The 10 Most Innovative Companies in Latin America in 2022

Brazil and Mexico are Latin America’s largest economies. Unsurprisingly, they are well represented on this years’ list of Latin America’s most innovative companies. Their closest competition is in emerging startup hubs such as Buenos Aires, Lima and Montevideo.

According to PitchBook data, Latin America is the fastest growing region in the world for venture funding, raising $14.8 billion across approximately 800 deals. As a result, there is a sudden abundance of unicorns such as Mexican startup Kavak; an online market place for preowned cars which rode the COVID era used car boom to nearly a $9 valuation and opened 40 logistics and reconditioning hubs in Mexico, Brazil and Argentina.

Uruguay’s first unicorn, dLocal, launched a program with Amazon allowing non-domestic merchants to sell their products through Amazon’s online store in Brazil for the first time. Other innovations include an increase in food delivery companies, a regional demand for online education and Mercado Libre’s offer to trade cryptocurrencies through its Mercado Pago app, to Quipu Market. Quipi Market is a micro-payments platform allowing small merchants to conduct digital transactions using virtual tokens, boosting sales and building a credit history. [1]

Currency Rallies Take Off in Latin America

Latin American currencies are the world’s best performers this year after a disastrous 2021, and analysts are predicting further advances amid the surge in global prices for oil, soy, iron ore and copper. The turnaround for currencies in exporters such as Brazil, Colombia, Peru and Chile comes as raw-materials costs soar in the wake of Russia’s invasion of Ukraine. Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. expect more gains ahead as correlations with commodity prices tighten.

The currencies’ strength will help mitigate inflation and buffer a region that was among the worst hit by the Covid-19 pandemic. Now, with the virus fading, commodity prices on the rise and currencies recovering, Latin America is starting to feel some relief.

Source: Bloomberg

Of course the region is vulnerable to an escalation in the Russia-Ukraine conflict that would spur an even stronger bid for haven assets such as the dollar. But for now, the surge in commodity prices is supportive. [2]

Russian Oil Cut-off Boosts Outlook for Venezuelan Output Revival

As a result of the war in Ukraine, the US is considering easing sanctions on Venezuela’s state oil producer to offset Russia’s cutoff from global markets. Observers wonder how much crude the South American nation has to offer to a market roiled by the war in Ukraine.

Energy consultancy firm IPD Latin America, sees production nearly doubling by year-end if exports from the South American country can flow freely and it’s able to import much-needed parts and equipment for its crumbling oil industry. However, sceptics say it would take billions of dollars of investment over several years before Venezuela can increase output substantially.

President Biden announced that imports of Russian fossil fuels will be banned, and US and Venezuelan officials discussed a waiver of some sanctions so that the OPEC nation can resume oil sales. If the talks were to lead to an reduction in sanctions, David Voght the managing director at IPD predicts that Venezuela’s output could reach 1.5 million barrels a day, up from the current 800,000 a day at present. [3]

Source: Baker Hughes

Chile Lithium Miner SQM Sees Profits Surge as Global Prices Explode

On Wednesday, Chilean miner SQM (the world’s number two lithium producer) reported a nearly five fold rise in profits in the fourth quarter on Wednesday which has been driven by the surging price of the ultra-light metal that is necessary to make electric vehicle batteries.

Lithium is extracted from brine lakes in Chile’s salt flats. The metal has boomed in price since last year as the world pivots to electric modes of transportation, driving huge demand from carmakers and battery firms to increase supply.

SQM reported a net profit of $321.6 million in the fourth quarter, compared with a net profit of $67.0 million in the year-ago quarter and beating the average Refinitiv estimate of $266.44 million.

Source: Refinitiv Eikon

For years, Chile’s lithium sector has been dominated by SQM and rival Albemarle Corp (ALB.N). However, rivals are increasing after the Chinese carmaker BYD (002594.SZ) and local firm Servicios y Operaciones Mineras del Norte SA won an auction for new lithium contracts this year. [4]

Chile Votes on Potentially Nationalizing Copper and Lithium

On Saturday, Chile’s constituent assembly approved an early-stage proposal which opens doors to nationalizing some of the world’s biggest copper and lithium mines. The assembly is in charge of writing the country’s new Constitution, which at the environmental committee received 13 votes in favour, 3 against, and 3 abstentions.

However, the proposal is yet to be approved by two thirds of the full assembly to become part of Chile’s new charter. It targets large scale mining of copper, lithium and gold. Analysts consider the motion a direct attack on private interests since the Chilean state already owns the underlying mineral rights, gives the government one year to nationalize companies. [5]

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