alée, president of ESK Consulting. For Chris Berry, founder and president of the consultancy House Mountain Partners, although interest in electric mobility is at an all-time high and sales of electric vehicles continue to increase, this high demand for this type of car has had an effect on production systems of the automotive industry. “Recent data with clogged supply chains and a lack of semiconductor chips for all cars shows that this is starting to affect automotive sales in general and may also affect EV sales in the future until supply chains can begin to operate efficiently again. This could take more than a year to resolve, ”he says. And although in Latin America the lithium supply chain has not yet reached the stage of production of batteries and much less of vehicles, all the experts consulted for this report agree that this great optimism about the high demand for electric vehicles has good fundamentals and now is the time for the countries of the Lithium Triangle to take advantage of this boom and become strategic suppliers especially for the future automotive industry. Thus, the security of lithium supply has become a priority for technology companies in the United States and Asia. Thus, In recent months, strategic alliances and joint ventures have been established between technology companies and exploration companies (such as those mentioned above in Argentina) to guarantee a reliable and diversified supply of lithium for battery suppliers and vehicle manufacturers. For Patricia Vásquez, Global Fellow at The Wilson Center, at this juncture there is no time to lose. 

“The optimism for the Lithium Triangle and other countries like Peru, Mexico and Brazil is well founded, especially for countries like Argentina and Chile that are very advanced. Countries like the United States and Europe have made important commitments to electromobility and in the next 10 or 15 years Latin America is very well positioned to respond to part of that demand. Although it is true that lithium is abundant and many countries are looking for it even at the bottom of the sea, the technology must be developed to extract it, make the investments and that takes a long time. That’s why the opportunity for the Lithium Triangle is now, before the competition starts, ”he says. For now, according to data from the United States Geological Survey (USGS, its acronym in English), identified lithium resources have increased substantially worldwide and total around 86 million tons. Only the Lithium Triangle concentrates 47 million tons, with Bolivia being the country with the largest quantity: 21 million tons. “The Lithium Triangle will always be attractive from a cost perspective with some of the largest and lowest cost lithium resources on the planet. The recent lithium deals in Argentina with the Chinese company CATL buying Millennial Lithium and Zijin Mining buying NeoLithium are two examples of the attractiveness of Argentine lithium assets. In addition, Sigma Lithium is building the first phase of its hard rock lithium mine in Brazil with first production planned for the end of 2022. They have current purchase agreements with Mitsui and LG Energy Solution, which are world-class partners. South America will remain an important part of the lithium supply chain for many years to come, ”says Chris Berry. In addition, countries should take advantage of good lithium prices to attract more investment. Especially when the price of lithium carbonate is at its best. Benchmark Mineral Intelligence, The global battery supply chain investigation and price information agency reported that last September lithium carbonate increased in China (the main consumer of lithium) 170% so far this year, to 142,000 yuan a ton (US $ 22,000), its highest level since April 2018. Meanwhile, in other markets, the price of lithium rose from US $ 17,500 per ton at the beginning of September and reached US $ 19,000 in the first half of that month.

A year ago, when the COVID-19 pandemic halted lithium extraction and crippled mining activity in general, the metal’s value fell below $ 7,600 per tonne. “Lithium will stay at that value in the long term or it will go down. Possibly there is some adjustment volatility between supply and demand, but the trend is that there will be no shortage of supply and prices will adjust ”, says Jaime Alée. FROM THE TRIANGLE TO THE SQUARE Although many countries around the world have launched into the search for lithium, some Latin American nations have already made some progress, although still far behind the Lithium Triangle. This is the case of Peru, where the Canadian junior Plateau Energy found in 2017 a lithium deposit in the Andean region of Puno called the Falchani lithium project. This year, another Canadian, American Lithium, completed the acquisition of its compatriot, the parent company of Macusani Yellowcake, a mining company that operates and manages Falchani. “The new owner, American Lithium, is giving a lot of movement to the project. You are going to resume exploration so that once the resources are defined, that is good news. With this, the quality of proven reserves will be verified and quantified. The company also operates in Nevada, United States, whereas the previous owner was a junior mining company ”, says Rómulo Mucho, former president of the Peruvian Institute of Mining Engineers (IIMP). Regarding the amount of resources in Falchani, the Ministry of Energy and Mines (Minem) of Peru estimates that 23,000 metric tons of lithium carbonate can be extracted per year. In addition, the Minem projects Falchani a useful life of 26 years. “There is lithium all over the world, but not from Peru’s concentration of more than 3,000 parts per million. That is a fabulous law and much more than the 500 parts per million that the Bolivian salt flats have. 

