How Latin America can avoid betting on obsolete industries: Lessons from Canada's 456-billion-Canadian-dollar mega-project list

Introduction

In September 2025, the Canadian federal government released a candidate list of 32 large-scale infrastructure projects, covering ports, high-speed rail, hydropower stations, nuclear power, oil and gas, mining, and carbon capture. After adjustment using Reference Class Forecasting (RCF), the total project cost reached C$456 billion. This figure not only reveals the enormous scale of Canada's infrastructure investment, but also exposes a structural contradiction: a large amount of capital is still flowing into traditional fossil fuel and bulk commodity export facilities, while transmission, energy storage, and high-value-added industrial infrastructure for an electrified future appears insufficient.

For Latin American countries, which are also in the stage of natural-resource-dependent economies and undergoing energy transitions, this case has extraordinary reference value. Will Latin America also waver between "building the past" and "building the future"? How can the cost trap of megaprojects be avoided? This article uses the Canadian list as a mirror to analyze the directional choices facing infrastructure investment in Latin America.

The Canadian Case: Strategic Imbalance Behind the Numbers

According to CleanTechnica's analysis, the total cost of Canada's 32 candidate projects after RCF adjustment is C$456 billion, averaging one-third higher than official estimates. Cost overruns vary significantly by category: hydropower and nuclear power exceed by 50% and 54%, respectively; transportation by 33%; oil and gas by 30%; and mining by 25%. This systematic underestimation shows that megaprojects tend to be more expensive and more time-consuming than planned, and once budgets are approved, actual expenditures are likely to far exceed expectations.

What deserves even more attention is the flow of funds. Among port projects, about one-third are explicitly used for oil and gas export expansion, and another third for bulk timber and mineral exports. These facilities serve low-value-added raw ores and commodities rather than processed, high-value products. At the same time, the five oil and gas-related projects together have an RCF cost of about C$114 billion, accounting for one-quarter of the project portfolio. However, the world's major economies are accelerating electrification and defossilization, and future oil and gas demand may continue to shrink. Oil and gas pipelines and LNG terminals built today may become sunk costs over the coming decades.

The lesson of the Canadian case is twofold: first, project evaluation must take historical experience into account and avoid overly optimistic estimates; second, infrastructure investment must align with future industrial trends, otherwise it merely renews the glory of the past at ongoing expense.

Similar Choices Facing Latin America

Latin America has long relied on natural resource exports. From Venezuela's oil and Chile's copper and lithium, to Brazil's iron ore and soybeans, resource exports drive economic growth in the region, but they also concentrate infrastructure investment excessively in resource extraction and export corridors. Large ports, railways, and pipelines are often built around mining areas and farmland, serving bulk cargo transport. However, the global energy transition is redefining the value of resources: demand for "critical minerals," represented by lithium and copper, is rising rapidly, but the market increasingly favors processed materials over raw ores.This means that if Latin America merely imitates Canada's approach—expanding bulk cargo ports and adding oil and gas pipelines—it is likely to fall into the same trap. Instead, Latin America has an opportunity to leverage its resource advantages to move up the value chain. For example, building refining and cathode material plants in lithium mining areas, developing green metal processing around copper mines, or using abundant renewable energy to attract low-carbon manufacturing. All of these require supporting efficient power grids, high-quality logistics, and industrial parks, rather than simply commodity export facilities.

Cost Overruns: The "Mega-Project Curse" Latin America Must Confront

Latin American countries are no strangers to cost overruns on large projects. Historically, large hydropower stations and transportation projects in Brazil, Peru, and other countries have repeatedly exceeded budgets, increasing fiscal burdens. The Canadian case once again confirms the value of reference class forecasting: by comparing actual outcomes of similar projects rather than relying on purely theoretical estimates, budget risks can be identified earlier. When initiating projects, Latin American governments should introduce independent cost review mechanisms and refer to the actual overrun levels of similar international projects to formulate more robust fiscal plans. Hydropower and nuclear power projects deserve special attention—Canadian data show they have the largest overruns, and Latin America has abundant hydropower resources and potential nuclear power plans, so these should be evaluated with particular caution.

