Is China's economic stimulus an opportunity for Chilean mining?

Despite calls to increase mining investments in the West to counter Chinese dominance in global mineral markets and the trend to raise tariffs on imports of Chinese products to protect domestic economies, it would be in Chile's interest to keep the Asian nation as a key partner, a webinar was told.

Between 2018 and 2023, Chile's mining exports to China grew at an annual average rate of 8.6%, although they fell last year to US$29.5bn. Bilateral trade, meanwhile, grew 6% annually on average, reaching US$56.8bn in 2023.

Trade could expand, experts told a webinar hosted by Fundación Chile Pacífico, despite China's weaker economic prospects.

The World Bank expects China's GDP to grow 4.3% in 2025, down from 4.8% this year, a situation that Xi Jinping's government is seeking to address with a series of stimulus measures.

Natalia Cortés, head of the Asia and Oceania department at export promotion agency ProChile, believes “the Chinese economy is advancing today with a new focus on sustainability, high-end industries, the green economy and poverty reduction,” she told the webinar.

According to Cortés, these new fronts of opportunity for Chilean companies are added to the expansion of production of electric vehicles, lithium batteries and renewable energy systems in China, which are current drivers of demand for mining products.

Bruno Hernández, senior partner in international business at consulting firm Dezan Shira & Associates, believes China's goal of strengthening the middle class and expanding urbanization will be other business opportunities for Chile.

In the next decade, the goal is for "73% of the Chinese population to live in cities," Hernández said in the webinar, citing the boom in materials that this will require.

An ideal partner or competition?

Jonathan Price, CEO of Canada's Teck Resources, called for diversifying mineral supply chains to reduce China's capacity in global processing for national security reasons.

At the same business event in Ottawa this week, Price said Canada is not doing enough to boost its mining industry. The same issue has been discussed in the local mining community.

"China’s spending on and acquisition of overseas mines has grown significantly in the past 10 years reaching record levels of US$10bn in the first half of 2023 with a particular focus on battery metals such as lithium, nickel and cobalt," says the International Energy Agency (IEA) in its latest report on critical minerals.

The IEA also warned that "over 90% of battery-grade graphite and 77% of refined rare earths in 2030 [will] originate from China." 

So, while the Chinese government's interest in expanding its development of green technologies and electromobility could continue to benefit Chile's mining exports, market concentration could undermine the attempts of the world's leading copper producer and second largest lithium producer to expand its own markets.

"The diversification of clients and players is positive. But in the case of lithium in Chile, many technologies will come that will renew the industry and it won't be enough to have the best resources, we need good partners too," Cortés told the webinar.

It will not be easy for Chile to reduce its dependency on China, which has been its biggest trading partner for almost two decades.

"If China grows by one point, Chile grows by 0.1%," said the ProChile executive.