In the case of Peruvian lithium, which is in rock and requires another process to extract it, the concentration is up to six times higher. Thus, to the Lithium Triangle, which has considerable reserves, Peru could be added. I see a great future for the project, taking into account that it is an obligation to go towards renewable energies ”, says Rómulo Mucho. Mexico is another country that has been causing people to talk, not only because of its clay-based lithium project located in the state of Sonora and in the hands of the British Bacanora Lithium, but also because of the way in which the government of Andrés Manuel López Obrador wants to manage it. From copying the Bolivian model and taking charge of the entire lithium production chain to the controversial proposal for constitutional reform with which the Mexican president intends to put total control of the electricity sector in the hands of the state Federal Electricity Commission (CFE), disappear regulatory bodies, eliminate permits and guarantee the control of the State over the precious reserves of lithium. This has set off all the alarms of potential investors and even the Mexican Mining Chamber (Camimex) has already warned that this rule would make several projects unviable. The truth is that the lithium project arouses a lot of interest. And it is that Bacanora Lithium has as a joint venture partner Gangfeng Lithium, which owns half of the project and is struggling to get 100%. For now, the Chinese company, which is a Tesla supplier, has already announced that it will build a plant in Sonora to recycle electric car batteries, an important process in the production and adoption of these vehicles in America. And the scenario could not be better for the Sonora lithium project, taking into account the large automotive industry of the North American country and its proximity to the United States, an economy that has been driving the demand for electric cars and that together with Canada have the T-Mec, a commercial agreement that stipulates that 75% of the content used in the The automotive industry must be regional, which encourages investment in this field. “Imitating the Bolivian model or nationalizing lithium is absolutely a political discourse, which has no practical or economic sense. In Bolivia, Evo Morales invested about US $ 500 million to develop lithium batteries. The result is that he created a company that has not sold a single gram of lithium, even though it has one of the largest reserves. This shows that there is a great distance between having reserves and producing them. The national lithium industry has only consumed money. Mexico is probably going to manufacture batteries and electric cars for its main industry, which is led by American companies that have their factories there, ”says Jaime Alée. The political plane could also play against Chile, the second largest lithium producer in the world. 

“In this country we do not know what will happen with the change of the Constitution. Although Chilean production is higher than in Argentina, this country has a larger project portfolio despite its economic and political ups and downs that characterize it. Currently in Argentina there are fewer barriers to investment while Chile demands that companies have to form a joint venture with the national company and give 25% of production, because in this country lithium is considered strategic ”, says Patricia Vásquez. The southern country, whose lithium industry is dominated by companies SQM and Albemarle, knows that it has lost competitiveness in recent years, giving its rivals a certain advantage. In this regard, last week Chile announced an auction process to award operating contracts to explore and produce 400,000 tons of lithium metal for batteries, in an attempt to boost production and meet global demand. “Our country, which until 2012 was the world’s leading lithium producer, was surpassed by Australia and it is expected that by the end of this decade China will displace us to third place,” the Chilean Ministry of Mining and Energy acknowledged in its statement. For Chris Berry, Latin American governments must ensure that they do not “kill the goose that lays the golden eggs” by increasing royalties, taxes or regulations. “They have to strike a balance between allowing companies to operate in the country and doing it in a responsible manner so that all stakeholders can benefit. Chile is rewriting its constitution and the next presidential elections in Brazil are two events to take into account in South America, ”he says.

 

Source: America Economy

Blinken vows to ‘correct imbalance’ in Washington’s approach to Latin America

Latin America

US secretary of state discusses Washington’s new approach to the region during a short trip to Quito and Bogotá.

US Secretary of State Antony Blinken promised this week to broaden Washington’s relationships beyond security funding in the struggle to promote democracy in Latin America.

Blinken made a three-day visit to the region, meeting a host of conservative leaders.

Colombian President Iván Duque, who has come under fire over a deadly police crackdown on protests, welcomed the top US diplomat at the Casa de Narino palace in Bogotá for two days of talks that will focus on key priorities of US President Joe Biden – climate change and migration.

