China Cutting US Out of Chile’s Key ‘Green Energy’ Market

As the Biden administration continues to openly attack domestic energy production, its plan to force America to embrace a “green” economy is running into trouble. Chile has crucial resources needed for electric vehicles in its copper and lithium industries, and China has been actively taking control of the Chilean market for all of this century.

Free trade treaties between Chile and China dating back to 2005 have allowed China to assert dominance over much of the global supply of the two resources critical to battery system manufacturing.

Chile is the top producer of copper in the world and is second only to Australia in lithium production. By 2019, Chile had 28% of the world copper market and 23% of the lithium production. In 2021, almost 84% of Chile’s exports to China were mineral products.

Chile is believed to hold more than half of global lithium reserves. Lithium, like copper, is essential to the manufacturing of electric vehicle batteries. China is meanwhile the world’s largest consumer of the two mineral resources. The submissive attitude of Chilean politicians toward China’s aggressive approach has helped make the South American country a virtual mineral colony.

New far-left Chilean President Gabriel Boric took office in March after running an environmentalist and pro-green energy campaign. He has announced his plans for a Chilean national lithium company to double the country’s production of the mineral. He has also said he expects to move further in nationalizing the copper industry.

Even though Boric has called upon China to do more to preserve the global environment, his plans for expanded exports of copper and lithium to his largest trading partner is likely to run counter to his political promises. Increased mining inside Chile will undoubtedly cause increased adverse environmental impacts there.

Even current levels of lithium mining in Chile have had significant negative effects on the country’s desert region of Atacama. Local indigenous communities in the region have lost access to already previously scarce water resources.

China has expanded its influence on other parts of the Chilean economy in recent years. The State Grid Corporation of China (SGCC) purchased a 100% interest in the Chilean Chilquinta Energia S.A. electric power producer two years ago. SGCC also acquired more than 96% of Chile’s largest electric company after that purchase. China now controls around 57% of all Chilean electricity production.