The United States and Chile recently signed a landmark joint declaration on critical minerals cooperation.
This agreement is a significant step in the ongoing strategic competition between the U.S. and China. Washington is actively working to build secure supply chains for essential materials used in batteries, AI hardware, and defense systems, reducing reliance on China. By partnering with Chile, the world's largest copper producer and second-largest lithium producer, the U.S. strengthens its access to these vital resources. This move slots Chile into a growing U.S.-led coalition of mineral-rich nations, following similar agreements with countries like Argentina and Mexico.
So, why did this happen now? The timing was driven by several key factors. First, the U.S. laid the groundwork through its Section 232 trade authority, which allows for tariffs on national security grounds. This created a powerful incentive for countries to align with the U.S. to secure favorable trade terms. Washington also hosted a Critical Minerals Ministerial, establishing a framework for investment, price-support mechanisms, and coordinated trade policies that made partnership more attractive.
Second, Chile positioned itself to be an ideal partner. The country’s new administration was eager to attract foreign investment. More importantly, Chile had just published its own National Critical Minerals Strategy and finalized the Codelco-SQM joint venture, a major public-private partnership to manage its vast lithium reserves. These domestic moves signaled to the U.S. that Chile was a stable and 'bankable' counterpart, ready to deliver on its commitments.
Finally, specific diplomatic events acted as catalysts. The U.S. pact with neighboring Argentina created peer pressure, raising the cost for Chile of 'waiting on the sidelines'. Additionally, a diplomatic friction point involving a Chinese-linked undersea cable project nudged Santiago toward closer alignment with Washington as a form of risk management. These weren't just correlations; they were causal links that made the U.S.-Chile declaration both logical and timely.
- Section 232: A part of the U.S. Trade Expansion Act of 1962 that allows the President to impose tariffs on imports for national security reasons.
- Codelco-SQM joint venture: A partnership between Chile's state-owned copper company (Codelco) and a private lithium giant (SQM) to jointly develop the Atacama salt flat's lithium resources.
- Critical Minerals: Raw materials that are essential for strategic sectors like high-tech manufacturing, defense, and green energy, but whose supply chains are vulnerable to disruption.