Why the United States and China are “rushing” to a Chilean port

In the frozen ports of Punta Arenas Some governments and multinationals have found solutions. In a world shaken by wars and climate change, traditional sea routes have become difficult to navigate, and The isolated Chilean region “has become an unlikely nerve center for global shipping.”

This was explained in a magazine article Americas Quarterly who pointed out that Merchant ship traffic through the Strait of Magellan increased by 25% in January and February 2024 —compared to the same period in 2024— and 83% —compared to 2021—.

China and the United States are said to be the countries most interested in the Magellanic ports of the Strait which is a V-shaped sea route that connects the Pacific Ocean to the Atlantic.

“We are in an increasingly strategic part of the world, which transcends the country” said the mayor of Punta Arenas, Claudio Radonich, QA.

But, Are Chilean ports prepared for such traffic? What attracts the most attention from large companies to reach this remote area?

According to the same article, China has expressed interest in building a port complex in Argentina, just outside the entrance to the Atlantic Ocean strait across the border from Chile.

For her part, the head of the US Army’s Southern Command, General Laura Richardson, visited Argentina and Chile in 2023 and stayed in Punta Arenas, where she received a security briefing and also visited the strait.

These are signs of the attention you are receiving the Magallanes and Antarctica region of Chile which, although far from the capital, is located at a point that clearly makes it a key and strategic place for the rest of the world.

But For this, port infrastructure must be improved.

As explained QAcurrently only There are “a few jetties and ramps, capable of receiving medium-sized ships, cruise ships and barges, but not large oil tankers and container ships of the type that are increasingly plying the strait. There are no loading cranes or protected docks. Even the Navy does not have its own port.

Chilean President Gabriel Boric said last year that the country needed “more and better ports,” and in November he signed a five-year, $400 million investment program to modernize Magallanes’ ports and other infrastructure.

However, thinking about the dizzying development that the region could experience, This figure does not seem sufficient.

As explained in the same media, in 2018 the CAF Regional Development Bank stated that Latin America and the Caribbean were expected to mobilize $55 billion in maritime and port investments by 2040.

But, Why do ports like Punta Arenas need to be improved?

Thanks to global warming, The Panama Canal is suffering from low water levels, preventing maritime transits from taking place normally. In the meantime, Suez Canal reduced transit due to Houthi rebels who attack ships in the Red Sea.

AND, In the Black Sea, the war between Russia and Ukraine makes maritime transport precarious.

That’s why Countries and multinational companies are looking for alternative routes, even if these are longer than they would like.

Another option that is gaining strength is the port of Ushuaia, in Tierra del Fuego, Argentina. : This week it was announced that there will be a stopover of 550 cruise ships for this season that “will mark a new record of arrivals of tourist ships in the city of southern Argentina,” said La Prensa Austral.

At the same time, during the 2024-2025 cruise season, 186 stops would arrive in Magallanes, carrying almost 100,000 visitors.

“Chile does not guarantee the quantity of fuel, unlike Argentina. A ship like the Eclipse carries 14 trucks of fuel. The loading maneuver is carried out during the hours that the ship is at the dock. At the same time, this is complemented by the loading of provisions, so the logistical movement is very important and they are very satisfied to do all this operation locally,” said Roberto Murcia, president of the Provincial Directorate of Ports of Argentina.

That’s to say, Chile could fall behind in the competition due to its poor infrastructure and strategy.

As explained by QA, “Magallanes’ economic anchor in modernity could be green hydrogen.”

It is about hydrogen produced by low-emission renewable energies, which would be the key to combating climate change of the world. And by using it, and leaving aside fossil fuels, large industries can significantly reduce their carbon footprint.

To obtain this resource, electrolysis (an electric current) is used to separate the water molecule into hydrogen and oxygen.

“Chile has a comparative advantage in the production of green hydrogen, because it has a high potential for renewable energy production, it has people trained in similar productive activities and it also has a high internal energy demand.” we read on the Chilean government portal.

In this sense, the green hydrogen market could be fruitful, even if its economic viability remains uncertain.

But, What does the Magallanes region have to do with green hydrogen?

This region would be the ideal place to produce green hydrogen, thanks to its intense winds and low population. In other words, in Magallanes there is an optimal environment for building wind farms.

From QA they assured that The region already has more than 15 project proposals from European companies that want to reduce their emissions and, in addition, “diversify away from Russian gas”: “The list of projects amounts to more than 3,600 wind turbines.”

This“For Magallanes, it will be like going back in time, when we were a free port and maritime traffic was enormous” assured the regional director of the national development agency Corfu Maria José Navajas, to the same medium.

For razors, The arrival of green hydrogen in Magallanes “will be focused on the well-being of the entire region.”

However, for this, since QA to emphasize the need to start building and renovating ports to supply “to enable the import of equipment for turbines, electrolysers, desalination plants and other installations, and then to facilitate exports to markets such as Germany and Japan.”