The Four-Nation South American Joint Declaration on Critical Minerals and the Reshaping of Lithium and Copper Supply Chains

Executive Summary

Although Chile, Argentina, Bolivia, and Peru declared a joint roadmap for strategic minerals in Santiago on August 28, the agreement is more of a declarative pact for information sharing and coordinated investment attraction than a binding, cartel-like mechanism. Meanwhile, the expansion of Chinese capital into individual projects continues on a separate track, as exemplified by Ganfeng Lithium’s acquisition of its third project in Argentina. This parallel structure is likely to define the landscape for the next 12 to 24 months. Chile’s signing of a Special Lithium Operation Contract (CEOL) with Quiborax signals a policy shift, revealing the limits of its state-control model. However, Argentina’s federalist structure and Bolivia’s political instability remain structural factors that constrain the effectiveness of any multilateral agreement. For South Korean companies, securing dual access through refining and processing capabilities is a more effective strategy than choosing a side. The POSCO Group’s existing investment track record in Argentina can be leveraged as a negotiating asset in this context. Prioritizing the stable operation of existing projects and building bilateral channels with individual countries, rather than pursuing new large-scale investments, is the most rational response at this juncture.

I. Analysis of the Current Situation

The Four-Nation South American Joint Declaration on Critical Minerals: A Geopolitical Reshuffle in the Lithium Triangle

1. Background and Developments

On August 28, Chile, Argentina, Bolivia, and Peru signed a joint roadmap declaration for strategic minerals in Santiago, the outcome of the first ministerial meeting dedicated solely to this topic [1]. The signatories were Chile’s Minister of Economy and Mining, Daniel Mas; Argentina’s Secretary of Mining, Luis Lucero; Bolivia’s Vice Minister of Mining Policy, Wálter Landívar; and Peru’s Minister of Energy and Mines, Guillermo Shinno [1]. These four nations comprise the “Lithium Triangle” and the copper belt, holding a significant portion of the world’s lithium reserves and forming a key axis of copper production.

This joint declaration stems from a recognition of the limits of individual national negotiating power. On August 25, Chile had already signed the country’s first Special Lithium Operation Contract (CEOL) with the private company Quiborax in the Arica and Parinacota Region [11]. This contract is a notable case as it approves a project fully controlled by the company, a departure from the previous lithium development model where the state maintained control. It shows that the government is making its regulations more flexible to attract private capital [11]. In Argentina, Chinese capital is already deeply entrenched, particularly in the Salta and Jujuy provinces. Ganfeng Lithium, building on a decade-long partnership operating the Caucharí-Olaroz project and its ownership and operation of the Mariana project, has secured its third venture by acquiring a 67% stake in the Pozuelos-Pastos Grandes (PPG) project [4]. It also made a parallel investment of $180 million in convertible notes in its Canadian partner, Lithium Argentina [4].

2. Current Situation

The Santiago Declaration marks a departure from the previous phase in that the four countries are attempting to establish a regional framework for joint action instead of exercising their negotiating power as resource-rich nations individually. *El Mercurio* described it as a “common roadmap for the Southern Cone of South America” [1]. However, it has not yet been specified whether this declaration is a binding, cartel-like price control mechanism or if it is limited to information sharing and coordinated investment attraction.

Meanwhile, the deepening of Chinese capital in the region continues on a separate track from the declaration. Ganfeng’s acquisition of its third project shows that Chinese companies’ stakes in Argentina’s lithium industry are expanding beyond participation in single projects to encompass all stages of development and operation [4]. *The Buenos Aires Times* points out that the U.S.-China competition over the Vaca Muerta shale field, the Paraná-Paraguay Waterway (Hidrovía), and Patagonian infrastructure is erupting “like an uncontrollable fountain” amid Argentina’s domestic political debates [7][2]. In Brazil, two U.S. proposals for cooperation on critical minerals, sent in February and at a later date, have yet to receive a response from the government in Brasília. A Washington diplomat commented at the Belo Horizonte mining expo, “It looks like we’ll have to wait until after the election” [9]. This reflects the local assessment that the United States is unlikely to make substantial progress until after Brazil’s presidential election in October. At the same time, there are also reports that a U.S.-backed acquisition of rare earth elements is nearing completion separately [9].

