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Jun 18, 2023

China Seeks to Control Strategic Minerals

Chinese companies have been expanding worldwide, seeking to extract the

Chinese companies have been expanding worldwide, seeking to extract the strategic minerals that fuel the clean energy revolution. Their sights are set on Latin America and its reserves of lithium, cobalt, copper, and rare earth elements. Between 2018 and 2023, Argentina, Bolivia, and Chile received the top Chinese lithium investment, the Latin America Center of U.S. think tank Atlantic Council indicated in an infographic series of early April.

"Mining companies invest in the region because the resources available in Latin America are of high quality, have a good price, and are in demand in the Chinese market," Francisco Urdinez, an associate professor at the Institute of Political Science of the Pontifical Catholic University of Chile, told Diálogo on April 20. "The interest in lithium because of the growing demand to develop clean technologies for electric cars, the investments in iron in Brazil and copper in Peru, are driven by the economic boom of the last 20 years."

The race for the dominance of green technologies, where investments for the extraction of strategic minerals are at the fore, has high environmental costs.

"The search for and extraction of lithium should contribute to the energy transition and the fight against climate change," Aleida Azamar Alonso, coordinator of the Master's program in Sustainable Societies at the Autonomous Metropolitan University of Mexico, told Argentine news site Canal Abierto. "We must be attentive to the whole series of resources consumed by this industry, to its eventual waste, and to the impact on the flora and fauna of the affected regions."

In a report, New York-based nongovernmental organization (NGO) International Service for Human Rights and The Collective on Chinese Financing and Investment, Human Rights, and Environment (CICDHA), a working space for a group of Latin American civil society organizations to implement an advocacy strategy and influence Chinese actors that have an impact on the region, compiled information on 14 Chinese capital projects that affect the rights of regional communities. Of these, six are mining investments located in the Andean region between Ecuador, Peru, and Colombia.

Sofía Jarrín Hidalgo, Ecuadorian activist and advocacy advisor for the NGO Amazon Watch, told environmental news site Mongabay Latam, that three Chinese projects located in the Ecuadorian Amazon seriously affect the environment and present problems of compliance with free and informed consent.

"It is essential to have formal and adequate channels for complaints that allow companies and financiers to be held accountable, to sanction companies’ abusive behavior and to guarantee access to remediation and integral reparation for the affected communities," Jarrín Hidalgo said.

The CICDHA report indicates that in the Ecuadorian province of Zamora Chinchipe, the Mirador mining project of Ecuacorriente, a subsidiary of Chinese state-owned companies Tongling and China Railway Construction Corporation (CRCC), impacts at least 16 different ecosystems, where 4,000 species of plants and 400 species of algae are found.

Meanwhile, in the Ecuadorian province of Morona-Santiago, the San Carlos-Panantza mining project of Explorcobres, a subsidiary of the CRCC-Tongling consortium that also exploits El Mirador, affects 1,200 families in 47 communities, and compromises 70 percent of the ancestral territory of the Shuar Arutam people, the study indicates. "After seven years of legal proceedings, the Constitutional Court of Ecuador ruled that the processes of socialization carried out by the mining company are not equivalent to carrying out a prior consultation. Thus, it ordered full reparation to the Shuar people," the report indicated.

The results of this report were presented in February to the Committee on Economic, Social and Cultural Rights of the United Nations (U.N.), requesting that it recommend China to protect and comply with its extraterritorial obligations contained in the International Covenant on Economic, Social and Cultural Rights (ESCR Covenant) and other U.N. instruments signed and recognized by China, in the context of projects with Chinese participation in Latin America.

"All the projects analyzed are located in areas of high social conflict, great environmental and cultural diversity, particularly in indigenous territories," said Marco Antonio Gandarillas, who monitors Chinese projects for Ecuadorian NGO Latinoamérica Sustentable, in a press release from Peruvian NGO for sustainable development CooperAcción. "The ESCR Committee's assessment is crucial for the future of Chinese investment and financing in the region."

A key common factor in Chinese investments that are causing environmental degradation is that the regulatory systems in place have failed. And this is precisely an urgent aspect that needs to be addressed to strengthen them.

"The states receiving these investments fail to control them accordingly. A phenomenon occurs in which the company is not willing to improve standards unless it is required to do so by the state; if the state does not mandate it, standards are simply not respected," Urdinez said. "The same companies can have very different behaviors in two different countries, depending on the regulatory quality of the countries receiving the investments."

According to the U.S. Office of National Intelligence's 2023 Annual Assessment Threat, China's dominance in the extraction and processing of several strategic materials represents a threat.

"China could use its control of these critical mineral markets to restrict quantities and gain commercial advantage, or as a tool in a political or trade dispute," the assessment states. "Prolonged disruption in Chinese-controlled supplies would result in shortages that could affect production in civilian and defense manufacturing in the West. However, restrictions on exports of critical minerals would likely accelerate efforts and coordination around the world to develop alternative sources or substitutes outside China."