Blinken will meet ministers from around the region amid a sharp rise in the number of desperate Haitians who are making a long trek from South America to the United States.

Duque was a close ally of former US president Donald Trump and has so far not been able to meet Biden, who faces pressure from left-leaning lawmakers in his Democratic Party to suspend assistance to Colombia on rights grounds.

Colombia for decades has been a top recipient of US military assistance, including in its decade-long campaign against FARC rebels.

In a speech in Ecuador prior to his visit to Colombia, Blinken said that the US record on security assistance in Latin America has been “mixed.”

“That’s because often we tried to fix the problem by relying too much on training and equipping security forces, and too little on the other tools in our kit,” he said at the Universidad San Francisco de Quito, with the green Andean foothills behind him.

“We focused too much on addressing the symptoms of organised crime, like homicides and drug-trafficking, and too little on the root causes. We’re working to correct that imbalance.”

He acknowledged the long shadow of US support for dictators, saying, “There were times when we supported governments in the Americas that did not reflect the choice or the will of their people and did not respect their human rights.”

In a letter to Blinken ahead of his visit to Bogota, Human Rights Watch said that Duque has presided over police brutality “unprecedented in recent Colombian history” with dozens killed this year in a crackdown on major demonstrations over proposed tax reforms.

“A strong public and private response by the Biden administration could help prevent further human rights violations,” wrote the group’s Americas chief, José Miguel Vicanco.

Blinken in his speech said that the United States had tools in addition to security funding. He pointed to the Biden administration’s greater push on fighting corruption, including denying visas to officials involved in graft.

Amazon deforestation pact

Speaking Thursday, Blinken said that the United States will also launch an Amazon-wide regional pact to reduce deforestation, a bid to fight a key factor in climate change.

Washington’s top diplomat said the a “new regional partnership specifically focused on addressing commodity-driven deforestation” would be set up “in the coming days.”

The initiative will “provide actionable information to companies so that they can really reduce their reliance on deforestation,” Blinken said.

He said the pact would also include financial assistance to help manage protected indigenous areas and support the livelihoods of farmers.

Without giving further details, Blinken said he expected the partnership would help preserve 4,500 hectares (11,000 acres) of forest and prevent the emissions of 19 million metric tons of carbon dioxide.

Rainforests are crucial for the environment because they serve as huge carbon sinks, but greenhouse gas emissions from burning and industrial-scale agriculture in the Amazon account for higher total annual emissions than those of Italy or Spain.

By far the largest Amazon nation is Brazil, where President Jair Bolsonaro has championed big agriculture in the forest and has been accused of abetting the killings of environmental defenders.

 

The expert who proposes including part of Latin America in the US economic growth plans.

Latin America

Among so many differences that the policy towards Latin America of the president of the United States, Joe Biden, has with that of his predecessor Donald Trump, there is a similarity: migration is a priority.

The US goal remains to reduce the irregular flow of people entering the country; Trump tried with threats and severe measures, Biden promises to address the causes of emigration in Central America, such as poverty, violence or corruption.

But some analysts note that Washington still lacks a broader strategy toward its southern neighborhood, including economic, commercial or even health initiatives in the face of the covid-19 pandemic.

In this context, Richard Feinberg, a professor of international economic policy at the University of California San Diego, launches a bold idea: that the US include the countries of the Caribbean basin in its domestic economic plan.

This would mean adding from Mexico to Central America and Colombia to Biden’s initiatives to improve infrastructure, digitization, education and job training in the United States, explains in an interview Feinberg, who directed inter-American affairs at the National Security Council of the White House during the government of Bill Clinton (1993-1996).

What follows is a synthesis of the talk, translated and edited for clarity, with this expert who also worked in the US departments of State and Treasury and recently published his proposal at the Wilson Center in Washington:

Your proposal probably reflects the idea that something must change in the way the US views Latin America …

The Biden administration is just beginning. The problem is that the region is not doing well enough.

I am not one of those who say that all of Latin America’s problems are due to the failure of US foreign policy. Countries must take responsibility for their own stories.

Now, the United States has an interest, like any great power, in countries of its near exterior.

