Critical Minerals and the US–China Rivalry in South America
Latin America’s critical minerals make for a geopolitical flashpoint, with the defence choices of Brazil, Argentina, Chile and Peru increasingly entangled in global power competition.
The race for market domination in crucial issues such as artificial intelligence, 5G networks, semiconductors, and critical raw minerals is happening simultaneously and across hot spots undergoing heavy geopolitical realignment in Eurasia, Africa and South America.
The surge in military consumption of traditional metals such as copper and silver for ammunition, electronic and weapon systems, or graphite and lithium used in battery production, military communications and unmanned systems, have singled out the Western hemisphere as a growing strategic playfield due to its abundance of these resources.
Resource-rich nations seem confronted by what scholars call a ‘minerals trilemma’ where governments need to ‘balance national security, economic feasibility, and sustainability’. For Latin American countries, both from the perspective of domestic defence capabilities and geopolitical relevance, minerals like lithium, graphite, copper, nickel, uranium, cobalt and rare earths elements are seen as particularly prized by the industrialised nations. The UK Ministry of Defence is actively managing supply chain resilience to protect military readiness ‘from the simplest firearm to F-35 fighter jets’. The US Department of Defense is adamantly investing in critical minerals projects as tension is high with Chinese competition. Beijing announced in late 2024 harsh export restrictions on dual-use technologies and barriers to trading critical minerals. ‘Critical mineral security is now intrinsically linked to the escalating tech trade war’, observers added.
According to NATO, critical minerals and rare earth elements enable high-tech weapon systems and electronic warfare and can be found in radar systems, precision-guided weapons, jet engines, lasers, night-vision goggles, and communications.
Brazil and Argentina have notable rare earth reserves. Cobalt, found in Cuba, Brazil, and small deposits in other countries, is currently used in thermal-resistant materials and power systems including high-performance alloys, batteries for military electronics, and missiles. Graphite is used in battery production, missile technology and military-grade lubricants, particularly battery anodes, lubricants for high-performance military equipment, and nuclear reactors. Mexico and Brazil have sizable graphite resources.
Brazilians are developing Latin America’s first nuclear-powered submarine (SN Álvaro Alberto), requiring uranium enrichment and high-performance alloys like niobium and nickel. Its space programme, responsible for the Alcântara Launch Centre, needs rare earths for satellite tech and guidance systems. As well, its defence exports industry around the Embraer jets require stable access to aluminium, nickel and rare earths. Brazil enjoys a favourable strategic position as it is self-sufficient in niobium and uranium. Its ambitions to reduce dependence on China for rare earth elements via domestic development have put the country in direction towards a regional leadership role in defence industrial cooperation.
The US . . . supports Brazil’s defence industry via partnerships . . . but is wary of Chinese access to dual-use minerals and strategic ports like in Rio Grande do Sul
The global armament industry is more frequently using nickel (of which Brazil, Cuba, and Colombia have significant production) in alloys for armour plating, jet engines and battery cathodes. Nickel and other corrosion-resistant metals provide military hardware with durability.
Systems like Brazil’s MAR‑1 air-to-surface anti-radiation missile, used on AMX and F‑5 and Mirage platforms have various uses for critical minerals including rare earth elements (neodymium, praseodymium, terbium and dysprosium) for permanent magnets in guidance systems; copper and nickel‑based alloys for reliable electronics and structural resilience. Embraer planes (like the E-jets and C‑390) use titanium and an array of other metals and rare earths for engines and radar systems, with copper wiring and high-grade aluminium alloys essential in avionics and structural components.
Argentina operates nuclear power plants and has enrichment facilities. This supports nuclear energy and potential naval propulsion tech. Its air force and aerospace sector (INVAP) relies on rare earths and high-purity metals for radar systems and satellites. Argentina’s strength in scientific R&D, contrast to its limited industrial-scale extraction. While previous governments have looked to partner with Brazil and China for dual-use technology development, the current administration might be more interested in developing national lithium value chains with potential for military-tech spillovers. Argentina has major reserves in the Lithium Triangle (the resource-rich region comprised between parts of Argentina, Bolivia and Chile) and smaller deposits of rare earths in Patagonia.
Brazil and Argentina have known uranium reserves and some enrichment capacity. The defence importance of Uranium is connected to strategic deterrence (nuclear weapons), naval propulsion (submarines) and reactors for military energy needs. Anti-tank infantry armaments, like the Argentine MARA by the local company DGFM and the feral agency in charge of the development and research of technologies for the armed forces, CITEDEF, typically use copper, nickel and rare earths used in guidance electronics and rocket propellant ignition systems, and high-grade steel/nickel alloys in launcher tubes for structural integrity.
Chile’s heavy foreign investment from US and China in lithium and copper contrasts with a minor domestic defence industry. The country has largely put its hopes in becoming a key mineral supplier for the export market as it has no nuclear program, but its heavily involved in space and slowly but steadily in acquiring unmanned systems. Its focus on resource diplomacy more than military-industrial development follows a long-standing record of copper (world’s largest producer) and new plans to develop its indigenous lithium sector (second-largest global producer).
