China is strategically targeting Latin America's vast resources to bolster its economic recovery following recent setbacks. This pivot towards the South aims to tap into the untapped potential of the region, which holds a significant share of the world's lithium reserves, essential for electric vehicle (EV) production and other high-tech industries [7bd34d12]. As of 2023, Chinese electric vehicle exports reached $34.1 billion, underscoring the importance of lithium for China's EV industry [a2502f63].
Chinese firms, including BYD and Ganfeng Lithium, are navigating a complex regulatory landscape in countries like Chile, Bolivia, Mexico, and Peru, where governments are imposing stricter regulations on foreign investments. In April 2023, Chile announced plans to nationalize its lithium sector, which has profound implications for foreign investors [a2502f63]. Meanwhile, Mexico's nationalization of lithium resources in 2022 has led Ganfeng Lithium to enter arbitration over cancelled concessions, complicating its operations [a2502f63].
Despite these challenges, Chinese companies have continued to invest heavily in the region, pouring $3.2 billion into Argentinian mining from 2020 to 2023. Argentina, now the fourth largest lithium producer, plans to quadruple its production to 200,000 metric tons by late 2025, largely due to Chinese investment [7bd34d12]. In March 2024, Ganfeng Lithium took a $70 million stake in an Argentinian lithium project, demonstrating ongoing interest despite regulatory hurdles [a2502f63]. Additionally, BYD is planning to establish an EV factory in Brazil, signaling its commitment to expanding operations in Latin America [a2502f63].
The U.S. is increasingly concerned about Chinese influence in Latin America, with U.S. Army General Laura Richardson labeling lithium access a national security issue [a2502f63]. In response, the U.S. Department of Energy is open to funding primary mining projects to diversify sources of critical minerals, which include rare-earth elements, lithium, cobalt, titanium, and zinc [7bd34d12]. A memorandum of understanding was signed between Argentina and the U.S. Minerals Security Partnership to reduce China's influence in mineral extraction, highlighting the geopolitical tensions surrounding these resources [7bd34d12]. As global demand for lithium surges, the competition for securing reliable sources of this critical mineral continues to intensify, with Chinese firms navigating a complex and evolving regulatory environment in Latin America [a2502f63].