Western Europe deals with Eastern Europe, Southeast Asian China, in the sense that they see their destinies as inevitably intertwined by geopolitics. This is in the interest of the great powers to promote economic prosperity and political stability.

What I recommend is a series of policies that encourage work with Central American and Caribbean countries, both of interest to the US and the region: more economic growth distributed more equitably and stronger, more vibrant and democratic institutions.

Isn’t the US doing that?

The Biden government has only been in place for 100 days, it is very early.

What he has suggested is a more or less traditional foreign assistance program to the Northern Triangle countries (Guatemala, Honduras and El Salvador) of some US $ 4 billion over four years. Of course, they have to define what they are going to ask for and go through Congress.

The Biden government agrees with many academic analyzes that say that the main problem in the Northern Triangle and in other developing countries has to do with the quality of government: it does not represent the population well, the institutions are weak, they cannot implement policies and a large amount of money disappears into the pockets of corrupt officials and politicians.

The Biden administration wants to focus more on those problems.

I could agree, but I don’t think that’s enough given the depth of the problems that we see in some of the countries in the region.

So I suggest a completely different approach.

The Biden administration is launching a whole series of extremely ambitious initiatives in the domestic economy and society.

But the analysis made by the Biden government is very similar to what can be done in the Caribbean basin: there are problems of infrastructure, digitization, job training, health, education and also urban violence.

These are problems that are seen both in the US and in the countries of the Caribbean basin.

And what do you propose?

What I propose is that the government take many of the programs that are being designed mainly for the domestic economy and extend them throughout the Caribbean basin.

For example, the government has already said that many programs that have to do with climate change and clean energy should also be applied to the Caribbean basin, to try to move countries away from hydrocarbons, invest more in clean energy sources .

That is also true for digitization. Central America and the Caribbean have advanced dramatically in terms of internet access, but there is often a long way to go in smaller towns in rural areas, such as in the United States.

Similarly in infrastructure: roads, ports, airports … As we are doing in the US, we could help finance projects in Central America and the Caribbean.

Ultimately, investment and growth are needed to support good social programs and public sector spending.

The government has advocated for innovation centers or technology centers that it would help fund in the US And this is related to the issue of supply chains: American corporations have become very global in their sourcing policies.

Many of the US companies have located their production facilities in Asia, particularly China. We discovered over the years that this created certain vulnerabilities.

The Biden administration says it would like to see some of those supply chains moved from Asia to the US But in most cases that would not happen because we are not cost competitive on certain production lines.

My point is that some of these centers may also be located in Central America and the Caribbean, and that the US can help finance infrastructure, working with multilateral banks such as the Inter-American Development Bank and the World Bank, as well as with private sector investors, both international and national, to put these centers into operation.

That would create a lot more jobs in the region, to intertwine its economy with that of the US.

Which countries are you referring to exactly when you talk about the Caribbean basin?

I am referring to Central America, not just the northern zone —which is what the Biden government focuses on due to immigration— but it would include Nicaragua, Costa Rica and Panama. And then the Caribbean islands, Colombia, Venezuela, which of course is a special case but is part of the basin, and Mexico.

How do you suggest financing this expansion of domestic programs to the region when there are already questions about how the Biden government can finance them at the national level?

If you include the programs in a foreign aid budget, it is very difficult to get Congress to pass them.

So what I suggest is to include the programs in these great domestic initiatives. Biden has advocated for $ 2.7 billion in the Build Back Better Initiative , also known as investing in jobs.

How will they be paid? There are basically two sources: the tax hike, which is what Biden has proposed, and the financing of the deficit. Because interest rates are very low, the government can issue bonds with modest interest rates in the future.

The US already has a free trade agreement with Mexico and another with Central America plus the Dominican Republic that liberalized trade and services. But that did not help reduce the flow of migration, violence or corruption in the region. Why would an initiative like the one you propose have a better result?

These various business initiatives have created many jobs in the region.

On the US-Mexico border there are something like 2 million Mexicans working in maquilas or supply chains linked for the most part to US manufacturing companies.

Trade agreements cannot solve all problems. The fact that there are problems of corruption and inequality in Mexico is not the fault of NAFTA, which did what it is supposed to do: increase commercial investment flows and create more jobs in Mexico.

Similarly in Central America. There are some 500,000 jobs in the region that support perhaps 2.5 million Central Americans in supply chains alone. That is a contribution.

