As China is deepening its influence across Latin America’s strategic mineral supply chains, Australia faces an increasing risk of losing commercial leverage over resources critical to its economic security. Hence, Canberra should use commercial diplomacy to strengthen Australian participation in the region and diversify the partnerships underpinning its mineral security.
When the mineral exploration and development company SolGold was acquired by Jiangxi Copper in March 2026, following an agreement announced in December 2025, Australian-linked shareholders including BHP sold their interests in one of the world’s largest undeveloped copper-gold deposits in Ecuador. Although the transaction may have provided an attractive financial return, it ended those shareholders’ equity participation in a major future copper supply source. Mine ownership does not determine where minerals are processed, but can shape financing, offtake agreements, and commercial relationships.
This case demonstrates that Australia’s strategic interests in mineral assets are intrinsically linked to overseas markets and supply chains: as Chinese companies expand overseas, Australian firms risk losing influence over where minerals are developed, processed and sold. This could complicate efforts to achieve the diversification, resilience, and economic security objectives of the national Critical Minerals Strategy 2023–2030.
Though Australia has abundant mineral resources, its leverage over overseas supply chains is limited. Recent efforts to expand domestic refining capacity make links with overseas producers increasingly important. Iluka Resources’ Eneabba refinery in Western Australia, for example, will process rare-earth concentrate imported from Malawi. As China deepens its commercial position in Latin America, Canberra should use trade diplomacy to support Australian investment, build supply-chain partnerships and diversify the relationships on which its mineral security depends.
We use the term “strategic minerals” to encompass minerals included on Australia’s Critical Minerals List and Strategic Materials List. Both critical and strategic minerals support renewable energy technologies and defence systems, but where they differ is by their supply-chain risks. Those on the Strategic Materials List are not currently considered sufficiently vulnerable to supply disruptions to qualify as critical minerals.
On one hand, Latin America holds significant mineral resources and it is emerging as a key theatre in the strategic minerals race. On the other hand, despite holding a substantial share of the world’s identified lithium resources, copper, and other minerals required for electrification and renewable energy storage, this resource endowment has not translated into control over downstream supply chains. The OECD finds that Latin America’s ability to expand domestic mineral processing is constrained by infrastructure deficiencies, high financing requirements, technological and skills gaps, fragmented regulations and weak regional coordination. Consequently, Latin America remains heavily dependent on foreign capital, technology, processing capacity and buyers, allowing external actors, particularly China, to convert their control over downstream stages into strategic leverage.
China is a major competitor in this region, holding substantial equity stakes in mining assets in Peru, Chile, and Argentina. China’s position is reinforced by its downstream processing capacity. The IEA’s Global Critical Minerals Outlook 2025 identifies China as the dominant refiner for 19 of the 20 strategic minerals examined, with an average market share of around 70%. Chinese firms also benefit from state-backed finance and integration with domestic refining, manufacturing and procurement networks. As exemplified by Jiangxi Copper’s acquisition of SolGold, these advantages allow Chinese companies to confidently take on mining projects while Australian firms may find greater difficulty in tolerating risk and overcoming short-term negative returns.
Jiangxi Copper’s acquisition of SolGold is a case in point that Chinese companies are advantaged in such a way that they can confidently take on mining projects, offering five times SolGold’s April 2025 share value despite its pre-revenue status, while Australian firms such as BHP may be less risk tolerant, with BHP previously frustrated by SolGold’s use of debt financing rather than share issuance.
As articulated by the Jim Chalmers in 2024, “The scale of subsidies in the 3 major global economies of course dwarfs anything Australia can offer… We can’t replicate or retrofit the approaches underway elsewhere.” This highlights the fiscal and institutional limitations Canberra faces in providing financial support and industrial subsidy frameworks. Furthermore, Australia lacks sufficient domestic downstream processing capacity to match China’s integrated mining and refining networks. Canberra should therefore compete where it possesses comparative advantages rather than attempting to reproduce China’s model.
One of Canberra’s strengths is its approach to commercial diplomacy, particularly through its commitment to removing non-tariff barriers and facilitating overseas business operations. This can help Australian businesses to overcome initial market-entry obstacles, identify suitable projects, familiarise with local regulation and establish relationships with governments, investors and commercial partners.
The Chilean case exemplifies that the Australian commercial approach can deliver positive results and deepen engagement in Latin America. The Department of Foreign Affairs and Trade notes that the presence of Australian companies operating in Chile increased from 120 to 200 following the 2009 Free Trade Agreement. For example, Austrade worked with Austmine to organise the Australian Pavilion at Expomin, one of Latin America’s largest mining exhibitions. The program brought 17 Australian mining equipment, technology and services companies participated in networking events and one-to-one meetings with prospective clients.
By providing market intelligence and direct access to possible clients, similar initiatives can reduce the information barriers associated with entering an unfamiliar market. Mining-services relationships contribute indirectly to mineral supply security. While they do not guarantee access to minerals, they give Australian firms an opening to overseas project networks, improve awareness of emerging projects and can create pathways to future investment. These connections can help Australia diversify its commercial relationships and contribute to the goals of the Critical Minerals Strategy.
While greater Australian participation in Latin American mining markets would not guarantee access to mineral resources, it would instead provide more flexibility in the event of a supply-chain disruption or geopolitical crisis, particularly where projects remain foreign-owned and processing occurs elsewhere. Its strategic value instead lies in strengthening Australia’s position before such disruptions arise. Australian firms embedded in regional mining networks would gain leading indicators of emerging projects, production constraints and investment opportunities, while becoming better placed to negotiate offtake agreements, develop processing and technology partnerships, better connecting Latin American producers with Australian and linked supply chains.
Commercial diplomacy can facilitate these outcomes by triangulating relationships among companies, governments and investors, thereby helping Australia diversify supply sources, identify emerging risks and respond more effectively to future disruptions. Australia’s objective is to ensure it remains connected to the markets, projects and partnerships that shape access to critical minerals. This approach should complement, rather than replace, investment in domestic processing capacity. As Australia expands its refining capabilities, stronger commercial links with overseas producers could also create opportunities for foreign-sourced minerals to enter Australian processing networks.
Rather than seeking to emulate China’s model of state-backed investment, Australia should extend this approach to other strategically significant jurisdictions. Compared with Chile’s FTA and recurring Austrade-backed mining programs, Australia lacks equivalent mining-focused commercial frameworks in other countries. In Ecuador, it relies on non-resident Australian representation and a 2015 mining-cooperation memorandum, while in Argentina, it relies on the 1997 investment treaty rather than dedicated and productive engagement.
Canberra should establish regular critical-minerals dialogues, assign dedicated mining-commercial officers and extend Austrade’s government-backed METS missions, regulatory briefings and business-matching programs to those countries. This would reduce entry and coordination costs while helping Australian firms convert mining-services relationships into investment and processing partnerships.
Australia still has leverage through substantial strategic mineral reserves and a strong reputation as a stable and reliable supplier. However, preserving this position will increasingly depend on Canberra’s ability to maintain commercial links to overseas mineral projects and help reduce excessive concentration within critical-mineral supply chains. As Latin America’s role in global mineral supply chains grows, stronger commercial diplomacy could help Australian firms participate in that development.
Louis Matteo Vallet is a second-year Economics and International Relations student at ANU.
Regina Ng is a third-year International Relations and Law student at ANU.
Both have interned for one year with the Embassy of Ecuador in Canberra. Together, they co-founded Australia’s first official Model European Union with the support of the Delegation of the European Union to Australia.
