China’s Latin American gold rush is all about clean energy

INTERNATIONAL DESK: A new gold rush is underway in Latin America—only this time around, the bounty is white. With its sprawling salt flats, the region is rich with a new ore—lithium—and everyone from Germany to China is clambering to get in on the race.

White gold, or lithium, is a coveted critical mineral that is key to making the batteries that drive the energy transition. Some 60 percent of the world’s lithium reserves can be found in the so-called lithium triangle, a region that encompasses Chile, Argentina, and Bolivia. It’s not just lithium either: Peru and Chile are the world’s two largest copper producers, while Brazil is home to 17 percent of all nickel reserves.

“Latin America is front and center in the race for minerals,” said Ryan Berg, director of the Americas Program at the Center for Strategic and International Studies. “It’s just about every single mineral you need to power the modern infrastructure, the green infrastructure that we’re going to need.”

That has sparked a global scramble to tap the region’s wealth—one in which Chinese companies have an edge. For decades, Beijing has rapidly ramped up its trade and investment in the region, entrenching its economic ties and influence there while the United States’ attention wandered. A growing number of Chinese projects in Latin America now center around the clean energy sector, part of what experts say is emblematic of a broader shift, as Beijing scales back its big-bore lending and zeroes in on what it sees as the prize.

“We’ve all known that renewable energy would eventually get the momentum necessary to pick up speed and really dominate the investment horizon,” said Rebecca Ray, an international development finance expert at Boston University’s Global Development Policy Center. “And we’re beginning to see that pivot in the [China-Latin America] relationship, where it goes from potential to reality.”’

Spanish conquistadors in the 16th century found loads of silver in Potosi, Bolivia. Chinese investors think they’ve found their own mother lode of a different kind. Chinese firms won a bid to develop two lithium plants in Bolivia last month, beating out offers from American and Russian companies.

Led by Chinese battery giant Contemporary Amperex Technology, the consortium is betting big on Bolivia’s enormous potential mineral wealth—estimated to be home to the world’s biggest lithium resources—although extraction challenges and political hurdles have long stymied the Bolivian industry’s development. Bolivia’s lithium just isn’t as easy or cost effective to pluck as it is in neighboring countries.

“Many countries and many companies have gone in there, tried to exploit the resource—for lack of a better phrase—and just run into challenges either with the government or with purifying that brine,” said Chris Berry, president of House Mountain Partners, an independent metals analyst, referring to the process of drying brine in salt flats to extract lithium ore. “That’s always been the problem with Bolivia.”

Beijing has found more success in Argentina, with Chinese battery powerhouse Ganfeng Lithium paying $962 million to buy Lithea Inc. and snap up the firm’s rights to two salt lakes. A year ago, another Chinese company, Zijin Mining, funneled $380 million into Argentina to build a lithium carbonate plant.

Beyond lithium, Beijing has also struck deals for solar, wind, and hydroelectric projects across the region, pouring hundreds of millions of dollars into solar parks in Argentina and Brazil as well as signing contracts for hydroelectric projects in Bolivia and Argentina. In Brazil, Chinese firms have also made inroads in the country’s electric vehicle industry.

Ray, the Boston University expert, said as Western firms withdrew from the region during the pandemic and resulting economic slowdown, Chinese companies moved in and began building up their portfolios. “And so now, Western companies may be playing a bit of catch-up,” she said. (Foreign Policy)