You cite the example of the maquiladoras and propose the creation of different centers in the region to produce for the US market. What would be the difference between these centers and the factories created by free trade agreements that are now seen as symbols of poor labor standards?

Who considers them? If you were a young woman in Central America with six to nine years of education, you would be happy to get a job in one of those factories. I am telling you this because I have talked to a lot of people there.

Now, could conditions improve? Yes, of course. What I am advocating is that the US signs social agreements with host countries that include protections for workers’ rights, the environment, and community rights.

And there would be extensive supervision: national and international auditors of compliance with the agreements.

Another of the great problems of the region is corruption. How would you prevent any investment from ending up in the pockets of officials?

As a requirement for these agreements, oversight mechanisms could be created, including the US government, with agencies that would have their offices in the field, so that there is full transparency to limit corruption.

I am not going to tell you that they are going to eliminate it overnight. But you can put in place mechanisms that provide some guarantees, and then, over time, try to strengthen national institutions and staff training.

You have warned that the US employment plan presented by Biden for domestic politics could harm the Central American economies. Why?

That is if you are serious about wanting American companies that source their supply chains from factories abroad to return to the United States.

There are around 500,000 jobs in Central America alone, and if each worker supports a family of five, there are 2.5 million citizens who would potentially lose their jobs and family income.

Source:

  • Gerardo Lissardy
  • BBC News World, New York

Guillermo Lasso: 3 problems facing Ecuador’s fragile economy (and how the new president intends to overcome them)

Latin America

The 65-year-old former conservative banker Guillermo Lasso assumed the presidency of Ecuador on Monday amid a severe economic crisis aggravated by the covid-19 pandemic.

Lasso aims to stimulate the economy by increasing foreign investment and boosting the production of oil, the most important export product of the South American nation.

During the campaign he promised to create two million jobs and expand the agricultural sector through low-interest loans.

But with a country deeply in debt and with scarce resources in the fiscal coffers, its economic agenda is likely to be an uphill road.

The new president will take over a bankrupt country, a fragmented Congress and strong social discontent.

In a dollarized economy, with few ammunition to fulfill his electoral promises , Lasso will probably face an avalanche of demands from the population in a country polarized between correísmo and anticorreísmo.

These are three of the biggest economic problems that the new president of Ecuador will face.

1- The chronic challenge of financing

The economy of the oil country was already in crisis due to low oil prices and the high level of indebtedness when the coronavirus outbreak broke out in 2020.

It had structural problems (such as a permanent fiscal deficit since 2009) that led President Lenín Moreno to impose painful austerity measures as part of the conditions of a loan of US $ 6.5 billion approved by the International Monetary Fund, IMF, of which already they have disbursed US $ 4,000.

One of those measures was to end the fuel subsidy, a decision that generated a social outbreak in late 2019 that forced President Moreno to back down.

The new president will inherit the toughest part of the IMF’s requirements, which include a fiscal reform to get the equivalent of 2% of GDP in new income.

The great challenge will be how to implement economic adjustment in the midst of a crisis that last year caused an economic contraction of 7.8%.

And Lasso will take up the challenge without a majority in the Legislative Assembly, with a third of the population in poverty and close to five million Ecuadorians earning less than the basic salary.

While Ecuador’s public debt is around 63% of the Gross Domestic Product (about US $ 63,000 million) and the fiscal deficit exceeds 7%, the country faces the great challenge of financing a high level of public spending.

“The indebtedness is enormous for a country like Ecuador that has a high country risk, the debt service is very expensive and the fiscal expenditure is gigantic,” Vicente Albornoz, dean of the Faculty of Economics and Administration of the University of the America (UDLA).

In the last decade the weight of the debt has grown year by year and despite negotiations with international creditors, the doors of the international financial market are practically closed.

Without new sources of financing available and with a high country risk of close to 1,200 points, Lasso will have to cut public spending if he wants to access more funds from the IMF or other multilateral organizations.

Or go into debt with China, which has not closed its doors, but charges high interest or oil guarantees.

One way to reduce the deficit is to lower spending and raise taxes, but just as in Ecuador it was impossible to eliminate the fuel subsidy, it would not be easy to reform the tax system either.

2- Dependence on oil

Ecuador depends on oil. In 1998 a barrel of crude was sold at US $ 7 a barrel and in 2008 it soared to US $ 117.

