The Rise of Chinese Investment in Argentina's Mining Sector

I. The Increase in Chinese Industrial Exports Worldwide

The growth in exports of manufactured goods from the People's Republic of China (which account for 94 percent of the total) is constant and shows no signs of slowing. Between 2019 and 2023, the value of that country's exports to the world rose 35.2% to US$3.38 trillion and increased in 199 countries. China reached a record trade surplus in 2022, and a trade surplus of over US$822 billion in 2023, which has caused concern among Western countries, which have raised tariffs and restrictions.

Source: WTO

II. When Trade Grows, Direct Investment Can Grow

Over the last five years, China has rolled out a significant policy of direct investment in several countries such as Serbia, Uzbekistan and Turkey, which are among the 20 countries where Chinese exports have grown the most. According to the Rosario Board of Trade, Argentina is going to receive 7 investment projects from Chinese companies in the mining sector (lithium) for a total of US$3.383 billion. It is therefore important to steer the likely increase in imports from China that accompanies its direct investments toward the acquisition of widely used industrial inputs and capital goods, taking advantage of the stock China currently holds because of the international restrictions mentioned above, and following the strategy this country has developed in the places where it makes direct investments.

Photo: Mariana Project (Salta, Argentina), Ganfeng Lithium

III. Local Suppliers of Chinese Companies

This is an opportunity to become a supplier to Chinese-capital companies investing in the country. Companies can access supplier portals such as Ganfeng Lithium (projects in Salta and Jujuy) and Eramet/Tsingshan (lithium projects in Salta).

• Ganfeng Lithium, which has projects in the provinces of Salta and Jujuy; ganfenglithium-latam.com .
• Eramet (French) / Tsingshan (Chinese) , which has lithium projects in the province of Salta:
• eramine.eramet.com

IV. Attracting Investment for the Manufacture of Lithium Batteries

Another possibility is attracting investment for the manufacture of lithium batteries. Indeed, while we watch Chinese electric vehicle manufacturers announce the establishment of factories in Brazil, Argentina could, by taking advantage of the regional automotive integration (2), attract investment from Chinese lithium battery factories, which dominate 70% of the world market and which, by some estimates, number around 400 in the Asian country, with a saturated local market. One of the most important lithium battery manufacturers is CATL (Contemporary Amperex Technology Co. Limited) and another is Gotion , both with most of their production plants in Asia but with investments in Europe and the US. Another company is BYD, which also manufactures automobiles and has established itself in Brazil. As we can see, the opportunities that are opening up are very interesting; what remains is the impetus that Argentina's mining provinces can give to take advantage of this moment.

References:

(1) - “Argentine lithium: China invests nearly US$3.4 billion in seven projects” Rosario Board of Trade. Franco Ramseyer – Patricia Bergero bcr.com.ar

(2) - Argentina has signed with Brazil an Agreement on the Common Automotive Policy, implemented through Economic Complementation Agreement No. 14, which regulates automotive trade between the two countries and extra-zone tariffs. servicios.infoleg.gob.ar