DIEGO VON VACANO
High atop the Bolivian Andes, 12,000 feet above sea level, lies one of the hidden wonders of the world: the Uyuni Salt Lake. At first glance, its luminescence, which expands as far as the eye can see until it becomes one with the sky, makes for a unique tourist destination. But beneath it, thousands of years of geological processes have produced what is now a potential solution to the world’s climate change crisis.
The Altiplano, an expansive, high-altitude plateau that surrounds Uyuni, is a desert with few populated areas. There, Bolivia possesses 21 million metric tonnes of lithium, not just in Uyuni, but in surrounding deposits such as Pastos Grandes and Coipasa. It is the world’s largest resource of the mineral that is crucial for the world’s energy transition. After almost twenty years of failed attempts at developing an industrial production of the lightest of metals, the country seems finally poised to take a major leap forward. Various windows of opportunity have opened up in the last two years that seem to suggest a real take-off of the sector and, with it, of the Bolivian economy. However, the windows could close at any time.
Bolivia exported a modest amount of about 600 tonnes of lithium carbonate equivalent (LCE) in 2022, for close to USD$40 million in revenue. That is about four times more than the previous year. (La Razón 2022). Still, Bolivia lags far behind lithium exports by neighboring Chile or Argentina, the other two members of the so-called Lithium Triangle, a vast expanse of land across the Andes that holds dozens of lithium-rich salt flats.
In the 1990s, Bolivia became the region’s natural gas hub, with exports to Argentina and Brazil. National oil company YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) implemented a well thought out strategy towards the end of the 2000s decade, that succeeded in fueling public spending and in generating jobs in the oil and gas sector.
Will the latest attempts at developing the country’s lithium industry mirror its natural gas success, and generate a miracle for Bolivia? Or is lithium merely a mirage that will delude observers?
FROM GAS TO LITHIUM: POLARIZATION, AND CORRUPTION
Since April 2021, there have been important advances in the country’s lithium industry, but there remain multiple challenges ahead that could hinder its full development. While some of the problems are technical, economic, and even cultural, the bulk of the obstacles are political in nature. In the end, these challenges are part of Bolivia’s traditionally complex political puzzle.
Bolivia’s political culture has been polarized for decades, mainly around management of its natural resources, and the lithium industry has not been immune to that reality. This can be traced back to “The Gas Wars” of 2003, when then-president Gonzalo Sánchez de Lozada’s attempt at exporting land-locked Bolivia’s natural gas through neighboring Chile was generated strong popular resistance. Deadly confrontations resulted in the resignation of the president and vice president, in a conflict that in truth, had deep historical roots. Bolivians hold an old grudge against their neighboring country since losing their exit to the sea to Chile, more than a century ago. The Gas Wars ultimately ended in the election of left-wing president Evo Morales in 2005.
Years later, new confrontations ensued, although this time connected to a different natural resource: lithium. The natural resource conflicts that have historically pitted mineral-rich Potosí against the central government are now centered around lithium. Even when the lithium industry is years away from generating rents, Potosí citizens have already been extremely mobilized in their claims for an equitable share of future lithium revenues.
After 14 years in power, Morales had to resign in 2019, amidst violent popular revolts in relation to alleged fraud during presidential elections. In truth, popular discontent had started simmering prior to the elections, when the central government and Potosí clashed over future lithium royalties. Potosí, Bolivia’s poorest region, has a history of well-organized social mobilization in demand of improved natural resource revenues. The Uyuni salt flat, which holds the world’s largest lithium resources is located in Potosí.
The former President fled the country and denounced he had been ousted by a coup supported by the United States, as part of Washington’s attempt at grasping his country’s lithium resources. (Cruz 2023) An interim government called for elections and Morales’ former finance minister, Luis Arce, became president in 2020. Arce was one of the key architects of Bolivia’s eco- nomic miracle during the Morales administration that has been praised for raising the living standards of the poor (Sarmiento 2019).
Morales eventually returned to Bolivia and is the head of the governing party, Movimiento al Socialismo (MAS). While there have been accusations that Arce is merely a puppet of Morales’, this is far from the truth. Arce has resisted changes to his cabinet demanded by Morales, he has shaped his own political and economic agenda, and he adopted a style of governing that is different from Morales’. (Vacano 2020) Arce presented himself as a more technocratic leader in contrast to Morales’ populist appeal. In practice however, this has not been necessarily the case.
Morales still maintains significant sway in the party— and in the administrative apparatus of the state— through civil servants associated with his political views. His charisma also draws loyal followers in agrarian, lower-class, indigenous sectors of society, although he has lost much support amongst urban mestizo, educated groups.
The former president persistently refers to lithium as one of the reasons for foreign intervention in Bolivia, in particular the 2019 movement that resulted in his ouster.
Electric car manufacturer Tesla’s CEO, Elon Musk, unwittingly gave Morales ammunition for expanding his anti-U.S. rhetoric in social media. In response to Morales’ 2019 removal from government (Vorotnikova 2022), Musk wrote an inflammatory tweet hinting that the U.S. can overthrow whomever it pleases. His facetious comment was badly received by many Bolivians, especially Morales followers, who alluded to it as proof of US and UK intervention in the 2019 events and of their intent to grab hold of their country’s lithium (Rozsa 202).
