Legendary lithium fortunes from Bolivia’s salt flats may remain a mirage

SALAR DE Uyuni, Bolivia, May 23 (Reuters) – In the Salar de Uyuni region of Bolivia, a vast white salt flat that looks almost like another world, Karina Quispe watches from the sidelines a global resource race for the world’s largest – and untapped – precious collection Approx. – metal lithium battery.

Her village on the brink of salary – from which most men have migrated to Chile in search of work – has so far seen few jobs or benefits from the mineral wealth beneath the plains.

“This is a forgotten town,” Kisby said.

Register now to get free unlimited access to Reuters.com

As the government prepares to award a lithium mining project to one or more of a global group of suitors, it hopes that will change.

It’s the most ambitious effort for a South American country yet to tap lithium as carmakers and governments scramble to secure supplies of the metal needed for the batteries that fuel the electric car revolution.

But locals’ dreams of lithium wealth may not be more realistic than the shimmering mirage that appears above Uyuni’s apartments. The landlocked country faces significant challenges in achieving its goals, according to Reuters interviews with dozens of current and former officials, as well as dozens of local residents around the salt flats.

Among the main obstacles, the sources said, are technological challenges, blunt citizen resistance, the lack of a legal framework for lithium mining and looming infighting within Bolivia’s ruling Socialist Party over taxes and royalties.

“I see exaggerated enthusiasm,” said Juan Carlos Montenegro, the former Bolivian official in charge of lithium mining under the administration of former President Evo Morales.

Bolivia expects to announce later this month one or more partnerships with foreign companies to tap payroll fortunes. Eight competitors from China, Russia, Argentina and the United States are bidding – none of them had commercially exploited lithium before.

Lithium prices have risen dramatically this year and automakers from Tesla Inc (TSLA.O) for Volkswagen AG (VOWG_p.DE) They struggle to get the metal.

Bolivia’s long-term goal: to manufacture lithium-ion batteries locally by 2025, an aspiration that even neighboring and wealthier Chile, the world’s second-largest lithium producer, has not achieved after decades of production.

But Juan Tellez, an adviser to the region’s governor, told Reuters that in Potosi, the Bolivian region where lithium is found, authorities don’t expect any production until 2030. That’s five years behind the central government’s schedule.

Bolivia has a history of unfulfilled promises with lithium.

It has tried and failed to develop lithium several times since the 1990s, producing a backlog of 1,400 tons since 2018. This year’s global supply of lithium, led by Australia and Chile, is expected to reach 600,000 tons, according to Benchmark Mineral Intelligence.

Bolivia has poured hundreds of millions of dollars into traditional evaporation ponds that have produced little lithium, in part because of the naturally occurring high concentrations of magnesium.

Therefore, current president Louis Ars solicited bids only from companies using a different, untested technology called “direct lithium extraction” – which could produce lithium faster but needed a different, new infrastructure not yet built.

Arce management declined to comment. A spokeswoman said only that lithium was a “sensitive” substance.

Bolivia’s Deputy Minister for Advanced Technologies, Alvaro Arnez, who is overseeing the development of lithium, acknowledged in a short interview with Reuters in March that the government needed to show results in order to prove its ambitions are serious. Arnez has reaffirmed his goal of achieving large-scale battery production and lithium extraction by 2025.

“The main thing is to be able to show results,” he said.

Reuters graphics

‘The past is the past’

Bolivia is home to 21 million tons of the 89 million tons that make up the world’s known lithium resources, according to the US Geological Survey, although none are listed as commercially viable.

The lure of a potential Bolivia prize has drawn some global players to the latest attempt to start extraction.

The list includes US start-up Lilac Solutions – backed by German automaker BMW (BMWG.DE) and Bill Gates’ Breakthrough Energy Ventures – and EnergyX. Chinese battery giant CATL is also on the list.

Others include Argentina’s Techpetrol, Russia’s Uranium One, Chinese projects Fusion Enertec and TBEA Ltd. (600089.SS) and CITIC Guoan Group Co., Ltd.

EnergyX has publicly summoned Bolivian officials, pledged community donations, and played down the risks from previous nationalizations of energy companies or the kind of societal outrage that wiped out a Bolivian partnership with Germany’s ACI Systems in 2019 to develop lithium batteries.

“In terms of past experiences between multinationals and Bolivia – the past is the past,” said Tej Egan, founder and CEO of EnergyX, in a statement. “We believe in and trust the Bolivian government’s vision.”

The head of another company involved in the operation, who asked not to be named, said the government was “very serious about seizing this opportunity”.

While the Ars government is closely allied with Russia and China, US officials told Reuters they believe the two US companies in the race stand a fair chance of winning.

The other companies did not respond to requests for comment.

Reuters graphics

‘We own this wealth’

Even if lithium can be exploited, the battle is over who benefits.

Under colonial rule, the Potosi region became Spain’s largest exporter of silver, helping to finance the power of the Spanish Empire for centuries.

But the mines were notorious for the millions of indigenous people who died working in appalling conditions, and the area remains one of the poorest in Bolivia.

“We were the center of (silver) exploitation, but we remained on the margins of decision-making in the country,” said Telles, an advisor to the Potosi governor. “That’s what we’re trying to avoid right now with lithium.”

Potosi is a stronghold of the ruling MAS party. But local authorities have criticized Arce in interviews with Reuters, saying the president’s office is trying to control lithium without their input.

“We don’t even have a channel to express our opinion,” Telles said. We find out (decisions) through the press.”

Deputy Minister Arnez said the Bolivian government is proposing the creation of joint ventures to extract lithium and manufacture batteries – where the nation owns 51% of the entity and gets about half of the profits.

To do this, you first need to amend the Bolivian law, which does not allow foreign companies to extract lithium. Local government officials are trying to use this as an opportunity to push for an increase in their share of royalties to 15% of sales from 3% under current law, threatening to take to the streets as they did in 2019 if they don’t get it. their way.

“As owners of these fortunes, it is clear that we need to get the greatest benefit at least once in our lives,” said Eusebio Lopez, mayor of Uyuni, the tourist town that gave the salt flats its name.

At the state’s pilot lithium plant already operating, few of the 700 employees are from the local communities, Uyuni villager Karina Kisbee lamented.

“We have metals and lithium,” she said. “People here have to get something.”

Fastmarkets Reviews for Lithium Carbonate and Spodumene
Register now to get free unlimited access to Reuters.com

Additional reporting by Marcelo Rochapon in Salar de Uyuni, Bolivia; Additional reporting by Ernest Scheider in Houston. Santiago Limachi and Claudia Morales in Salar de Uyuni, Bolivia, Monica Macicao and Daniel Ramos in La Paz; Editing by Adam Jordan, Christian Plumb and Rosalba O’Brien

Our criteria: Thomson Reuters Trust Principles.


Leave a Comment