Recently, Barrick Gold, a Canadian company, and Shandong Gold Group from China announced their joint operation at the Veladero Gold Mine in Argentina, planning for a large-scale expansion. Experts believe that the Chinese Communist Party is strengthening its development of precious metal resources in Latin America as a strategic asset to hedge against US dollar risks.
According to sources familiar with the matter disclosed to Reuters, the project submitted a $400 million investment plan in early August, aiming to increase the mine’s lifespan by an additional 1.6 million ounces of production and applying for inclusion in the Large Investment Incentive Plan (RIGI).
American economist Davy J. Wong analyzed the case for Epoch Times, stating, “For Beijing, through Shandong Gold’s strategic actions in Latin America to expand in both gold and lithium assets, it is a move to hedge against US dollar risks and ensure the safety of foreign reserves.”
However, from the perspective of the US and Canada, with Barrick still holding a 50% stake, “the joint venture structure reduces the sensitivity of Chinese investment dominance, avoiding triggering excessive vigilance over strategic dependency on the US,” explained Wong.
The Financial Times previously reported that Beijing is gradually adjusting its $3.2 trillion foreign exchange reserve portfolio, reducing holdings of US Treasury bonds and investing in high-yield diversified assets, including gold. Reuters column analysis indicates that China’s gold reserves account for about 8% of foreign reserves, three times before the epidemic.
Official Chinese data shows that as of the end of July, the central bank’s gold reserves were around 2,300 tons. However, the US financial media MarketWatch recently cited market analyst Jan Nieuwenhuijs based on import and export trade data estimates, the actual reserves could be as high as 5,000 tons, suggesting that China may have underreported or not fully disclosed the situation.
In 2017, Shandong Gold acquired a 50% stake in Veladero held by Barrick for approximately $960 million and established a joint venture with Barrick.
Regarding the current president Javier Milei’s position, Wong believes, “Although ideologically colored, he is pragmatic in economic policy. He refused to join BRICS but continued currency swaps with China and investment cooperation, keeping business and politics separate.”
International affairs expert Sun Guoxiang further added that Milei has a close relationship with US President Trump, with a diplomatic narrative leaning towards the Western camp but maintaining a practical approach towards Chinese investment in economic practice. Sun is currently a full-time professor in the Department of International Affairs and Business at Nanhua University in Taiwan.
Regarding concerns about the export destination of gold production in Argentina, Wong pointed out, “Gold products are still global commodities, and gold dore is mostly exported to Switzerland and refined in the US before entering the international market. Although China has strong demand, it does not mean that this gold will be directly sent to China.”
Sun Guoxiang stated, “China mainly imports lithium from Argentine mining, with gold accounting for a relatively small proportion. The expansion of Veladero Gold Mine does not necessarily mean a significant increase in exports to China, let alone being ‘controlled by Chinese investment.'”
Reportedly, RIGI has no restrictions on capital sources and provides tax incentives, import exemptions, foreign exchange facilitation, and 30 years of legal stability for projects of over $200 million.
Regarding the approval possibilities, Wong analyzed three scenarios: swift approval – national and provincial cooperation allowing the project to smoothly enter RIGI; additional conditions – requiring enhanced environmental monitoring, tailings management, and community benefit agreements; delays or partial rejection – if accidents occur again or face legal challenges, it may be hindered.
Sun Guoxiang assessed that the probability of passing is high but warned of potential risks, stating, “Veladero Gold Mine has a history of cyanide leaks, and there is uncertainty regarding the regulation of high-altitude Andes mines under Argentina’s Glacier Protection Law.”
It is known that mining at an altitude of 4,000 meters in the high mountains faces severe climates and temperature differences, limited water resources, fragile ecosystems, and challenges in waste management, “Environmental groups may demand stricter environmental conditions or extend the approval schedule,” Sun added.