3. Key Actors and Interests

The Chilean Governmentis seeking a balance between its state-controlled lithium policy and the need to attract private capital. At the CEOL signing ceremony, Minister Mas stated that the government “has been reviewing various alternatives to dynamize the development of the lithium industry and attract private investment for the exploration and development of this key resource for the energy transition” [11]. This suggests a policy shift away from the system centered on state-owned Codelco and SQM toward allowing standalone projects by private companies.

The Argentine Governmenthas maintained a proactive stance on attracting foreign investment since the inauguration of the Milei administration, and under this policy, the expansion of Chinese capital into the mining sector has proceeded with few political obstacles. However, in infrastructure areas such as Vaca Muerta and the Hidrovía waterway, U.S.-China competition has become a subject of domestic political debate, indicating a difference in temperature between the mining sector and the infrastructure and energy sectors [7].

Ganfeng Lithiumand other Chinese companies are upgrading their market entry strategy from equity participation to securing operational control. The structure of taking both a 67% stake and operational responsibility in the PPG project aims for effective control over the entire production and logistics process, moving beyond simple capital investment [4].

The United Stateshas designated Brazil as a key foothold but has failed to gain the cooperation of the local government. The *South China Morning Post* reported this in a manner suggesting “the U.S. has conceded defeat in the minerals race with China,” and noted that the key question is whether Brazil can turn this vacuum into an opportunity to build its own refining and processing capabilities [10]. This illustrates a recurring pattern across Latin America: a gap between Washington’s announcement-focused approach and the actual deployment of capital [8][5].

South Korean Companieshave already secured a substantial stake within this framework. The POSCO Group, after eight years of continuous investment in Argentina’s Salar del Hombre Muerto, has established a lithium production system at an altitude of 4,000 meters. A company official stated, “Through our lithium business in Argentina, we will enhance our competitiveness in secondary battery materials and contribute to the economic security of the Republic of Korea” [13]. However, the global reliance on China for 70.2% of lithium refining and processing is a structural problem that cannot be solved by POSCO’s raw material acquisition alone [13].

4. Key Issues

The first issue is the effectiveness of the Santiago Declaration. It is uncertain whether it will evolve beyond information sharing and a joint roadmap into a mechanism for substantive coordination on prices and volumes, or if the individual nations will continue to compete to attract the best investors. Chile’s approval of a standalone CEOL for a private company and Argentina’s policy of openness to Chinese capital show that the four countries are pursuing liberalization at different paces, separate from the joint declaration [11][4].

The second issue is the United States' capacity to respond. As the case of Brazil illustrates, there is a significant time lag between the announcement of U.S. supply chain realignment plans and the actual deployment of capital [9][10][8]. If this pattern repeats in the Lithium Triangle, it is highly likely that the U.S. will only begin to respond after Chinese companies have already solidified their preemptive stake acquisitions.

The third issue is the bottleneck at the refining and processing stage. Separate from the competition for raw ore, refining capacity for lithium and copper remains concentrated in China [13]. If the Santiago Declaration is limited to cooperation at the mining stage and does not extend to the joint development of refining capacity, the four nations' attempt to strengthen their resource sovereignty will be difficult to fully translate into negotiating power with end-users like battery and semiconductor companies.

II. In-Depth Analysis

The Four-Nation South American Joint Declaration on Critical Minerals: An In-Depth Analysis

1. Analysis of Root Causes

The shift by the Lithium Triangle countries toward a joint roadmap is rooted in their past failures with individual negotiations. In Bolivia, the nationalization model has delayed the pace of lithium development itself. Argentina, in contrast, adopted an open model but only deepened its dependence on Chinese capital. There is a shared recognition that both extremes have failed to secure the level of value-added that their respective governments desired.