Systems for air defence, like Chile’s NASAMS, contain rare earth elements for radar electronics, phased-array components and magnetics. Chile’s air-defence like the Mistral type and M‑163/M‑167 anti-aircraft guns frequently have rare earths and cobalt in guidance electronics and magnetic sensors; and copper and nickel alloys in fire-control electronics and launcher structures. The state-owned company FAMAE produces firearms like the CT‑30 carbine, SAF submachine gun, FD‑200 sniper rifle, and rocket launchers which can frequently use copper and nickel alloys in precision barrels and firing mechanisms, and lithium and graphite in advanced multiple launch guidance modules and warhead electronics.
Similarly, Peru’s defence industry is limited, making the country act more as a resource provider. Foreign companies, especially China and the United States are heavily involved in extraction practices which make Peru a heavy competitor with other poles of regional value chains, for example, in Brazil and Chile. But given its large copper reserves (second-largest Latin American producer), lithium (emerging deposits less developed) and rare earths (small but untapped potential in Andean regions), it can turn around the country’s in-house offer for the global defence market.
Peruvian armament including Russian-made Mi‑24 use titanium in their armour, and the currently in-construction vessels for the Navy by Hyundai Heavy Industries will have cobalt and manganese used in wiring, communications and sensors across all systems, with nickel, cobalt and rare earths required in missile systems, armaments, engine turbines and electronics. Lithium-ion battery technology capabilities will be offered in the Hyundai package for submarine replacement.
Strategic Alignment or Neutrality?
China is Brazil’s top trading partner and major investor in rare earths, lithium and infrastructure. The US on the other hand supports Brazil’s defence industry via partnerships with Embraer and Amazon surveillance, among others, but is wary of Chinese access to dual-use minerals and strategic ports like in Rio Grande do Sul. Brazil’s nuclear submarine relies on uranium and high strength alloys and faces export control sensitivities with both the US and China watching. The country’s niobium reserves (90% of global supply) are strategically vital to US and NATO aerospace/defence firms. Washington could encouraged Brazil to ‘de-risk’ rare earth supply chains from China, but Brazil is balancing carefully. Its semi-alignment with both superpowers means that Embraer military exports (for example, the KC-390) may be affected by supply chain nationalism or export controls.
Chile is a global lithium heavyweight and copper superpower. China is a top buyer, but the US is increasing pressure to build a lithium supply chain away from Chinese processing
Argentina’s geopolitical pressure points are growing. China is investing heavily in lithium projects and nuclear power plants. But under President Javier Milei’s the US is trying to reassert influence, including through IMF negotiations and lithium partnerships with US firms. The country’s lithium triangle position puts it in the middle of US-China battery war, potentially affecting tech for military purposes. China recently offered JF-17 fighter jets and military modernisation packages, which included systems needing rare earths, lithium and advanced alloys, but Argentina decided instead for the American-approved deal of acquiring F-16 jets from Denmark. Still, Argentina’s access to Western defence tech could be limited if in the future it deepens security cooperation with China. Lithium control is a key battleground.
Similarly, Chile is a global lithium heavyweight and copper superpower. China is a top buyer, but the US is increasing pressure to build a lithium supply chain away from Chinese processing, offering Chilean lithium a US tax break in 2024. Although Chile is not a major arms producer, the US may use its lithium leverage to influence foreign policy alignment, including military purchases. Chile uses US and European defence systems like the Leopard 2 battle tank, F-16 jet fighters and naval capabilities with technologies dependant on critical minerals which could create dependencies on Chile’s own exports.
China dominates Peru’s mining sector, especially copper through companies such as MMG and Chinalco. The US is wary of Chinese control of Peruvian ports, railways and rare mineral extraction. But the news on naval modernisation with Hyundai eased US concern over military technology entanglement between Peru and China. Many of Beijing’s weapons systems require copper, cobalt and rare earths, which can be mined in Peru but exported mostly to China for processing, locking Peru into China’s tech loop.
Facing the ‘Minerals Trilemma’
If South American countries were to tilt too heavily towards China, Washington could enact economic sanctions or impose new tariffs targeting Chinese-origin defence systems, dual-use technologies, and related firms operating in Latin America. That could include restrictions on interoperability, software integration and sensitive mineral supply chains. But countries are already engineering their bilateral relations with Washington.
For countries processing lithium, it may make more sense to push for regional processing hubs not tied to China, and convincingly ensure military platforms stay 100% Western-interoperable
For countries processing lithium, it may make more sense to push for regional processing hubs not tied to China, and convincingly ensure military platforms stay 100% Western-interoperable. Copper exports might be targeted indirectly via dual-use restrictions, and military-to-military training or intel-sharing with US could be scaled back. In the short term, Brazil’s defence sector should keep leaning toward US and European systems avoiding deep Chinese defence entanglement. Argentina is eager on continuing US tech-transfer opportunities and Chile’s close relationship with the US military might need to be counterbalanced against the country choosing mineral export alignment with Beijing (which could potentially ban Chilean lithium processed in China from entering US defence supply chains).
Will South American nations create a more resilient industrial base, avoiding tech leakage to Chinese-linked firms? Can they become a trusted supplier of critical minerals to NATO countries? Can they scape being caught between top US weapons platforms and Chinese mineral dependence? Will it be space to de-risk by negotiating with more European counterparts? South American military and civilian decisionmakers need to respond to the ‘minerals trilemma’, a decisive cornerstone of today’s strategic sovereignty, faster than the rest of the world moves towards their market control.
© RUSI, 2025.
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WRITTEN BY
Dr Carlos Solar
Senior Research Fellow, Latin American Security
International Security
- Jim McLeanMedia Relations Manager+44 (0)7917 373 069JimMc@rusi.org