Chengxin Lithium has applied for the rights to two lithium deposits in Ukraine that are up for auction, in a move that would give the Chinese company a foothold in the European lithium industry. The company, which makes lithium chemicals for electric vehicle (EV) batteries, said it would build a lithium plant in Indonesia and is investing in mining projects in Argentina and Zimbabwe.
China’s project to expand the Belt and Road Initiative in Latin America will have competition from a project – called Build Back Better World, or B3W – launched in the region by the United States. The initiative was formally announced by G-7 leaders during the summit last June.
A strategic network of ports controlled by China is advancing in Latin America. In Peru, the construction of the Port of Chancay, operated by the Chinese company Cosco, is progressing steadily, with an estimated investment of USD 3,000 M. In Brazil, there are Chinese operators interested in a new scheduled series of port privatizations. There is also a megaproject promoted by Asia Pacific Xuanhao that contemplates the reconstruction of the port of La Unión, related to a free trade zone to be created in the southeast of El Salvador, with access to Honduras and Nicaragua) (although the initiative would not be prospering, according to some newspapers).
Chinese state-controlled energy companies are increasing their operations in Colombia, Ecuador and Venezuela, especially in oil and coal.
In Venezuela, while the United States remains firm in the application of sanctions, the National Petroleum Corporation of China (CNPC) requested to PDVSA to boost production in five joint ventures that it has with the Venezuelan national oil company in the Orinoco Belt.
In Ecuador, China is actively expanding its influence mainly in the oil sector. In late 2020, Beijing signed a USD 1,400 M oil-backed loan with the Ecuadorian government. Chinese state-controlled oil producers occupy a prominent position in the upstream oil industry in Ecuador.
In Colombia, China is looking for larger amounts of thermal coal.
China is willing to sign a Memorandum of Understanding with Argentina as soon as possible to further promote the synergy of the two countries’ development strategies, according to Chinese Foreign Minister Wang Yi, who stated that the two sides should strengthen cooperation in investment and financing, energy and mining, and expand collaboration in new fields such as aerospace, communications, Antarctica and oceans.
China is being evaluated by the Argentine government as an alternative to finance the construction of a new gas pipeline -called “President Néstor Kirchner”- that will leave from the province of Neuquén, in the vicinity of Vaca Muerta.
The project, which will be developed between 2022 and 2025, will require a total investment of USD 1,807 M, and will be divided into two sections: the first will go from Tratayén (province of Neuquén) to Salliqueló (province of Buenos Aires), for USD 1,145 M; and the second, for USD 662 M, will go to San Jerónimo (Santa Fe). The intention is for the first stage of the pipeline to be operational before winter 2023.
China is asserting itself as Argentina’s main source of financing, with significant investments, from hydroelectric dams to trains and nuclear power plants. It has helped – through currency swaps – to support the Argentine Central Bank, which has exhausted its international reserves. On the other hand, China is consolidating itself as Argentina’s second trading partner, behind Brazil, after having multiplied trade with Argentina five times since 2003. In the first 7 months of 2021, bilateral trade reached USD 10,200 M. Most of the transactions were made in yuan. China’s imports of Argentine products in that period reached USD 3,350 M, with grains and meats being the most important.
The mega mining company Zijin Mining Group, based in the Fujian province, in eastern China, announced that it will seek to acquire – for USD 768 M – the Canadian Neo Lithium Corp, which owns a lithium project in the province of Catamarca.
Contemporary Amperex Technology Ltd. (CATL, a Chinese battery manufacturer and technology company that specializes in the manufacturing of lithium-ion batteries for electric vehicles and energy storage systems,), which has an 8% stake in Neo Lithium Corp, announced that it would buy – for USD 377 M – Millennial Lithium, another mining company operating in Argentina. Millennial’s main asset is the Pastos Grandes lithium-brine project in the province of Salta.
Ganfeng Lithium de China, a producer of lithium and lithium metal compounds, reached an agreement to increase its stake in the Mariana lithium project in Salta province to 100% through the purchase – for USD 16,8 M – of the remaining stake 8.6% of Litio Minera Argentina SA held by International Lithium. The company announced that this transaction is to strengthen its disposition in upstream lithium.
The Mariana Project currently has 18 exploration and mining licenses located in Salta, covering a total area of 32,436 hectares. Currently, the project has an annual production capacity of 20,000 tons of lithium chloride in Phase I.
China is the world’s largest consumer of lithium, accounting for 39% of world consumption already in 2019. China’s dependence on lithium imports was almost 80% in 2020, and its dependence on Australia (with which it maintains significant political and economic conflicts) was around 60%, according to Huaxi Securities.
Finally, China would have been left out of the construction and administration of an Antarctic Logistics Pole in Ushuaia, according to Mercopress 10/14/2021. A few days before, on 10/11/2021, the Commercial Chronicler reported that there were negotiations between the Argentine government with China (and Russia) about the financing of the project, but that no details were given in this regard.
The project, which would require an initial investment of USD 85 M and would be operational in 2024, would allow vessels to operate to supply the different stations in Antarctica.