The situation in Chile is similar. Departing from its traditional approach of strong state control over lithium development, on August 25, Chile signed the country’s first CEOL that grants full control to a private company, Quiborax [11]. This can be read as the Chilean government’s own acknowledgment of the limitations of its state-led model. At the signing, Minister Mas stated that the government “has been reviewing various alternatives to promote the development of the lithium industry and attract private investment for the exploration and development of this resource, which is key to the energy transition” [11]. Underlying this policy shift is the judgment that state control alone is not enough to accelerate investment.

Demand-side factors also play a role. *El Mercurio* covered the declaration under the headline “Facing High Global Demand” [1]. The rising demand for copper and lithium, driven by the expansion of batteries and power grids, can be seen as a pressure that pushed the four nations to opt for securing price and investment bargaining power through regional cooperation rather than relying on individual negotiating strength.

More fundamentally, there is a structural disadvantage at the refining and processing stage. The global lithium supply chain has a 70.2% dependency on China for refining and processing [13]. No matter how dominant the four South American countries are in terms of reserves at the ore extraction stage, as long as the refining bottleneck is not resolved, pricing power will remain with China. Whether the joint declaration can move beyond cooperation in mining to securing processing and refining capabilities will be the measure of its substantive weight.

2. Structural Context

Political Structure: The Dual Constraints of Resource Nationalism and Federalism

In Argentina, due to its federal system, jurisdiction over mining lies with provincial governments like Salta and Jujuy. Even if the central government introduces policies aimed at checking China, contracts with individual companies like Ganfeng Lithium proceed independently at the provincial level [4]. *The Buenos Aires Times* noted that U.S.-China competition over the Vaca Muerta oil field, the Paraná-Paraguay Waterway, and Patagonian infrastructure has erupted “like an uncontrollable fountain in the fertile soil of domestic debate” in Argentina [7]. This means there is a gap between the central government’s foreign policy and the actual contracts signed by provincial governments. This gap is a structural factor that limits the effectiveness of multilateral agreements like the Santiago Declaration.

Bolivia is at the opposite extreme. The state’s tight grip on lithium development has delayed foreign investment, and its commercial lithium production lags behind the other three nations. The fact that Bolivia sent a vice minister (Wálter Landívar, Vice Minister of Mining Policy, Regulation, and Inspection) rather than a minister to the declaration also indicates the issue’s priority in its domestic politics [1].

Economic Structure: The Dual Dilemma of Refining Bottlenecks and Capital Procurement

A previous EAI analysis pointed out that U.S. and European critical minerals policies have involved “injecting public funds without first identifying and resolving the binding constraints that prevent private capital from flowing in” [8]. This diagnosis applies equally to South America. Even when Washington advocates for supply chain diversification, it cannot compete with Chinese companies in the speed of actual capital deployment. This is supported by the fact that Ganfeng Lithium secured its third project in Argentina, becoming the operating entity with a 67% stake by leveraging its experience from operating Caucharí-Olaroz [4]. U.S. capital tends to remain at the announcement stage, while Chinese capital repeatedly follows a pattern of leveraging existing partnerships to secure subsequent projects.

The case of Brazil highlights this asymmetry even more clearly. A U.S. diplomat at the Belo Horizonte mining expo revealed that the Brazilian government has not yet responded to a draft cooperation proposal sent in February, saying, “It looks like we’ll have to wait until after the election” [9]. On the other hand, there are also reports that a U.S.-backed acquisition of rare earth elements is separately nearing completion [9][10]. This asymmetrical structure—where official intergovernmental agreements are delayed while individual capital transactions proceed—shows that in the reshaping of South America’s critical minerals supply chain, corporate-level contracts, rather than declarations between nations, are the channels creating real change.

