The high-stakes fight over Bolivia’s lithium
Bolivia has the largest known resources of lithium. Can it build an industry to supply the world's growing demand?
Nearly 12,000 feet above the Pacific Ocean in the Bolivian Altiplano, the crystalline remnants of ancient lake beds form odd geometric patterns that sprawl, with unearthly flatness, to distant, mountain-studded horizons. This is the Salar de Uyuni, a salt flat, or salar, so large it's visible from space. Beneath its surface: Earth's largest known deposit of lithium, a metal critical to the lightweight, high-performance batteries found inside laptops, smartphones, electric cars and renewable power storage facilities.
For more than a decade, Bolivia has labored, unsuccessfully, to commercialize its lithium riches through an ambitious state-run project championed by former President Evo Morales. When Morales was forced out in November amid accusations of election fraud, the project's future was thrown into question. Some, including Morales himself, speculated that nefarious U.S.-backed lithium interests were a driving force behind the socialist government's collapse.
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The truth, it turns out, is far more complex. And — with elections looming this spring — so, too, is the future of Bolivia's lithium.
Will the government continue pursuing Morales' dream of a state-run lithium industry that lifts the entire nation out of poverty? Or will it fling open the doors to foreign investors? It's a local political fight, but these questions reverberate far beyond Bolivia's borders. According to industry experts, Bolivia could yet become a lithium powerhouse with the right technology and under the right leadership — and if that were to happen, it would reshape an industry at the very center of the green energy revolution.
The challenge of building a homegrown lithium industry
Bolivia is in the strange position of having an abundance of lithium and not nearly enough.
In terms of sheer resources, no other country can compare. According to a recent analysis by mining consultancy firm SRK that was verified in the U.S. Geological Survey's latest lithium report, the Salar de Uyuni contains 21 million tons of lithium. That's more than three times as much lithium as in Australia, the world's largest producer. And it doesn't even include the currently unquantified lithium resources present in Bolivia's Coipasa and Pastos Grandes salars to the north and south of Uyuni.
Yet from a resource extraction perspective, it would be better if Bolivia's brines held even more lithium — or, alternatively, less magnesium. Sitting close to each other on the periodic table, the two elements behave similarly, and separating them is a "chemical and energy intensive process" said Pablo Cortegoso, a lithium brines expert at SRK. Chile's Salar de Atacama, home to what are considered the best lithium brines on Earth, has a magnesium to lithium ratio of 6 to 1. In Uyuni, that same ratio can be as high as 20 to 1, Cortegoso said.
This unfavorable chemistry — combined with poor infrastructure, the geographical disadvantage of being a landlocked nation, and relatively high levels of rainfall in Uyuni — help explain why Bolivia, despite its resource riches, has so far failed to produce any lithium commercially.
"Making EV batteries needs a reliable, high purity supply of lithium chemicals," said Vivas Kumar, a principal with Benchmark Mineral Intelligence. Right now, Kumar said, Bolivia's lithium is simply "not as competitive as material coming from Argentina or Chile."
At the same time, global demand for lithium is surging. Kumar said that the market for lithium chemicals, which fell just shy of 275,000 tons in 2019, could more than triple to roughly a million tons by 2025 as production of batteries for both EVs and renewable power grows apace. Without major investments in bringing new resources online, "there will be a pretty significant shortage of lithium chemicals" in the not-so-distant future, Kumar said.
When Morales and his socialist MAS party rode a wave of anti-capitalist sentiment to power in 2005, there was widespread hope that the country's resources would no longer be plundered by foreign nationals, but developed, with the guiding hand of the state, for the benefit of all Bolivians. Morales' MAS government decided to adopt a state-run approach to lithium industrialization. The goal was nothing short of transforming Bolivia into a South American hub for green technology, from lithium salts to electric cars.
