Legendary lithium resource from Bolivia’s salt flats may still be just a mirage

Bolivia’s Salar de Uyuni, May 23 (Reuters) – In Bolivia’s Salar de Uyuni, a huge white salt flat that feels almost otherworldly, Karina De Uyuni Karina Quispe watches from the sidelines in a global resource race for the world’s largest and almost untapped treasure trove. Lithium battery metal.

Her village on the edge of the salt marshes — from which most men immigrated to Chile in search of work — has so far had little to no work or benefit from the mineral wealth beneath the plains.

“It’s a forgotten town,” Quispe said.

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She hopes that can change as governments prepare to award lithium mining projects to one or more of a string of suitors around the world.

It is the South American country’s most ambitious effort to develop lithium yet, as automakers and governments scramble to secure supplies of the metal needed for the batteries that power the electric vehicle revolution.

But locals’ dreams of lithium wealth may still be no more real than the gleaming mirages that have popped up over Uyuni apartments. The landlocked country faces serious challenges in achieving its goals, according to Reuters interviews with more than a dozen current and former officials and dozens of local residents around the salt flats.

Major obstacles include technical challenges, citizen resistance, a non-existent legal framework for lithium mining, and infighting within Bolivia’s ruling Socialist party over taxes and royalties, the sources said.

“I see an exaggerated enthusiasm. It’s not based on reality,” said Juan Carlos Montenegro, a former senior Bolivian official in charge of lithium extraction under former President Evo Morales. Carlos Montenegro) said.

Bolivia is expected to announce one or more partnerships with foreign companies later this month to develop Salar’s fortune. Eight competitors from China, Russia, Argentina and the United States are bidding — none of which have previously mined lithium on a commercial scale.

Lithium prices soar this year, Tesla Inc’s automaker (TSLA.O) to Volkswagen (VOWG_p.DE) Efforts are being made to find the metal.

Bolivia’s vision: to locally produce lithium-ion batteries by 2025, an ambition that even neighboring and wealthier Chile, the world’s second-largest lithium producer, has failed to achieve after decades of production.

But in the Bolivian region of Potosi, where lithium is located, authorities do not expect any production until 2030, Juan Tellez, an adviser to the region’s governor, told Reuters. This is five years behind the central government’s timetable.

Bolivia has a history of failing to deliver on lithium promises.

The company has made several unsuccessful attempts to develop lithium since the 1990s, producing a cumulative 1,400 tonnes since 2018. Global lithium supply, led by Australia and Chile, is expected to reach 600,000 tonnes this year, according to Benchmark Mineral Intelligence.

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

So the current president, Luis Arce, has only tendered to companies using a different and untested technology called “direct lithium extraction” — a technology that can produce lithium faster but needs to be built yet different new infrastructure.

The Arce government declined to comment. A spokeswoman said only that lithium was a “sensitive” issue.

Alvaro Arnez, Bolivia’s deputy minister of advanced technologies, which is in charge of lithium development, acknowledged in a brief interview with Reuters in March that the government needed to show results to prove its ambitions were serious. Arnez reiterated goals for battery production and large-scale lithium extraction by 2025.

“It’s mostly about being able to show results,” he said.

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“The past is the past”

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

The lure of a potential bonus in Bolivia has drawn some global players to its latest bid to start mining.

The list includes Lilac Solutions, an American startup 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 Tecpetrol, Russia’s Uranium One and Chinese companies Fusion Enertech, TBEA (600089.SS) and CITIC Guoan Group Co., Ltd.

EnergyX has publicly courted Bolivian officials, pledging donations to the community and downplaying the risk of previous nationalisations of the energy company, or community outrage that led Bolivia to partner with German firm ACI Systems in 2019 to develop lithium batteries.

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

The head of another company involved in the process, who asked not to be named, said the government was “taking this opportunity very seriously”.

While the Arce government has close ties to Russia and China, U.S. officials told Reuters they believed the two U.S. companies in the race had a decent chance of winning.

Other companies did not respond to requests for comment.

Reuters Graphics

‘We own the wealth’

Even if lithium can be mined, a battle is brewing over who will benefit from it.

Under colonial rule, the Potosi region became Spain’s largest producer of silver, funding the Spanish Empire’s strength for centuries.

But the mines are notorious for the millions of indigenous people who died working in harsh conditions, and the region remains one of the poorest in Bolivia.

“We are at the center of (silver) mining, but still on the fringes of national decision-making,” said Teliz, an adviser to Governor Potosi. “That’s what we’re trying to avoid with lithium now.”

Potosi is a stronghold of the ruling MAS party. But local authorities criticized Arce in an interview with Reuters, saying the president’s office was trying to control its lithium without their involvement.

“We don’t even have a channel to express our opinion,” Thalerz said. “We are learning about (the decision) through the media.”

The Bolivian government is proposing a joint venture to extract lithium and make batteries, and Deputy Minister Anez said the country owns 51 percent of the entity and gets about half of the profits.

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

“As owners of these wealth, it’s clear that we need to get the best benefit at least once in our lives,” said Eusebi Olópez, the mayor of Uyuni, a tourist destination named after the salt flats. small town.

Karina Quespe, a villager in Uyuni village, laments that at the pilot national lithium plant already in operation, only a few of the 700 employees are from the local community.

“We have minerals, we have lithium,” she said. “People here deserve something.”

Fastmarkets Assessment of Lithium Carbonate and Spodumene
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Reporting by Marcelo Rochabrun in Salar de Uyuni, Bolivia; Additional reporting by Ernest Scheyder in Houston; Santiago Limachi and Claudia Morales in Salar de Uyuni, Bolivia and Monica Machicao and Daniel Ramos in La Paz; Additional reporting by Adam Jourdan, Christian Plumb and Rosalba Edited by O’Brien

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