\Bolivia’s lithium sector is at the core of the country’s current political disputes. The head of Creemos, one of the major opposition parties, is thought to be contemplating forming an alliance with a Potosí-based opposition against the ruling MAS. Luis Fernando Camacho is currently in prison for his alleged participation in the 2019 coup against Morales.
Also endemic to Bolivia’s internal democratic workings is corruption, which has already directly impacted the lithium industry. In 2022, former-president Carlos Mesa’s opposition party, Comunidad Ciudadana, accused state-owned lithium company Yacimientos de Litio Bolivianos (YLB) of influence peddling in relation to a contract the company signed with Chinese construction firm CAMC Engineering back in 2016. The US$500 million contract was granted by Morales’ government for building a water treatment plant in the Uyuni salt flat. (Economy 2022) Other, similar corruption claims, some with evidence, have resurfaced over the last two years. The Arce government has responded largely by ignoring them.
Noteworthy is the general stir caused last year by the replacement of YLB technical experts with less knowledgeable workers with political ties to the government. (Cota 2022) Also, the Morales wing of the MAS party laid strong accusations of nepotism and corruption against President Arce’s son, Luis Marcelo Arce Mosqueira. He was accused of allegedly favoring certain companies that presented proposals to a government call for introducing Direct Lithium Extraction (DLE) techniques to develop Bolivia’s lithium (Emol.com 2023). These tensions threaten to divide the MAS party from within and raise questions about the future of Bolivia’s lithium industry.
YLB was established in 2017 as the government institution responsible for the development of the lithium sector in Bolivia (Montenegro Bravo, 2018). The company is the current iteration of the institution that oversees lithium and related metals that had originally been part of state mining company COMIBOL (Corporación Minera de Bolivia) (Tsolakis 2008) (Hopper 2009). Lithium was initially described as an important resource in the 1970s, under the military regime of President Hugo Banzer. But it was only in 2008, under the presidency of Evo Morales, that it was labeled a strategic mineral, which means that only the Bolivian state has the right to develop it.
COMPETITION FOR BOLIVIA’S LITHIUM
In 2021, President Arce launched a new, promising phase for Bolivia’s lithium industry. In a public event, the president announced that YLB would partner with private companies, in an effort to focus on seeking appropriate technologies to develop Bolivia´s lithium from the country’s three major salt flats –Uyuni, Coipasa, and Pastos Grandes. There is lack of transparency around YLB’s major decisions: including in relation to the selection of its partners, and the designing of its technical and business-models.
The government is seeking private companies to introduce technologies that can address two main challenges of Bolivia’s lithium deposits: a) the complexities of Bolivia’s salt flats, which have a high magnesium content, and rainfall; and b) heavy reliance on large water evaporation ponds typically used in traditional lithium extraction from brines, such as those in place in neighboring Chile and Argentina. The ponds use a lot of water, which can be detrimental to the environment and to local communities. Before Arce’s term, Bolivia had already invested almost $1billion to build 20 lines of ponds that have since remained largely idle.
As a result of Arce’s initiative, twenty foreign firms submitted proposals, to implement DLE technologies in Bolivia, in lieu of evaporation ponds. (Rochabrun 2022) There are a variety of DLE technologies, all of which are better alternatives to the large evaporation ponds because they do not deplete local aquifers and they minimize environmental impacts. DLE technologies are a good choice for Bolivia because they could contribute to addressing the high-magnesium content present in the country´s brines, which reduces the purity of the extracted lithium. High-quality lithium-ion batteries are manufactured with lithium that contains very low impurities, such as that produced by Chile and Argentina.
By August 2021, the government had narrowed down to nine the number of private foreign companies eligible to develop Bolivia´s lithium. It remains unclear why the other eleven firms had been eliminated, because YLB did not make it a transparent process: it was neither an open tender nor a bid. It was simply a ‘call for proposals,’ which means there is no public record of it. In spite of YLB´s frequent public events and pronouncements about the choice of private investors, no specific technical details were made public as to why one company was picked over another. By June 2022, two more firms were removed from the shortlist, leaving a final count of six companies: four Chinese, one Russian, and one from the USA. None of the six finalist companies signed definite contracts with YLB yet.
The two firms removed from the shortlist were Argentine company Tecpetrol— a member of the large international conglomerate Techint— and Texas startup EnergyX. The latter was the only firm to have developed a pilot plant in Uyuni to test its production method there for five months, with excellent results of over 94% lithium recovery rate (Krauss 2021). Both firms were eliminated for not having met the deadline for presenting the required paperwork to be considered as candidates. EnergyX, which missed the final deadline by just ten minutes, took responsibility for the delay and reiterated its interest in working in Bolivia in the future. Lithium experts within YLB believe EnergyX’s technology could not only be good for Uyuni, but also for Bolivia’s other lithium deposits.
The four Chinese companies among the six remaining finalists, include CATL, the world’s largest battery maker; Fusion Enertech, the only Chinese firm with proven DLE technology in two plants in Western China; and CITIC and TBEA, two stateowned firms with some lithium-sector experience. The Chinese firms presented strong proposals that go beyond mere extraction, with plans to assemble battery materials in Bolivia, and eventually manufacture batteries proper. This is not surprising, given China’s strength in the lithium downstream sector.
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