Chinese companies dominate lithium investments in Latin America

Investments in essential mineral value chains in regions such as Africa and Latin America give China significant control over the supply chains of key minerals used to produce clean energy technologies, such as lithium, cobalt, copper and rare earths.

A US Congress report highlights that control, which includes assets in Mexico.

To access mineral deposits in developing countries, Chinese state-owned companies have acquired stakes in mines around the world and have invested in mineral exploration, processing and refining operations, and transportation infrastructure.

Chinese investments in lithium mining and refining globally are well documented, with such investments in Mexico, as well as in Latin America’s “Lithium Triangle”, encompassing Argentina, Bolivia and Chile.

In August 2022, the Chinese company Ganfeng Lithium paid approximately $253 million to complete its acquisition of the British company Bacanora Lithium, which is currently building the world’s largest lithium mine (8.8 million metric tons) in the Mexican desert. of sound.

In 2022, Ganfeng also spent $962 million to acquire the Argentine company Lithea, which owns the rights to two lithium salt lakes in Argentina.

Chinese companies purchased around 6.4 million metric tons of lithium reserves and resources in 2021, almost as much as the amount purchased by all companies the previous year.

Chinese companies have also outperformed US companies in this space, investing an estimated $4.3 billion in lithium mining assets between 2018 and the first half of 2021, compared to $1.4 billion invested by US companies.

Chinese political banks such as the China Development Bank and the Export-Import Bank of China (China EXIM), further support China’s mining strategy by financing investments by state-owned companies around the world.

In 2007, China EXIM provided at least US$6 billion in financing for Sinohydro and China Railway Group to carry out infrastructure and mining projects in the Democratic Republic of the Congo (DRC) in exchange for 68% ownership of one of the largest copper and cobalt mines in Africa.

By specifically targeting debt-troubled mining operations in the DRC, Chinese companies were able to acquire ownership or financial stakes in 15 of the country’s 19 cobalt mines by 2020.

In parallel, China’s role as a global center for refining and processing raw materials is a key component of its influence over critical mineral supply chains.

Mineral refining processes aim to isolate and concentrate by-products to increase the purity of the mineral, often generating toxic waste that is harmful to the environment.

Although the United States was once the world’s top supplier of rare earth minerals, environmental pressure and lower wages pushed the industry to China, which now controls about 85% of the world’s processing of rare earths.

Most of the major rare earth miners ship them to China for refining.

roberto.morales@eleconomista.mx