Security Structure: Infrastructure Dependency and Competing Geopolitical Interpretations

*Janes* defines China’s involvement in Latin America as “not merely an economic issue but a long-term strategic challenge to influence with security implications” [3]. The precedent of Peru’s Chancay port, initially presented as a commercial logistics facility but later revealing its nature as a strategic asset, supports this interpretation [3][2]. Lithium and copper could follow a similar path. The core of the *Janes*-style interpretation is that what begins as purely commercial mining and processing contracts could, over time, transform into a structural dependency for a country’s battery and defense industrial supply chains.

Competition over technological infrastructure follows the same trend. The case in the Dominican Republic in August, where the U.S. embassy posted a warning on social media about Chinese companies like Huawei, ZTE, and Hikvision, prompting an immediate rebuttal from the Chinese mission in Panama, shows that the U.S. and China are treating resources and telecommunications infrastructure as a single front [14][2]. Mineral contracts in the Lithium Triangle could also be interpreted through this lens of securitization.

3. Historical Precedents and Comparative Cases

Structural Differences with the OPEC Model: While the Santiago Declaration might be compared to an OPEC-style cartel, the structural preconditions are different. Most OPEC member states could directly control production volumes through their national oil companies. In contrast, the four Lithium Triangle countries each have different development models. Until recently, Chile has practiced state control, Argentina has an open model led by private and foreign capital, Bolivia has nationalized its resources, and Peru has a separate system centered on copper. Without a single executive body to regulate production, it is difficult to move beyond the level of information sharing and a joint roadmap.

Parallels with the DRC Cobalt Case: A previous EAI analysis noted that the Democratic Republic of Congo chose a path to “increase its negotiating power through resource sovereignty rather than siding with either the U.S. or China” by implementing a “value-added strategy of banning the export of raw cobalt and copper ore to secure domestic refining and processing stages” [5]. The joint declaration by the four South American nations follows a similar logic. Based on the recognition that it is difficult for individual countries to exert negotiating power over either the U.S. or China, the DRC chose a national-level measure (banning raw ore exports), while the four South American countries chose a regional-level measure (a multilateral roadmap). Although their responses differ, they share the same underlying problem awareness.

Comparison with the African Case: *Le Monde* points out that although Africa holds about “one-third of the metals essential for the energy transition, semiconductor manufacturing, and the defense industry” in its subsoil, it has long remained a spectator in the great power competition [12]. The recent declaration by the four South American nations can be interpreted as an attempt to move beyond this spectator role. However, as in Africa, unless the structural disadvantage in refining and processing capacity is resolved, it is uncertain whether a stronger voice at the negotiating table will translate into actual power over prices and volumes.

4. Key Variables Shaping Future Developments

First, the level of legal bindingness of the declaration. Whether the Santiago Declaration remains at the level of information sharing and joint marketing or develops into a binding mechanism with features like production and export quota adjustments will determine its substantive weight. The information released so far indicates it is a roadmap, and no specific enforcement mechanism has been confirmed [1].

Second, the speed of U.S. policy implementation after the Brazilian presidential election. The current situation, in which the Brazilian government is not responding to U.S. cooperation proposals, could change after the October presidential election [9]. Brazil’s direction will be an indicator of the level of U.S. engagement in the critical minerals landscape of South America as a whole.

Third, whether Argentina’s provincial governments continue to pursue individual contracts.If the provinces of Salta and Jujuy continue to expand their contracts with Chinese capital, regardless of the central government’s political stance, the Santiago Declaration’s function as a check on China will be substantially diluted. Ganfeng Lithium’s acquisition of its third project indicates that this trend is already underway [4].

Fourth, the success of efforts to attract investment in the refining and processing stages.The declaration's substantive success will be judged by whether cooperation moves beyond the ore extraction stage to materialize as joint regional investment or third-country capital for refining and processing facilities. Given that China currently accounts for 70.2% of the global lithium refining network [13], cooperation at the extraction stage alone will have limited impact on securing price-setting power without changes at this later stage.