“It was like winning the lottery , but unfortunately we spent every last penny,” Albornoz said.

“We not only spent all the money, but we also got into debt.”

Then there was another cycle of oil bonanza between 2010 and 2014 but, since there were no savings, those profits were spent to the same extent that petrodollars entered the country.

In those years, former President Rafael Correa (who is convicted of bribery), increased fiscal spending and distributed a part of the benefits of the oil boom in aid for the most vulnerable sectors.

Resources from crude oil accounted for about a third of fiscal revenue.

Starting in 2014, a period of lean cows began. The economy began to roll downhill, indebtedness increased even more and the pandemic ended up turning the stagnation into a devastating crisis .

Currently both a barrel of WTI oil, which is traded in the US, and Brent (in the UK) are around US $ 60.

As the world economy recovers, expert projections are that in the future the price of crude should show an upward trend, giving the Ecuadorian economy a break. But that remains to be seen.

3 – The economic management of social demands

In Ecuador, one in four children under the age of 5 suffers from chronic malnutrition, according to Unicef. Poverty reaches 35% of the population and although formal unemployment is barely 6%, a large part of the population lives from underemployment (in precarious conditions).

In recent years, the cost of living has risen as much as that of the oxygen tanks that are now sold in the informal market to help the victims of the pandemic.

The country has deflation (or negative inflation of 0.8%) because there is very little consumption and people usually buy only the essentials.

And although the minimum wage is US $ 400, higher than in other Latin American countries, the cost of living is also high.

In a country with squalid fiscal coffers, with serious difficulties in increasing social spending, without the possibility of borrowing in the financial market and with the IMF imposing an adjustment on it in the midst of the crisis, Lasso will have to overcome many barriers.

In this context, a potential social outbreak could put the new government in check if it does not find a quick way to finance its electoral promises.

What does Lasso propose?

Faced with such a complex scenario, Lasso told BBC Mundo before the elections that he wanted to promote alliances between the public and private sectors to attract both local and foreign investment.

“The global oil sector will see the invitation that Ecuador will make to come and invest in joint venture contracts,” he assured during the campaign.

And he added that it will respect contracts in the formal mining sector “by processing environmental licenses with greater agility, to generate more tax revenue.”

Regarding the agreement with the IMF, Lasso indicated that he would respect the pact, except in one point.

“We are not going to ignore the agreement with the International Monetary Fund. What we are not going to do is raise the VAT, ” Lasso said, clarifying that the fiscal accounts can be put in order without increasing this consumption tax.

Even the candidate assured during the campaign that it would be even “bolder” than the goals set by the IMF.

“They talk about reducing the deficit, I talk about reaching a zero deficit , because the day Ecuador reaches a zero deficit there will be no more debt.”

To get resources, Lasso proposed doubling oil production, incentives for foreign investment, reducing both public spending and the size of the state, and fighting corruption.

The big stone in his shoe is that he has only a four-year mandate to implement his agenda.

International investors and analysts welcomed Lasso’s triumph as good news.

“Public debt will follow a sustainable path and will probably boost the country’s dollar sovereign bonds in the short term,” said Nikhil Sanghani, Emerging Markets economist at Capital Economics consultancy.

While the investment bank Credit Suisse, based in Zurich, Switzerland, noted that “much of its economic program focuses on creating conditions for entrepreneurship , less regulation and more efficient processes.”

During his campaign, Lasso offered to raise the minimum wage to US $ 500 a month , give a US $ 210 salary to housewives and “urgently assist 300,000 families who feel hungry.”

By delivering these and other benefits, you will likely have a hard time matching your promises with fiscal discipline.

It is a fine line that the new president of Ecuador will have to walk to move forward with his economic and political agenda and ensure the governance of the country.

AstraZeneca: what is known about the distribution in Latin America of the covid-19 vaccine produced between Mexico and Argentina

Latin America

The long wait for what some called “the Latin American vaccine” for covid-19 seems to be coming to an end.

After weeks of delay on the plan of Mexico and Argentina to produce and distribute between 150 and 250 million doses of the AstraZeneca vaccine, both governments confirmed on Tuesday that the first of the vaccine packages will be released over the weekend.

