In late April, Expomin, the largest mining business expo in Latin America, held its biannual gathering in Santiago de Chile. This year’s expo had one clear winner: China.
Since Xi Jinping’s ascent to power in Beijing in 2013, China’s footprint in the international mining sector has steadily increased, and the country now effectively controls the reserves, extraction, and processing of many critical minerals. Much of China’s focus in this regard has been on Latin America, where mining has traditionally been dominated by American, Canadian, European, Australian, and regional companies. Mining is itself one of the largest business sectors in Latin America, accounting, for instance, for about one-sixth of Chile’s GDP.
China has become a prominent player in the region, making multiple billion-dollar investments in mining each year. This shift towards Chinese dominance over mining in Latin America isn’t going away anytime soon, and will likely keep solidifying, especially as Western countries, particularly the United States, look inward for opportunities, put increasing conditions on trade and investment, and hunker down for an economic downturn. All the while, China’s unprecedented levels of investment abroad show little sign of slowing down.
Out of the 1,372 companies from more than 35 countries present at this year’s Expomin, around 200 were from China, being the largest contingent according to the organizers of the expo. Since its establishment in 1991, Expomin has grown from a regional trade fair into the premier showcase for global mining interests in Latin America. Traditionally dominated by Anglosphere firms, China’s rising presence at Expomin reflects not just its market share but its broader strategy of becoming an indispensable part of the future of the sector in Latin America, offering capital, technology, and political flexibility where Western actors increasingly hesitate.
“China leads not only in mining equipment but also in technology for ore crushing, tailings management, waste recovery and heavy machinery,” Expomin’s Executive Director Francisco Sotomayor said last month in an interview with China’s Xinhua news agency.
Interestingly, however, the Latin American mining market shift towards China is hard to discern from the outside. At first glance, some of the most active players at this year’s Expomin were traditional players such as Anglo American, Teck, Glencore, and Itaú.
None of the expo’s sponsors were Chinese, nor were any of its speakers, a testament to China’s quiet economic diplomacy in the region. Avoiding headlines prevents backlash and hurting Western soft power, particularly given rising concerns about Chinese influence, and operating more privately allows businesses to continue growing without causing too much of a market fuss.
Regardless of its public activities, China’s growing presence in the sector is no less critical.
Mining and energy are the two largest targets of Chinese foreign direct investment in Latin America. China is the top destination for Brazilian, Chilean, Panamanian, and Peruvian mining exports. In Chile alone, China consumed over 65 percent of the country’s entire mineral exports in 2021. China is already the top trade partner for many countries in the region, including Brazil, Peru, and Chile. It will likely soon also overtake the U.S. in Ecuador, and is on track to reach $700 billion in trade with the region by 2035.
Despite Western countries, including the U.S. and Canada, traditionally the largest mining stakeholders in Latin America, talking a big game about decoupling from China, nearshoring in Latin America, and hitting China’s influence in the Western hemisphere, that does not seem to be working in this sector.
China’s increasing banking and financial presence in Latin America will only continue as the power of the U.S. dollar weakens. Many Latin American countries, including Brazil, are now using the Chinese yuan in trade transactions with China.
Promising developments like the U.S. Inflation Reduction Act (IRA) and the European Union’s Critical Raw Materials Act could help reinvigorate Western investment in critical minerals, but political turmoil and delays have prevented any major progress toward operationalization. China is still much more flexible and cash-rich than its Western competitors, while being resistant to the structural forces currently assailing Western democracies.
The region will need more than an elevator pitch about shared values, democracy, and economic stability – particularly as the U.S. and other Western countries are increasingly characterized by authoritarian populism and economic chaos.
China has already adapted to assure local companies and governments that it complies with environmental standards, and is coming up with its own environmental, social, and governance (ESG) certifications, despite immense evidence to the contrary.
In an interview with Xinhua, Zhou Weidong, head of the Machinery Sub-Council at the China Council for the Promotion of International Trade, said that “advancements in technology and improved environmental standards have enhanced the appeal of Chinese mining equipment, providing Chinese firms with a competitive advantage in Latin America.” That quote could easily have been issued by an executive at Rio Tinto or Anglo American.
The bottom line is that Latin American countries and companies are pressed for cash, investment, and expertise – and China is offering them as much as they can give. For any major course reversal to happen, it will have to be met in kind. Until Western players can match China’s scale of financing, predictability, and technological support, the region’s mining sector will continue to pivot toward Beijing.