In 2008, Morales declared the country's lithium a "strategic resource and national priority." Shortly thereafter, the government founded a national lithium firm (now called Yacimientos del Litio Boliviano, or YLB), and laid out an ambitious, three-phase strategy for lithium development. Phase one and two, focused on pilot projects and the industrial projection of lithium salts, would be entirely state-run. Phase three, the production and commercialization of battery materials, would involve public-private partnerships that brought on international experts.
The MAS government initially set aside about U.S.$1 billion for the initiative, according to Iván Aranda Garoz, a Spaniard who helped direct portions of the state lithium project from 2009 to 2014, making it among the most ambitious state mining programs in Bolivia's history.
By all accounts, the lithium project has moved slowly. "They're very far behind," said Vladimir Díaz-Cuellar, a doctorate student at Canada's Carleton University who has studied Bolivia's mining sector. Juan Carlos Zuleta, a Bolivian economist and a vocal critic of Morales' lithium strategy, is harsher in his assessment: "We tried to develop our own technology, and we failed."
Aranda sees it differently. There have been delays, he said, but Bolivia has also made progress. In 2012 and 2013, the state inaugurated pilot plants for the production of potassium chloride, a fertilizer that can be pulled from salar brines prior to lithium extraction, and lithium carbonate, a lithium chemical used in battery manufacturing. In 2014, the nation's first lithium battery pilot plant came online.
Ultimately, Aranda said, Bolivia proved at a pilot scale that it could develop a value chain from salts to batteries using local resources and technology.
"I can say that goal was fully achieved," Aranda said.
But as Bolivia tried to take its lithium commercial starting about five years ago, things grew more difficult. The country brought on new international partners with their own interests, some of which didn't sit well with campesinos in the department of Potosí, where the Salar de Uyuni is located. All the while, questions swirled over the technical feasibility of the projects the state was embarking on.
For its first commercial lithium project, Bolivia had hoped to construct a plant capable of producing 30,000 tons of lithium carbonate a year — a midsize operation, according to Cortegoso. The German firm hired to design the plant, K-UTEC Ag Salt Technologies, took more than twice as long as originally planned, Zuleta said, and it was forced to downscale the operation by about half in the process. Construction of the plant, which got underway in late 2018, was supposed to be completed last year, but so far the mining operation hasn't come online. Zuleta and Aranda now expect it to be up and running later this year.
Meanwhile, battery manufacturers have begun to favor a different lithium chemical, lithium hydroxide. This form of lithium, Kumar explained, can be used to produce batteries that are lower in cobalt, a conflict metal, and that have a higher energy density, meaning they can run longer on a single charge. "As a result lithium hydroxide's growth rate, from a supply and demand standpoint, has been greater than that of lithium carbonate," he said.
To capture that emerging demand, in late 2018 the Bolivian government also entered a joint venture with German firm ACI Systems. A company that was originally in the solar distribution business, ACI Systems claimed to have developed a "globally unique" process that took the waste tailings from Bolivia's lithium carbonate plant and squeezed out even more lithium — in this case, lithium hydroxide. No additional brine would be pumped from the Uyuni, and the process would cut water consumption "by about half" compared with traditional methods, making it more environmentally friendly, said company spokesperson Doris Schultz.
A joint venture agreement between ACI Systems and YLB aimed to establish a plant capable of producing 35,000 to 40,000 tons of lithium hydroxide annually by the end of 2022. Over 80% of that lithium would be exported directly to Europe, Schultz said, enough to support the production of more than half a million electric cars a year. When the deal was signed, Germany's economic minister hailed it "an important building block" toward shoring up the nation's long-term supply of lithium and allowing Germany to become "a leading location for battery cell production."
But in Bolivia, where Morales had spent years promising the nation would remain steward of its lithium resources, the arrangement was far more controversial.
To Zuleta, it looked like a stark, possibly illegal break from Morales' strategy of going from salts to batteries with entirely national technology. He also questioned the viability of ACI Systems' method, and the means by which this relatively nameless German firm had managed to obtain so much knowledge about Bolivia's brines. No technical experts contacted for this story felt able to comment on whether the technology ACI Systems was offering would, in fact, work.
