As a privileged partner of Argentina, China is increasing its purchases of mining concessions in the north-west of the country. It benefits from the numerous tax advantages put in place by Argentina’s center-left government to attract investment in the exploitation of its subsoil, which is among the richest in the world in lithium.
In three weeks, three Chinese companies have spent more than $ 1 billion to acquire the rights to operate three lithium mines in Argentina, recount Nikkei Asia. The massive investment in this sector testifies to the acceleration of the race for “white gold” in the region while the production of batteries, in particular for electric cars, is in full growth.
At the end of September, the Chinese company Ganfeng Lithium took control of an extraction project in the province of Salta, in the northwest of Argentina, recalls the Japanese weekly. In the process, the Chinese giant of lithium batteries CATL bought the Canadian company Millennial Lithium, located in the same province, for a few hundred million euros.
On Sunday October 10, another Chinese company, specializing in gold and originally foreign to the sector, concluded for more than 660 million euros the purchase of another Canadian company, Neo Lithium, also established in the Argentine part of the lithium triangle, an area straddling the Andean border between Chile, Bolivia and Argentina.
The promises of the’Argentine
This mountainous area, known for its vast salt deserts (salares), alone is home to nearly 60% of the world’s lithium reserves, according to data from theUS Geological Survey. Local lithium production is carried out by Chile, where the mining industry is particularly developed. Corn “Argentina offers the most promising framework for the expansion of the industry”, considers Ryan C. Berg, senior researcher at the Center for Strategic and International Studies, cited by Nikkei Asia.
Some of the most important companies, notably Australian, Canadian or South Korean, have a long-standing presence in the north-west of the country. The fourth largest lithium producer in the world, with 8% of exports, now aims to overtake its Chilean neighbor, which represents 22% of the market, to “Support its battered economy”, to analyse Ambit :
The country seeks to entice international mining companies with tax advantages and promises of [modernisation des infrastructures].”
Last year, the center-left government, led by President Alberto Fernández, lowered mining export taxes from 12% to 8%, notes the Argentinian financial newspaper. In April 2021, the transfer abroad of 20% of the profits made was also authorized for mining projects whose investment exceeds 100 million dollars.
Parliament plans to cut tax on electric cars, adds Ambit, and the government has set a target of producing 200,000 tonnes of lithium per year from 2025, equivalent to one-fifth of global production forecast this year.
This proactive policy of the Argentine government particularly targets China, a privileged partner, which seeks to support “National industry and the scientific and technological sector to generate more technological development and jobs in the country”, notes Bariloche 2000.
China and Argentina “Are already strategic allies in the production of lithium batteries and electric vehicles”, adds the Argentinian site. In mid-September, the signing of a memorandum of understanding between the government of Alberto Fernández and the Chinese electric vehicle company Jiankang Automobile, had been an innovative agreement for the company, which has never invested in abroad. The agreement covers the opening of a lithium battery factory in Argentina, the first in Latin America.
In Nikkei AsiaWashington-based researcher Ryan C. Berg points out the growing influence of the Asian power in the region:
Not only has China increased its investments in the lithium triangle countries, but it has also strengthened its bilateral relations through its vaccine diplomacy. ”
Last spring, Argentina had indeed received doses of the Sinopharm vaccine against Covid-19 from the Chinese government. To support its economy, historically centered on agriculture and livestock, the country also knows that it must rely on China, its largest importer of soybeans.