European Union’s endeavour to challenge China’s foothold in South America

The European Union (EU), under the leadership of European Commission President Ursula von der Leyen, is seeking to challenge China’s already established presence in South America, particularly in the realm of lithium and other resource extraction.

This is according to Juan Alberto Rial, an analyst who spoke to Sputnik about the EU’s efforts to penetrate this strategically crucial territory.

Rial views the prospect of increased competition as generally positive, despite noting the EU’s contradictory stance of placing constraints on the South American trade bloc, Mercosur.

Von der Leyen’s recent visit to South America, including Argentina and Chile, underscored the EU’s focus on lithium, a key resource in the age of renewable energy.

She signed a memorandum of understanding with Argentine President Alberto Fernández for a Strategic Partnership on Sustainable Value Chains in Raw Materials.

Von der Leyen envisions this agreement as a win-win situation, especially in relation to lithium, and aims to extend beyond mere extraction and towards developing new value chains.

During her visit to Chile, the EU leader stressed the importance of finalizing the EU-Chile Advanced Framework Agreement that has been in negotiation since 2015.

She highlighted the potential for cooperation in green hydrogen and lithium areas and expressed Europe’s intention to create local value chains and added value.

Rial, in his conversation with Sputnik, pointed out lithium’s pivotal role in the EU’s bilateral relations with South America.

The EU aims to involve itself in the lithium exploitation and value chain, leveraging South America’s rich resources.

Rial lauds Europe’s plans to invest in projects beyond extraction and contribute to value chain creation.

He also highlighted the competition the EU faces from China, which has already made considerable inroads in the region with various investments and strategic alliances in Argentina, Chile, and Bolivia, the three nations comprising the so-called Lithium Triangle.

While China has the early mover advantage, Rial believes there’s room for more investors in the region.

However, a key question remains whether the EU can provide more appealing conditions than China for regional investment.

This becomes particularly pertinent given Europe’s increased need for energy and food supplies in light of the conflict in Ukraine and sanctions on Russia.

Rial also noted the difficulties faced by the EU and Mercosur in finalizing a free trade agreement, primarily due to resistance from certain European countries.

He pointed out that while the EU is initiating dialogue channels, as exemplified by von der Leyen’s visit, it also appears to be closing doors related to trade, such as suspending the agreement with Mercosur and introducing regulations that limit market access for South American products.

With information from Sputnik