There was more. In the department of Potosí, many locals felt that the terms of the joint venture, including the level of royalties that would flow into local communities, were deeply unfair, said Pablo Poveda Ávila, an economist with the Bolivian labor research organization CEDLA. Anger over the project, Ávila said, was compounded by years of discontent with the MAS government, which had marginalized the very campesinos who initially pushed for a national lithium strategy, and which hadn't met Potosinos' demands to improve local health care, education and infrastructure.
"It was the drop that made the glass overflow," Kirsten Francescone, the Latin American Coordinator at Mining Watch Canada, said of the German joint venture.
In early October 2019, the Potosí Civic Committee, an organization of unions and social groups headquartered in the City of Potosí, launched an indefinite work strike protesting the joint venture. On Nov. 4, amid growing national unrest over the contested results of the Oct. 20 national election, Morales finally responded, annulling the decree that created the YLB-ACISA partnership a year prior.
But the move, seemingly meant to rally former supporters to his side, came as too little too late: On Nov. 10, Morales was forced to step down after he was abandoned by close allies and the military and as violent uprisings roiled the country.
Can the plan get back on track?
The sudden fall of Morales' government could mark a turning point in Bolivia's lithium strategy. In a surprise move in January, the interim government appointed Zuleta to head up YLB. While it's unclear whether his appointment will last beyond the national elections set to be held in May, the economist is already making some changes.
In an interview with Reuters in January, Zuleta said the country would not strike any short-term deals with outside interests to ramp up lithium extraction, but would rather focus on developing local technical expertise with outside advisers. Prior to his appointment as head of YLB, Zuleta expressed in an interview with Protocol his desire to work with "appropriate companies" and pursue "very new technologies" to help make Bolivia's magnesium-rich brines competitive.
However, those do not seem to include the technology ACI Systems was offering.
"My personal opinion [is] there's nothing to renegotiate with this company right now," Zuleta said in December. "They didn't have the technical financial capacity to engage in this kind of project. Why shouldn't Bolivia look for something better?"
Ultimately, the elections this spring will dictate the fate of the various partnerships Morales' government was pursuing. In addition to the under-construction lithium carbonate plant and the now-frozen German partnership, there's a $2.3 billion joint venture with a consortium of Chinese firms, and a recent agreement to forge lithium alliances with India, still on the table.
Several experts noted that the national lithium project is going to be difficult to dismantle in its entirety, given the considerable resources invested in it and the fact that, under Morales, nationalization of mineral resources was enshrined in Bolivia's constitution.
Yet a conservative government might try to do just that. "If we see a right-wing election in April, it's quite feasible there won't be a state or national company, they'll just let private companies run the whole thing," said Bret Gustafon, a Washington University in St. Louis anthropologist who has studied extractive industries in Bolivia. "That would probably face massive opposition from locals and others alike."
While many of Bolivia's lithium challenges, from the technical to the socio-political, are idiosyncratic, tensions among regional, national and international interests when it comes to a strategic mineral resource are nothing new. And the tough questions Bolivia faces about the future of its lithium — who gets to develop it, how, and who benefits — are illustrative of a broader ideological battle over how the green energy revolution will play out.
Will it be neoliberalism-as-usual, with large corporations coming into underdeveloped regions and extracting resources for their own benefit? Or will technical know-how and manufacturing capacity be developed within resource-rich countries like Bolivia, with those countries reaping the economic rewards? If Bolivia's lithium goes commercial, will it be exported across oceans, powering up Teslas from New York to London, or will it stay within South America, fueling the region's own energy revolution?
Zuleta, despite his opposition to many of Morales' moves, agrees with the former leader that the nation's lithium should be used to bring prosperity to Bolivians. Beyond that, he'd like to see the country's mineral wealth help drive development of a 21st-century auto market for the region.
"Sooner or later, Latin American countries are going to consume EVs," Zuleta said. "So why not try to think of developing an EV industry for Latin America in the future?"