“It is great news. It is to increase production with a combination of efforts from the public sector, the private sector, and that Latin America has production, let’s say, its own: Argentine active substance, bottled and filled in Mexico, access to many countries of Latin America “, highlighted the Mexican Foreign Minister, Marcelo Ebrard.

“It is great news, it is solidarity and it is what we have been demanding in the world, that there be equity, that there be access,” he added.

Nine months ago, both Latin American countries announced the plan to produce and package the AstraZeneca coronavirus vaccine in the region, thanks to funding from the Mexican magnate Carlos Slim’s foundation.

However, the ambitious project presented in its day as a success as a result of the cordial relationship between Mexico and Argentina has faced various problems such as the shortage of some supplies that resulted in delays over the scheduled date to release the vaccines.

How many vaccines will be available?

This Tuesday, however, Ebrard confirmed that it will finally be this week when the first vaccines produced and packaged in Latin America will be distributed.

“We only need the release of AstraZeneca in London which should be this week, that’s what they told us, so that the weekend, finally from August 2020 to May 2021 (…) we can say that the weekend there will be a flight that it will take to Argentina what corresponds to them “, announced Ebrard.

“Mexico will receive 800,000 and Argentina the other 800,000, half and half,” the foreign minister advanced.

According to the Federal Commission for the Protection against Sanitary Risks (Cofepris) of Mexico, the four batches that are expected to be released this week contain a total of 3,403,080 doses.

In the second week of June, it is planned to release a batch of almost 895,000 doses (June 7), another two batches of 1,800,000 in total (June 9) and a fourth batch still in production, once the tests are completed. those who undergo vaccines to confirm their safety and efficacy.

“It is expected that between four and six batches can be produced per week,” Cofepris head Alejandro Svarch predicted on Tuesday.

When will they reach the rest of Latin America?

Ebrard said that, after the release this weekend, production and packaging will continue so that the rest of the doses can continue to be distributed in Mexico, Argentina “and also to many Latin American countries that made contracts with AstraZeneca.”

The authorities did not clarify at the moment which countries will be, the number of vaccines that each will receive or on what date.

Last year, Mexico and Argentina announced that the vaccines would be distributed equitably among the interested countries at the request of the governments of the region except Brazil, which made an independent agreement.

“We are being more independent in Mexico, Argentina and Latin America,” said the president of Argentina, Alberto Fernández, who participated by videoconference in the press conference where the announcement was made in Mexico.

“That agreement that we made (…) what will allow is that Mexicans and Argentines have joined the effort, the joint work, to have vaccines for Mexicans and Argentines, but also for all our Latin American brothers,” he stressed.

“There are no borders, we are together, I would say that in the same cause, seeking the welfare of our peoples,” agreed his Mexican counterpart, Andrés Manuel López Obrador.

What caused the delays in the process?

In August 2020, it was announced that the Argentine laboratory mAbxience, of the Insud group, would manufacture the active substance of the AstraZeneca vaccine and the Mexican Liomont would be in charge of packaging it, before its distribution to the rest of the region.

Initially, it was said that the doses would be available in the first half of 2021, although later other specific dates were announced that were not met.

Last March, for example, Foreign Minister Ebrard announced that distribution in Mexico and the rest of Latin America – where the second wave of the coronavirus was strongly felt, especially in South America – would begin “from the third week of April.”

Peru doubles deaths from covid-19 after a revision of figures and becomes the country with the highest per capita mortality rate in the world

Latin America

Deaths from covid-19 in Peru are more than double those recorded until now.

Authorities reported this Monday that more than 180,000 people have died from coronavirus in the South American country , which is 2.5 times more than the figure of almost 70,000.

This also ranks Peru as the country with the highest per capita death rate in the world in the pandemic.

The new number is consistent with the so-called “excess deaths,” a measure of how many more people are dying compared to trends in previous years.

The president of the Council of Ministers Violeta Bermúdez indicated that the death toll was reviewed by a council of Peruvian and international experts.

The highest rate in the world

Peru has been one of the countries most affected by the pandemic in Latin America, with a saturated public health system and a crisis due to lack of oxygen tanks.

Until now, deaths from the pandemic have only included the deaths of symptomatic patients with a positive test for COVID-19 .

However, the National Death Information System showed that there was an underestimation of deaths.

In April, the Executive created a panel of experts to review the figures.

