Legendary Lithium Riches from Bolivia’s Salt Flats May Still Be a Mirage – Reuters

By Marcelo Rochabrun

Salar de Uyuni, Bolivia – In the vast expanse of Bolivia’s Salar de Uyuni, a striking white salt flat, Karina Quispe observes the unfolding global race for lithium, a crucial component in the batteries powering the electric vehicle sector. Despite the mineral wealth beneath her feet, her village, located on the edge of the salar and depleted of male workers who have migrated to Chile for employment, has yet to see significant benefits or job opportunities from lithium extraction.

“This is a forgotten town,” Quispe lamented.

As the Bolivian government prepares to award a lithium mining project to international firms, Quispe remains hopeful for a shift in fortunes. This initiative marks Bolivia’s most ambitious attempt to harness its lithium resources amidst a surge in demand from automakers and governments striving to secure supplies for the electric vehicle revolution.

However, the aspirations of locals for lithium prosperity may be as elusive as the mirages that occasionally shimmer over the salt flats. According to interviews with current and former officials, as well as local residents, Bolivia faces substantial challenges in realizing its goals. Key obstacles include technological difficulties, local resistance, an inadequate legal framework for lithium mining, and ongoing disputes within the ruling political party regarding taxes and royalties.

“I see an exaggerated enthusiasm. It’s not grounded in reality,” remarked Juan Carlos Montenegro, a former official responsible for lithium extraction under ex-President Evo Morales.

An announcement regarding partnerships with foreign firms for lithium extraction is expected later this month, with competitors from regions including China, Russia, Argentina, and the United States vying for the opportunity. Notably, none of these firms have previously engaged in large-scale lithium extraction.

This year has seen lithium prices soar as major automakers, among them Tesla and Volkswagen, grapple to secure the metal. Bolivia has set an ambitious goal: to produce lithium-ion batteries locally by 2025, a feat that even Chile, the world’s second-largest lithium producer, has yet to accomplish.

Despite this vision, authorities in Potosi, the Bolivian region housing the lithium, do not anticipate any production before 2030, which is five years longer than the central government’s projected timeline.

Bolivia’s history with lithium has been one of unfulfilled potential. Since the 1990s, it has attempted to develop its lithium resources, managing to produce a mere 1,400 tonnes since 2018. In contrast, global lithium production this year, led by Australia and Chile, is expected to reach 600,000 tonnes.

The Bolivian government has invested hundreds of millions into traditional evaporation ponds, yielding little lithium largely due to high magnesium concentrations present in the brine. In response, President Luis Arce has only sought bids from companies employing a novel and untested method known as “direct lithium extraction,” which, while potentially faster, requires new infrastructure that is not yet established.

The government has remained tight-lipped on the topic, with a spokeswoman stating only that lithium is a “sensitive” issue. Deputy Minister for Advanced Technologies Alvaro Arnez acknowledged that the government must deliver results to demonstrate its commitment. He reiterated the goal of achieving battery production and large-scale lithium extraction by 2025.

Bolivia is believed to possess 21 million tonnes of the world’s known lithium resources, but none have been classified as commercially viable. The allure of Bolivia’s potential has drawn attention from global companies, including U.S. startups backed by major automotive firms and China’s leading battery manufacturers.

EnergyX, one of the bidders, has publicly engaged with Bolivian officials, promising community support while minimizing concerns over past experiences with nationalization and local resistance, particularly a failed partnership between Bolivia and a German firm in 2019.

“As far as past experiences between multinationals and Bolivia – the past is the past,” stated Teague Egan, founder and CEO of EnergyX. He expressed confidence in the Bolivian government’s vision.

Even if extraction can be realized, a conflict looms over who will reap the benefits. Historically, the Potosi region has been exploited for its silver during colonial rule, leading to the suffering and death of millions of indigenous workers under harsh labor conditions. Despite this dark history, the region has remained economically disadvantaged.

“We were the center of exploitation but remained on the fringes of decision-making,” said Juan Tellez, an adviser to the governor of Potosi. “That is what we are trying to avoid now with lithium.”

While Potosi is a stronghold for the ruling party, local officials have expressed discontent with President Arce’s approach, asserting that they lack involvement in crucial decisions regarding lithium.

“We don’t even have a channel to express our opinion,” Tellez remarked, expressing frustration over the lack of communication with the presidential office.

The Bolivian government is currently proposing joint ventures for lithium extraction and battery manufacturing, with the state retaining a 51% ownership stake and approximately half of the profits. However, to advance this plan, the government must amend existing laws that prohibit foreign firms from extracting lithium. Local officials are using this as a chance to advocate for an increase in local royalty shares, which they contend should rise from 3% to 15% of sales. They have warned that they may resort to protests, similar to those in 2019, if their demands are not met.

“As the owners of these riches, obviously we need to get the biggest benefit at least once in our lives,” asserted Eusebio Lopez, the mayor of Uyuni.

At a state-run lithium plant already in operation, few local community members are employed, a point of contention for Quispe.

“We have minerals, we have lithium,” she emphasized. “The people here should receive something from it.”