Patagonia is the latest energy flashpoint for China and the West
Semafor Signals
Insights from Americas Quarterly, Chinese in Chile, and RAND
The News
A far-flung port in southern Chile is drawing interest from both the US and China as the fjords of Patagonia become the latest flashpoint for rivalry over energy and mineral dominance.
As conflict in the Middle East and the climate crisis force shipping companies to reroute away from the Suez and Panama canals, the southern tip of South America is once again becoming an important trade route.
Punta Arenas, a key port that sits on the Strait of Magellan between the Pacific and Atlantic oceans, has become a hotspot for global shipping, and a symbol of the broader tussle for influence in Latin America.
And the remote Patagonia region is becoming a key energy and mineral resource hub thanks to its ideal conditions for the production of a type of renewable hydrogen and its proximity to Antarctica.
Both the West and China are now eyeing the region and its riches as crucial to their economic ambitions, causing geopolitical tensions to flare.
SIGNALS
Europe and China race to export Chile’s green hydrogen
Sources: Americas Quarterly, Chinese in Chile, Dialogue Earth
Green hydrogen is rapidly becoming one of the most lucrative sources of renewable energy: under its ambitious net-zero scenario, the International Energy Agency predicts the sector could balloon to $112 billion by 2030. Production takes huge amounts of electricity and infrastructure, but Chile’s Magallanes region around Punta Arenas is a “Goldilocks place” to produce it thanks to its strong winds and sparse population, Americas Quarterly reported. Chile has succeeded in reducing the costs of producing renewable energy in recent years, placing it “at the vanguard of the hydrogen revolution” according to the Chinese in Chile WeChat blog. The question is who will dominate in securing hydrogen exports: European countries including Spain, Ireland and Italy have floated investment proposals, but China has been the leader in helping Chile decarbonize its energy grid.
China taps Argentina as it eyes Antarctica’s resources
Sources: Institute for Security and Development, RAND
China’s plan to build a port on the southern tip of Argentina, the closest place in the world to Antarctica, is likely part of a wider bid for control of strategic polar regions, according to the Institute for Security and Development. China opened a new Antarctic base this year, and Western observers warn the country’s growing presence in the Antarctic could lead it to dominate in exploiting as-yet undiscovered resources. Both militarization and mining are banned under the decades-old Antarctic Treaty — of which China is a signatory — but since no enforcement mechanisms exist, “Chinese Antarctic mining activities could consequently open the floodgates for similar activities” if Beijing ever calls to renegotiate the treaty, which signatories can enact at any time, according to the RAND think tank.
Milei poses an obstacle to China’s Patagonia expansion
Sources: South China Morning Post, La Política Online, Diálogo Americas
Upon taking office last year, Argentina’s right-wing President Javier Milei said he would transfer project rights of China’s proposed Rio Grande port on the country’s southern tip to local developers. Washington has lobbied Milei to stop China from building the port and other scientific research centers in Argentina, Argentinian newspaper La Política reported. However, Milei may be realizing the limits of his anti-China rhetoric, as Argentina needs Chinese investment. The president has refused to touch the country’s $18 billion currency swap with Beijing — desperately needed to aid Argentina’s depleted central bank funds — which China uses as leverage to secure supplies of food and critical minerals such as lithium, according to Bloomberg. One international relations academic said China would likely refuse to back down over the port plan and the development wouldn’t be canceled, just postponed.
