China's Strategic Shift: Mining Influence in Latin America

As China seeks a way to continue its economic development after a series of devastating blows to its economy, Beijing “pivots to the South” in search of untapped potential.

The most advanced technologies originate from raw materials and China dominates the lower echelons of the most relevant mining commodities.

“China’s market dominance allows it to exert significant influence over global pricing, whether through increasing or restricting exports of key commodities or by implementing other restrictions on key materials,” said Melissa Sanderson, board member of American Rare Earths, a mining company, told SIGNAL Media.

The United States is working toward diversifying sources of critical minerals. The U.S. Geological Survey defines these 50 raw materials along these criteria:

• Essential to the economy: a mineral that is essential to the economic and national security of the United States.

• Supply chain vulnerability: a mineral with a supply chain vulnerable to disruption, which could have significant consequences for the U.S. economy or national security.

• Limited domestic production: a mineral for which the United States is largely dependent on foreign sources for its supply.

• Key role in technology and industry: a mineral that plays a critical role in the manufacturing of advanced technologies, including defense, energy and electronics.

• Potential for impact on the economy: the unavailability of the mineral could have severe consequences for the U.S. economy, including job losses and economic downturns in key industries.

Rare-earth elements, as well as lithium, cobalt, titanium and zinc are notable examples.

“While industries in states like Arizona are doing their absolute best to lead in critical mineral production, America is far too reliant on foreign sources for our critical mineral production, most notably China,” Rep. Juan Ciscomani, a U.S. lawmaker from Arizona, told SIGNAL Media.

Ciscomani presented a bill to expand the list of critical minerals, among other mining initiatives.

“Recently, the Department of Energy has indicated it will be open to funding primary mining in addition to secondary recovery of materials from mine tailings and battery dumps. The Departments of Defense and State, likewise, have programs available to support primary resource development, as do several states, including Wyoming,” Sanderson told SIGNAL Media.

State funds for competing with China’s generous subsidies are part of the actions to contain the offensive.

Following the U.S. embargo on advanced semiconductors, China seems to have responded in kind, albeit with little fanfare.

When the Grainger College of Engineering needed wafers for semiconductor production, they went to AXT, a California-based supplier with close ties to Beijing. These links also reportedly reached China’s aerospace sector, including the potential supply of raw materials for the country’s spy balloon program, according to NBC News.

“When we asked them for a quote, they asked us to sign a document saying that those wafers would not be used for any DoD-funded work,” said John Dallesasse, associate dean at the Grainger College of Engineering.

In the end, Dallesasse’s lab sourced from an alternative supplier. Nevertheless, AXT’s surprising demand gave a new dimension to the school’s materials research in a direction away from China’s dominance.

Several attempts by SIGNAL Media to contact AXT were unsuccessful.

As the United States continues its tit-for-tat exchange with China, Beijing has set its eyes on the part of the world where it has greater influence.

This year’s Chinese Communist Party’s (CCP) 20th Central Committee’s third plenary meeting produced several policy documents that suggest its sights are on a new target.

China’s foreign direct investment in Latin America will be increasingly focused on high-tech industries like renewable energy and electric vehicles, making the region central for China’s supply chains.

Additionally, China’s provinces and municipalities will play a larger role in deepening local-level economic ties with that region, according to analysis by U.S. think tank The Dialogue.

“Sci-tech and institutional innovations are like two wheels propelling the growth of China’s total factor productivity,” Huang Hanquan, an official from the National Development and Reform Commission, was quoted as saying by China’s official news agency Xinhua during deliberations.

The market for innovations, like electric vehicles, is expected to increase in Latin America, as well as the sources for many of its critical minerals not found in its geography.

Argentina, currently the world’s fourth largest lithium producer, will quadruple its production by late 2025, displacing Chile and China, to 200,000 metric tons, according to Standard & Poor’s, a research company. This will place the South American country within closer range of world leader Australia, which produced 355 metric tons of the mineral in 2022.

This dramatic jump is almost entirely a consequence of heavy investment by Chinese companies.

The CCP document stressing the importance of establishing links at levels of government below national was put into practice in this push, with Chinese provinces Henan and Guizhou establishing direct links with Jujuy, a northeastern Argentine province with generous lithium deposits.

As SIGNAL Magazine went to press, Argentina signed a memorandum of understanding, covering lithium and copper, to facilitate work with countries in the Minerals Security Partnership, a U.S.-led group that includes 14 countries and the European Union. This initiative, led by the Department of State, is an effort to minimize China’s influence over strategic mineral extraction in the South American nation.