The dispute between China and the US for lithium in Latin America – 04/16/2023 – Market

More than half of the world’s lithium is in Argentina, Bolivia and Chile, a triangle that has aroused the interest of governments and investors who want to enter these markets.

Countries like China and the United States do not want to miss the opportunity to have a fundamental metal to manufacture the batteries used in electric cars, a market in expansion and in which more and more investors are entering.

“The main powers are struggling to obtain the minerals needed for the energy transition and Latin America is an important battleground”, says Benjamin Gedan, director of the Latin America Program at the Wilson Center, to BBC News Mundo (service in BBC Spanish).

“The United States was late to the party and Washington is clearly eager for China’s head start,” he adds.

Chinese companies have been looking for places to stock the so-called white gold for years in different parts of the world, mainly in Latin America, where the world’s largest reserves of the metal are located.

Bolivia leads the list with known reserves estimated at 21 million tons, followed by Argentina (19.3 million) and Chile (9.6 million), according to the United States Geological Survey.

Mexico, although it has only 1.7 million tons (ninth place on the list), has become a relevant figure in North America, not only because of its geographical proximity to the United States and Canada, but also because it is becoming a production center for electric cars (mainly after the recent announcement of giants that will install factories in their territory, such as Tesla and BMW).

“Evil Activity”

General Laura Richardson, head of the US Southern Command, warned that China “continues to expand its economic, diplomatic, technological, informational and military influence in Latin America and the Caribbean,” during a presentation before the Armed Services Committee of the House of Representatives in March.

“This region is teeming with resources, and I’m concerned about the evil activity of our adversaries taking advantage of that. It looks like they’re investing when they’re really extracting,” Richardson argued.

Regarding the “lithium triangle” in South America, formed by Argentina, Bolivia and Chile, she said that “China’s aggressiveness and its game on the ground with lithium is very advanced and very aggressive”.

What does China say?

Just as the United States and other countries embark on their plan to regain part of their energy independence, China has also been preparing for several years with an eye on the minerals most coveted by global trade, including lithium.

“China has a high degree of external dependence on some important mineral resources, and once the international situation changes, it will certainly affect economic security or even national security,” Natural Resources Minister Wang Guanghua said earlier in January. in an interview with state news agency Xinhua.

The government included 24 strategic minerals in its National Plan for Mineral Resources published in 2016.

These include metals such as iron, copper, aluminum, gold, nickel, cobalt, lithium and rare earths, as well as traditional energy resources such as oil, natural gas, shale gas and coal.

The plan notes that minerals are essential to “safeguard national economic security, national defense security and the development of strategic emerging industries”.

Explosive rise in Chinese investment

While Chinese companies are advancing in South America with huge investments in mining, the countries of the triangle intend to take advantage of the technology and capital of Chinese companies with the aim of promoting local industrial development.

In the first three months of this year alone, Chinese companies closed ambitious deals to invest in Bolivia, Argentina and Chile.

In Bolivia, Chinese companies CATL, BRUNP and CMOC have committed around US$ 1 billion in lithium projects in the departments of Potosí and Oruro, according to the Atlantic Council think tank.

In Argentina, Chery Automobile is going to invest around US$ 400 million in the construction of a factory for the production of electric vehicles, possibly in Rosario.

And in Chile, the companies Tsingshan Holding Group, Ruipu Energy, Battero Tech and FoxESS committed to investing in a lithium industrial park in the city of Antofagasta, for an amount still unknown.

The commercial relationship between Argentina and China is increasingly closer in lithium mining, with the announcement of at least nine investment projects in 2022 alone in the areas of Salta, Catamarca and Jujuy.

Technological and geopolitical competition between giants

According to the associate director of the think tank Adrienne Arsht Latin America Center of the Atlantic Council, Pepe Zhang, “the United States is actively seeking to strengthen its position in the global supply chains of critical minerals and green technologies”.

In this context, “lithium is proving to be an increasingly critical area in the technological and geopolitical competition between the United States and China”, he tells BBC News Mundo.

And China is going with its foot on the accelerator.

This year, estimates Zhang, will be an important period for the Asian giant’s mineral investments in the region.

Projections indicate that the US$ 1.4 billion committed for this year would surpass the investment of US$ 1.1 billion in 2021 and 2020.

“In January alone, we saw three Chinese companies commit to an investment of US$ 1 billion in Bolivia”, says the researcher.

The “national security” factor

The White House has also explicitly established securing a mineral supply chain as one of its priorities for strategic reasons.

“Critical minerals provide the foundation for many modern technologies and are essential to our national security and economic prosperity,” the Joe Biden administration said in a statement last year.

This includes minerals such as lithium, cobalt and rare earths, used in various products, from computers to household appliances, and which are key inputs for the production of technologies such as batteries and electric vehicles, wind turbines or solar panels.

As parts of the world try to make progress in the transition to cleaner energy, global demand for these critical minerals “will skyrocket by between 400% and 600% in the coming decades”, the text says.

And, he adds, for minerals such as lithium and graphite, “demand will increase even more, up to around 4,000%”.

“A tug of war between Washington and Beijing”

“China takes advantage of Beijing’s willingness to invest in battery production in Latin America”, argues Gedan.

While “the United States is primarily focused on procuring raw materials for American companies to build green technologies”.

Faced with this dilemma, it is likely that Latin American countries will find the Asian offer more attractive than the traditional model of exporting their commodities with very little added value.

“The United States is clearly eager to catch up,” says the expert. “No wonder South America finds itself in a tug of war between Washington and Beijing.”

– This text was published in