Future-Oriented Infrastructure: Electrification and High Value-Added

So how should Latin America adjust its infrastructure investment direction? At least four priority areas can be drawn from the Canadian case:

1. Modernization of power systems. Integrating renewable energy requires flexible and robust power grids. Latin America has excellent wind and solar resources, but grid interconnection remains insufficient. Investment should go to smart grids, energy storage, and cross-regional transmission lines to lay the foundation for larger-scale clean energy use.

2. High value-added processing and logistics. When building ports and railways, priority should be given to container transport and exports of processed products, rather than merely expanding bulk cargo capacity. For example, ports in Peru and Chile could be upgraded from bulk cargo ports to comprehensive logistics hubs, supporting exports of lithium salts, refined copper, and processed food products.

3. Electrified transportation hubs. High-speed rail is costly, but efficient connections among Latin American urban clusters could yield long-term economic benefits. In the Canadian list, high-speed rail is one of the few projects directly related to the electrification agenda. Latin American countries could consider prioritizing urban rail transit and regional railways to reduce dependence on aviation and roads.

4. Regional connectivity. Infrastructure connectivity among Latin American countries is insufficient, constraining intra-regional trade and industrial chain integration. Upgrades to the Pan-American Highway, cross-border transmission lines in the Andes, and logistics corridors within Mercosur are all key to enhancing regional competitiveness.

Key Observations

• Latin American infrastructure investment remains oriented toward resource exports, similar to Canada, and carries the risk of "locking in obsolete industries." Many new ports and railways mainly serve oil, gas, minerals, and agricultural products rather than high value-added processed goods—a major hidden danger amid the changing structure of global commodity demand.- Critical mineral processing is Latin America's best entry point for raising industrial added value. But current investment is insufficient, especially in electricity, water, and logistics support, which hinders the leap from "mining" to "manufacturing."

• Cost overruns on large projects are the norm, and Latin America must adopt more rigorous project evaluation methods. Reference class forecasting, independent reviews, and transparent budget mechanisms can reduce fiscal risks.

• Electrification infrastructure should become a priority area for regional coordination in Latin America. Grid interconnection not only helps integrate renewable energy but also lowers energy costs across countries and drives green industrial chains.

• Global supply chain restructuring brings manufacturing opportunities to Latin America, but it needs port and logistics modernization as support. If the nearshoring trend can be seized, Mexico, Central America, and Caribbean countries can become new manufacturing hubs.

Latin America's Long-Term Outlook: The Next 5-10 Years

Over the next decade, Latin America's infrastructure investment strategy will determine its role in the global economy. The following structural changes may emerge:

• Resource-exporting countries will diverge. Countries actively advancing lithium processing and green energy, such as Chile and Argentina, are expected to become a key link in the global battery supply chain; while countries overly reliant on fossil fuels, such as Venezuela and parts of Mexico, may face more severe fiscal transition pressures.

• Regional connectivity will accelerate. Driven by the energy transition and supply chain restructuring, cross-border power grids, hydrogen pipelines, and digital logistics platforms will gradually take shape. Mercosur and the Pacific Alliance may launch new infrastructure financing mechanisms.

• Infrastructure project financing models will innovate. Facing fiscal constraints, public-private partnerships (PPPs), green bonds, and multilateral development bank loans will play a more important role. Latin American countries need to create a more attractive investment environment to attract long-term capital.

• Investor preferences are shifting toward sustainable assets. Under the global ESG investment trend, financing for fossil-fuel-related ports and pipeline projects will become more difficult, while high-quality power grids, renewable energy parks, and high-value-added processing facilities will gain more capital favor.

Canada's mega-project list is just the beginning; it reminds all resource-rich regions that infrastructure is not just steel and concrete, but a bet on the future. What Latin America must choose is precisely the path toward sustainable prosperity.