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Summit of the Americas: An Opportunity to Address China’s Growing Influence on Latin America’s Mineral Resources

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The Summit of the Americas provides an excellent opportunity for the United States government to work with like-minded partners in the region to address a major strategic challenge: China’s growing influence over critical and natural mineral resources in the Latin America.

The ninth Summit of the Americas, being held this week in Los Angeles, California, brings together leaders from North, South and Central America and the Caribbean to promote democracy and human rights, increase competitiveness, strengthen regional security, and address key issues of the day such as clean energy and supply chains. Given the summit’s emphasis on “Building a Sustainable, Resilient, and Equitable Future,” securing the United States’ supply of essential and natural resources should be a priority for the U.S. delegation.

Over the past two decades, Chinese companies have increased their investment in the mining and processing of so-called “critical minerals” in Latin America, including lithium and nickel, which the United States defines as “non-combustible minerals essential to the economic and national security of the United States”. Chinese companies have also stepped up investment in other Latin American mineral resources, including copper, iron ore and gold, which, although not defined as “critical”, nevertheless serve as the technological basis for a range of consumer, clean energy and military technologies. Figure 1 illustrates the scale of Chinese investment in mineral commodities in the region between 2017 and 2022 (Note: This chart includes a non-exhaustive list of projects identified through a search of publicly available resources such as news articles and reports).

Between 2018 and 2020, China’s net foreign direct investment in overseas mining totaled nearly $16 billion, including investment in South America’s so-called “lithium triangle.” , the region covering parts of Argentina, Chile and Bolivia which account for approximately 56 % of global lithium resources. As demand for lithium and other critical minerals continues to grow, driven in part by growing demand for lithium-intensive clean energy technologies like rechargeable batteries, China has wasted no time in secure its share of the world’s lithium resources.

In February 2022, for example, the Chinese company Zijin Mining announcement plans to invest $380 million in a new lithium carbonate plant in the province of Catamarca, in northern Argentina. And in 2021, China’s largest lithium producer, Ganfeng Lithium, completed a acquisition another major lithium mining project in Argentina. Chinese companies have made similar investments in Colombia copper and zinc marketsAs good as inside The copper mines of Peru.

Figure 1. A representation of Chinese investment in mineral commodities and the deal in Latin America between 2017 and 2022.

These investments, which are part of China’s broader effort under its Belt and Road Initiative to expand its economic influence in the Western Hemisphere, have contributed to the growing dominance of China on world mineral resources. For rare earths alone, a subset of the broader category of critical minerals, China is estimated to account for approximately 85% of global processing capacity.

This presents a strategic challenge for the United States and its allies, who are increasingly depends on chinese production of mineral resources. Currently, net imports from the United States are 100% dependent on its supply of at least 13 of the 33 critical minerals included in the Department of the Interior report. February 2022 Critical Minerals List for which the US Geological Survey data product, and it depends more than 50% on net imports for at least 13 other of these essential minerals. During near 40 percent of the critical minerals listed, China was the main supplier.

The United States must respond to China’s continued efforts to expand its influence over critical and natural mineral supply chains in Latin America. As the current global shortage of semiconductors has demonstrated, America’s economic well-being and national security depend on building secure, resilient, and diverse supply chains for strategically important technologies. and the critical minerals that support them. Allowing a geostrategic competitor like China to exert disproportionate influence over access to critical minerals – or allowing production to concentrate in a single geographic region – poses a serious risk to the United States and its allies.

The United States has an opportunity to explore new ways to deepen its strategic and economic partnerships in the region, counterbalance China’s growing influence, and secure supply chains for critical minerals at the Summit. of the Americas. In particular, Summit leaders should commit to working together to prevent and mitigate supply chain disruptions and drive investment in new mining and processing facilities that use best mining practices to protect health. environmental, human and community. The parties could also commit to collaborate in mapping existing critical and natural mineral resource capacities in Latin America to inform foreign investment and trade.

Finally, leaders should explore opportunities for developing downstream processing and manufacturing capabilities in the region, particularly to advance the transition to clean energy in the Western Hemisphere, and assess the financial, regulatory and policy changes that will will be needed to facilitate this change. Together, these measures would mark a significant first step towards building more resilient supply chains and supporting efforts to transition to clean energy generation in the region.

When it comes to securing supply chains of critical and natural minerals, time is running out. The Summit of the Americas is the ideal platform to chart the course for tangible solutions, and participants must seize this opportunity with both hands.