Bolivia’s foray into the lithium market, particularly the recent collaboration with Russia’s Rosatom through the Uranium One plant, signifies the nation’s ambitious lithium strategy. However, as Bolivia seeks to compete with major players like Chile and Argentina, it faces challenges and uncertainties that need careful consideration.
The uniqueness of Bolivia’s lithium deposits, often intertwined with other minerals, poses extraction challenges compared to the purer reserves in Chile and Argentina. Rosatom’s adoption of Direct Lithium Extraction (“DLE”) technology, allowing for up to 90% mineral extraction, is a promising step. Still, there’s a lack of clarity on how the lithium carbonate output, with a maximum capacity of 14,000 tonnes per year, will integrate into the broader value chain.
The agreements between Bolivia’s Yacimientos de Litio Bolivianos (“YLB”) and Rosatom, much like those with Chinese counterparts CBC and Citic Guoan, lack transparency. “The great truth is that there is no contract in force between the Bolivian state and any foreign company for the extraction of lithium,” exclaimed a former Ambassador to Bolivia. “Such is the mismanagement that even a YLB industrial plant was inaugurated 10 days ago, and after the inauguration the plant is stopped.”
“The great truth is that there is no contract in force between the Bolivian state and any foreign company for the extraction of lithium.”
Former Ambassador to Bolivia
The Bolivian levies system imposes a 3% royalty on mining exports, but the intricate details of the deals remain undisclosed, a “discretionary management by the high command of the government, with their Chinese and Russian friends.” While China operates in Uyuni, the largest salt flat, Uranium One focuses on Potosí, in the minor salt flat Pastos Grandes, forming part of Bolivia’s broader lithium industrialisation plan, alongside the Chinese consortium CBC. The overarching goal is to produce batteries and transition to a renewable energy matrix by 2025.
Bolivia’s lithium strategy pivots on investing in technology, human capital and infrastructure. While Russian and Chinese developers contribute technological expertise, building human capital demands sustained investment in education and training. The success of the Pastos Grandes plant is contingent on a stable supply of electricity, gas and water, alongside robust road infrastructure for transporting and exporting lithium and lithium-based batteries. The absence of direct access to a seaport adds an additional layer of complexity.
However, one key aspect of Bolivia’s approach is the absence of binding contracts in its agreements, a strategic move by the government. “The most important thing to talk about this agreement with Uranium One group, or the previous ones, is that it is not a contract,” stated a director of an environmental NGO. The director continued, “The state propaganda is overwhelming in Bolivia, and it really has an impact,” creating an impression of progress that may not align with reality.
The government’s emphasis on agreements rather than contracts is deliberate; it aims to generate interest from international companies for pilot tests before committing to significant investments. “There are four in total: the first was in January 2023 with CATL to implement two industrial plants in the Uyuni salt flats. Then, in June, it signed an agreement with Citic Guoan of China and Uranium One Group of Russia for two plants in Pasto Grande. It recently signed a second agreement with Uranium One for a lithium carbonate plant,” the former ambassador disclosed. “That is what the news tells you. But there is no contract. The contract can only be signed with a law of the Assembly.”
This raises concerns about even being able to attract substantial investments without legally binding contracts. The YLB-Rosatom agreement, alongside others, lacks the legal validity and leaves Bolivia’s lithium sector in a state of uncertainty. “That is the answer to why there has been no progress to date in Bolivian lithium. Would you dare to invest 1 billion without a contract?” questioned the environmental NGO director. “No project has started, least of all this Rosatom project. The moment there is a law that allows companies to enter, then we can measure dates and quantities. Not now.”
“That is the answer to why there has been no progress to date in Bolivian lithium. Would you dare to invest 1 billion without a contract?”
Director of an environmental NGO, Bolivia
The absence of transparent tender processes and the discretionary management by the government raise questions about the efficacy of Bolivia’s lithium endeavours. “We are talking about direct extraction of lithium, which is a new technology, and you have no certainty about anything.” The director elaborated, “but the companies are not investing because they don’t have a contract. It’s simple.”
Bolivia’s lithium aspirations are marked by a delicate balance between ambition and reality. While the adoption of advanced technologies and international collaborations holds promise, the absence of legal contracts, production targets and transparency present challenges that need urgent attention. Navigating these complexities will be crucial for Bolivia to emerge as a significant player in the competitive global lithium market, but currently it’s (quite literally) a sorry state of affairs.