With the information as of May 22, the total number of deaths from covid-19 was established at 180,764, a large increase compared to the 69,342 that had been counted.

Neighbors Colombia and Bolivia have registered 88,282 and 14,000 deaths, respectively. In contrast, Brazil has one of the highest death figures in the world, with more than 460,000.

But Peru now has the highest number of deaths from covid-19 in the world in relation to the size of its population , (about 32.5 million): around 500 deaths per 100,000 inhabitants.

Hungary previously had the worst number of deaths per capita with a rate of 300 per 100,000 people.

 

Waiving IP rights will not boost vaccine production, says pharma group

Latin America

Exempting Covid-19 vaccines from intellectual property rights will not speed up production or distribution of the jabs, a pharmaceutical industry association argued Tuesday.

Proponents of doing away with IP rights say more companies could produce the vaccine, which could then be used in poorer nations that have yet to receive any jabs.

But the head of a pharmaceutical group said Tuesday that managing the complex logistics of rolling out vaccines was what was slowing down jabs, not patents.

“Taking away patents now or imposing a waiver wouldn’t give you a single dose more,” said Thomas Cueni, the head of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA).

“It is really about the know-how, it is about the skill set… you still wouldn’t know how to roll them out on a large scale,” he added, speaking at a virtual briefing in Geneva.

His comments come amid a push at the World Trade Organization (WTO) to introduce a temporary IP waiver during the pandemic. The proposal, which was first put forward last year by India and South Africa, has been gaining momentum with the backing of more than 100 countries.

But several nations, including the United States and Switzerland along with the European Union, oppose the move. The opposition means the proposal cannot move forward in the WTO, which makes decisions by consensus.

Jim Robinson, in charge of the Covid vaccine manufacturing strategy at the Coalition for Epidemic Preparedness Innovations (CEPI), warned against waiving vaccine patents.

Pointing to the many people already sceptical about vaccines, he warned that poor-quality or unsafe vaccines by underqualified manufacturers could have devastating consequences.

“We don’t want to stretch so far that we break the system and we do harm,” he said, adding that vaccine production has been much more successful than anticipated.

Some 10 billion doses are expected to be produced this year – double the manufacturing capacity for all vaccines combined in 2019.

But manufacturers have faced a number of supply chain issues and bottlenecks, and there are still “significant gaps” between the expected output and the current manufacturing capacity, Cueni said.

Leftist Arauz, conservative Lasso advance to Ecuador presidential run-off

América Latina

Leftist economist Andrés Arauz will face conservative Guillermo Lasso in the upcoming second round of Ecuador’s presidential election, officials confirmed Sunday. Third-place finisher, indigenous leader Yaku Pérez, vows to appeal.

Thirty-six-year-old Arauz won the first round with 32.72 percent of the vote – not enough to win outright. His opponent in the second round will be ex-banker Lasso, who took 19.74 percent to beat left-wing indigenous leader Yaku Pérez’s 19.39 percent, according to the final results of the February 7 poll.

The run-off will take place on April 11, after the first round results were approved by four out of the five members of the National Electoral Council (CNE) at a meeting that lasted into the early hours of Sunday morning.

Pérez, however, said he would appeal. He last week submitted a request for a recount in 17 of the country’s 24 provinces, but that secondary tally was suspended Wednesday.

“We’re going to challenge thousands of votes,” Pérez, a 51-year-old environmental lawyer, said Sunday, before joining indigenous people and supporters marching on the capital Quito.

He has alleged there was fraud to keep him out of the run-off after he was narrowly displaced by Lasso from second to third place in the middle of the count.

“This resistence continues in the legal, judicial, social and political fields,” said Pérez, adding that “we cannot allow electoral fraud to remain unpunished.”

The marchers, who left last Wednesday from close to the southern border with Peru, are expected to arrive in Quito on Tuesday.

“Rivers of people will arrive, rivers of our hearts to say that our vote is worth defending, our vote must not be stolen. We need to recover the votes,” Pérez said.

Lasso, who last week supported Pérez’s call for a partial recount, has already started looking forward to the next round.

“Today democracy has triumphed, we are going with courage and optimism to this second round,” Lasso said in a statement following the announcement.

Incumbent President Lenín Moreno, whose term in office ends on May 24, did not seek re-election.