China seeks to improve cooperation with Brazil in the framework of the Belt and Road Project, promoted by the Chinese government. Brazil, as the largest economy in Latin America, has a solid foundation and great potential for cooperation with China and, therefore, has all the conditions to be an important player in the BRI, assured the Chinese ambassador to Brazil, Yang Wanming, in a seminar on “Belt and Road & Brazil”, which aims to discuss a wide range of topics, such as 5G technology and new investments and financing under the BRI.
China confirms its position as the main trading partner of Brazil, with a participation in the general trade of the South American country close to 65%. In it, the proportion of Brazilian manufactured products sent to China is minimal and exports are highly dependent on concentrated commodities with virtually no added value, such as grains, oilseeds, iron ore and meats.
China National Offshore Oil Company will increase its stake in the Buzios field from 5% to 10%, according to a statement from Petrobras. Petrobras currently owns 90% of the Buzios field, and the remaining 10% is divided equally between CNOOC and China National Petroleum Corp.
China officially accepted Cuba’s entry into the Belt and Road Initiative by allowing it to be a member of the Energy Partnership of China Belt and Road, the BRI energy alliance, which was officially inaugurated in April 2019, and which already has 29 member countries. After joining, Cuba announced that it will accept credit assistance from China to improve its electricity grid with a focus on renewable energy.
The measure comes amid growing geopolitical tensions with the United States, which is seeking to promote its own alternative to the BRI in Latin America, consolidating its relations with pro-United States states in the region: Panama, Colombia and Ecuador.
China announced its interest in starting negotiations with Chile on its adherence to the CPTPP, the Comprehensive and Progressive Agreement of Trans-Pacific Partnership. China has recently officially submitted an application to join the CPTPP, a trade agreement of which Chile is a member.
Chile was the first country in South America to establish diplomatic relations with the People’s Republic of China (PRC) and one of the first countries to publicly support the restoration of the People’s Republic of China at the UN. China recently praised Chile, calling it an important partner in the region.
Chinese State Councilor and Foreign Minister Wang Yi met with Chilean Foreign Minister Andrés Allamand to seal bilateral relations and cooperation between the two nations. They pledged to continue promoting high-quality joint construction in Silk Road Belt and Road projects, and to promote cooperation in the fields of economy, trade, investment, mining, clean energy, science and technology, among others. They plan to deepen cooperation in vaccine research and development, in the fight against COVID-19.
Finally, despite having shown great interest, the Chinese technology giant Huawei will not participate in the “Asia-South America digital gateway” project promoted by Chile, known as the Humboldt project, which aims to connect South America with the Asia-Pacific region through a series of transpacific fiber optic submarine cables, beginning in the Chilean coastal city of Valparaíso.
NEC Corporation (Japan) was finally selected to undertake the Humboldt project. It is not unreasonable to consider the pressure of the United States government on Chile as a possible reason for the exclusion of the Chinese technology giant, in the context of the confrontation that both superpowers are carrying out on a global level. This pressure to avoid compromise with Huawei – which has been accused of espionage and threatening the national security of other countries – has already been evident in other parts of the Pacific.
Huawei was originally very interested in the Humboldt project. Huawei had suggested a route that would have connected Chile with the Chinese coastal city of Shanghai, acting as a digital gateway for South American countries in Asia-Pacific.
In 2019, the president of Chile, Piñera, had met with senior Huawei officials and openly invited them to invest in the country’s digital transformation, stating that he wanted to “transform Chile into a business center for Chinese companies” in South America. Subsequently, Huawei opened the first public cloud in Latin America in the Chilean capital, Santiago (investment: USD 100 M), and had announced that it would build a second.
China is interested in the new Capurro Port of Montevideo (a new Uruguayan fishing terminal, with a dock capable of mooring more than 50 industrial vessels) to become a Chinese logistics dock so that its fleet can operate in the South Atlantic. The Chinese group Shandong Baoma Fishery had already been interested, for decades, in a port of its own in South America.
Despite this information, the Master Plan of the National Port Authority of Uruguay does not make any mention of a possible port aspiration by China.
China offered Venezuela USD 3,000 M, within the next 3 years, as assistance to developing countries in their fight against epidemic and their socio-economic recovery.
According to the China-Latin America Financial Database, the largest recipient of debt from China in Latin America has been Venezuela, with USD 62,000 M in loans (followed by Brazil, Ecuador, Argentina and Bolivia).
The security threat in Afghanistan and the desire to shut off Central Asia from other powers, such as the U.S., is motivating Beijing and Moscow to cooperate and gloss over their differences. Beijing’s gradual engagement with Central Asian countries had been focused on the economic front, with state-backed investments in hydrocarbons, mineral extraction, pipeline construction, transportation, among others, but “lately there has been a trend of China becoming a security player too”. Moscow, meanwhile, has been the dominant security partner for the countries within the Russia-led Collective Security Treaty Organization framework and has been the largest supplier of arms.
China cancels Democratic Republic of Congo loans as it joins belt and road. Beijing writes off US$28 million in matured loans and pledges US$17 million of support in a country where Chinese firms already dominate mining sector.