China's Lithium Investments in South America Expand Influence

OMEN, NATIONAL SECURITY, Geopolitical Threats

Understanding China’s Role in South America’s Lithium Supply Chain: Strategic Investments and Geopolitical Implications

China’s lithium investments in South America are transforming global resource competition and shifting geopolitical power dynamics. By securing control over vast lithium reserves in Argentina, Bolivia, and Chile, China is advancing its green energy ambitions while undermining Western supply chain dominance. This strategic expansion raises concerns over economic leverage, resource dependency, and the long-term implications of Beijing’s growing influence in Latin America. Understanding these investments is critical to navigating the evolving landscape of global energy and security.

China’s growing investments in the lithium mining industry in South America is transforming the region into a pivotal battleground for the global energy transition. The “Lithium Triangle,” which spans Bolivia, Argentina, and Chile, holds over half of the world’s lithium reserves. This resource is crucial for electric vehicle (EV) batteries and renewable energy storage systems, making it a cornerstone of global efforts to transition away from fossil fuels. By embedding itself deeply into the region’s lithium supply chain, China is not only securing the resources needed for its burgeoning EV industry but also reshaping the geopolitical dynamics in a region historically dominated by Western influence. Understanding the scope and implications of these investments is critical to assessing the shifting landscape of global resource competition.

Bolivia, home to the largest lithium reserves in South America, will begin exporting lithium to China in 2025 under an early 2023 agreement — Figure 1: Photographs of a Bolivian lithium mine. Source: Flickr

Argentina

In Argentina, China has become a major player in the lithium industry. The country is home to some of the world’s most promising lithium mining projects, and China has solidified its position through significant investments. Of Argentina’s sixteen active lithium projects, six are under Chinese ownership or partnership, including four of the most advanced operations. Notably, Tibet Summit Resources Co. Ltd. has committed $2.2 billion to boost production capacity in the country. These investments not only provide China with a stable supply of lithium but also strengthen its influence in a strategically important region for global resource extraction.

Bolivia

Bolivia, home to the world’s largest lithium reserves, has historically been cautious about foreign involvement in its resource extraction industries. However, this began to shift in early 2023 when the Bolivian government signed a $1 billion agreement with a Chinese consortium that includes battery giants CATL, BRUNP, and CMOC. This deal aims to unlock Bolivia’s vast untapped lithium reserves and includes plans to begin exports by 2025. The partnership highlights China’s ability to navigate Bolivia’s complex political environment, scoring a decisive victory in establishing itself as a potential long-term partner in an industry set to explode as the need for lithium-ion batteries continues to increase.

Chile

Chile, another sizable player in lithium mining, has also attracted significant Chinese investment. In 2018, Tianqi Lithium acquired a 23.77% stake in Sociedad Química y Minera (SQM), a major Chilean lithium producer. While this acquisition raised alarm bells over China’s influence on Chilean production and exportation of lithium, Chinese investments in Chile have faced challenges. In 2024, Chile’s Supreme Court rejected Tianqi’s appeal against a lithium deal between SQM and the state-run company Codelco. This rejection reflects the complexities and sensitivities surrounding foreign involvement in Chile’s resource sector, particularly as the country explores ways to exert greater control over its lithium industry. Despite attempts to slow down Chinese involvement in this crucial sector, China will likely continue to press hard to acquire more tangible influence and stakes in Chilean lithium.

Global Supply Chains

China’s deep investments in the lithium supply chain through South America goes beyond securing resources—it represents a deliberate effort to dominate the global supply chain for critical minerals and ostensibly establish itself as a leader in the green energy transition. While green energy uses lithium in the production of batteries, necessary in EVs and other modern transportation applications, lithium is also vital for powering computers and smartphones—including those of China’s global rivals. Economically, China’s investments ensure direct access to this vital resource, reducing its reliance on Western-controlled markets. Geopolitically, these investments strengthen China’s foothold in Latin America, a region long viewed as a strategic domain for the United States, while seizing large portions of the global lithium supply for potential leverage against geopolitical enemies. This growing influence is altering diplomatic and trade dynamics in ways that could reshape global power structures.

Challenges

Despite its successes, China’s increasing role in South America’s lithium industry has not come without challenges. Indigenous communities and environmental groups in Bolivia, Argentina, and Chile have raised concerns about the social and ecological impacts of lithium mining. Protests, legal challenges, and resistance from local stakeholders have the potential to disrupt operations and delay projects. Geopolitical competition has also intensified, as the United States and Europe grow wary of China’s expanding global influence. This has prompted calls for countermeasures, including increased Western investment in the region to offset China’s dominance. Additionally, South American governments are exploring ways to assert greater control over their lithium resources through resource nationalism, which could complicate foreign partnerships and investments.

China’s strategic investments lithium supply chain are reshaping the resource landscape in South America. By securing access to the Lithium Triangle’s reserves, China is not only advancing its green energy ambitions but also challenging the geopolitical status quo. For stakeholders in the global energy transition, understanding China’s role in this supply chain is essential for navigating the evolving dynamics of resource competition and cooperation. Addressing these challenges will require innovative approaches to resource diplomacy, sustainable mining practices, and collaboration between local governments and international actors to balance development with environmental and social responsibility. As the world accelerates toward a sustainable future, South America’s lithium reserves will remain at the heart of this global transformation and could prove decisive in the shift to the computer-dominated battlefield of the future.