Chinese Investment in Argentina Amid Political and Economic Challenges

by | Oct 3, 2024 | FDI Latin America

The local political fluctuations and economic recession that Argentina is experiencing are far from discouraging Chinese investment in Argentina, which continues to strengthen its foothold in the domestic market. In addition to staying involved in Dam Projects in Patagonia, even though the Chinese company leading those initiatives has acknowledged current difficulties and even hinted at withdrawing from ongoing developments, China is expanding its control over Strategic Mineral Reserves and is preparing to activate a Satellite Facility. Similar to the operational base in Neuquén, this project is causing unease within the U.S. military. Additionally, China is preparing to enter the automotive scene in the province of Córdoba, further demonstrating Chinese investment in Argentina.

Expanding Chinese Control Over Strategic Minerals

China’s expansion in the Mining Sector is not limited to lithium, although it remains a significant focus for Chinese capital. The strategic importance of gold, copper, iron, and silver is evident in these materials’ strong attraction for Chinese companies. Their investment in Argentina, particularly in these areas, underscores the strategic significance of these minerals in the country’s economy.

In this regard, the Rosario Stock Exchange (BCR) issued a report detailing the primary deposits where Chinese investment in Argentina is evident. According to a review by iProfesional, the projects range from Feasibility Stages to Production, depending on the type of venture. Regarding gold and silver, the most significant deposits are in Veladero in the San Juan and Suyai provinces in the Chubut region. According to the BCR, “the project, like La Ortiga, is a joint venture in which Barrick Gold holds 50% of the capital, and Shandong Gold provides the other 50%.” The Chinese company Shandong Gold purchased 50% of the mine in 2017, making an estimated investment of $960 million. The project’s lifespan is expected to extend until 2034, and the Capital Expenditure (CAPEX) is projected to be around $600 million.

Chinese Involvement in Major Mining Projects

As for Suyai, Chinese involvement amounts to 40% through the presence of CAM. “The mine’s estimated average annual production is 250,000 ounces of gold. The expected final product will be doré, an alloy of gold and silver. The project envisions a capital expenditure (CAPEX) of $220 million and will use an underground mining method to extract the minerals,” the report noted, illustrating another form of Chinese investment in Argentina.

Regarding Copper Mining, Shandong Gold is involved in La Ortiga in San Juan in partnership with Barrick Gold. “The investment in exploratory activities is expected to reach $6.5 million over five years, starting from the signing of the exploration contract in September 2020. The contract was awarded to Del Carmen SA, a subsidiary of Barrick Gold,” according to the BCR. In the province of Jujuy, Chinese investment in Argentina is also evident through the extraction of zinc, lead, copper, and silver at the La Providencia Mine, located in the department of Susques. The project has been in production since March 2023 and is wholly owned by the Chinese company Hanaq Group, which reportedly invested $15 million.

Chinese Reopening of Mines and Space Initiatives

“Previously, the mine had ceased production activities in 1997, and following the acquisition of the project by the Asian company in 2018, it was possible to reopen after an initial exploration phase identified new mineral reserves, making it possible to resume extraction activities,” the report continued, further demonstrating Chinese investment in Argentina.

Meanwhile, the Asian giant is in the Final Countdown to the Launch of a ‘Giant Eye’ in San Juan. Specifically, following an agreement with the government, China will soon activate the most powerful radio telescope in South America, located near El Leoncito, in the department of Calingasta. This Satellite Project, like others, represents another crucial component of Chinese investment in Argentina.

China Eyes the Automotive Industry in Córdoba

China also sets its sights on the Automotive Sector. Separately, China’s ambassador to Argentina, Wang Wei, met with officials from the province of Córdoba and made a statement that sparked anticipation in the region: “I see it as very likely that a Chinese Carmaker will set up in Córdoba.”

According to the Córdoba government, possibly establishing a Chinese automotive plant in the province would significantly boost the local industry. The province already hosts major car factories such as those of the Stellantis Group (Ferreyra), Renault-Nissan (Santa Isabel), and Iveco (Ferreyra), all dedicated to producing heavy commercial vehicles. As this sector expands, Chinese investment in Argentina will likely play an essential role.

Chinese Electric Vehicle Investment in Argentina

“Chinese car brands are already present in South America and the Mercosur, and Chinese cars are increasingly seen on Argentine roads,” said Wei. He also emphasized that China is one of the world’s leading suppliers of Electric Vehicles, with one-third of the global production of these cars coming from China. Chinese investment in Argentina is poised to grow further in this area.

Wei also mentioned that several Chinese electric vehicle companies are evaluating the possibility of setting up factories in Argentina, noting that they already have a presence in Brazil. According to the ambassador, establishing a plant in Córdoba will depend on local authorities’ policies to attract foreign investment, marking another significant chapter in Chinese Investment in Argentina.

Conclusion: Strengthening Chinese Presence in Strategic Sectors

Chinese Investment in Argentina continues to expand across strategic sectors despite the country’s political and economic challenges. China has increased its influence in the Mining Industry, focusing on lithium, gold, copper, and silver minerals. Key projects include partnerships in the Veladero mine in San Juan and Suyai in Chubut, where Shandong Gold holds significant stakes. In Jujuy, Chinese-owned Hanaq Group revived the La Providencia mine, while exploratory activities in copper mining continue through partnerships. Additionally, China is advancing its Satellite Presence in Argentina by launching a powerful radio telescope in San Juan, further challenging U.S. interests. Beyond mining and space, China’s Automotive Sector is poised to enter the Argentine market, particularly in Córdoba, where local officials are working to attract investment from Chinese electric vehicle manufacturers. Ambassador Wang Wei highlighted China’s growing presence in South America’s automotive market, suggesting that a Chinese carmaker could establish operations in Córdoba. This would complement existing plants from companies like Stellantis and Renault-Nissan. Overall, Chinese Investment in Argentina is strengthening in critical areas like strategic minerals, automotive, and space technology, challenging U.S. influence in the region.