Bolivia signs agreements with a Chinese and a Russian company to extract lithium from its salt flats

The Government of Luis Arce has authorized two more companies, one Russian and one Chinese, to extract lithium from the Bolivian salt flats, which contain 21 million tons of the mineral, the largest lithium brine deposit in the world. “We are not going to allow political matters to hurt the economy of Bolivians. Today [June 29] we signed two important agreements with Uranium One Group JSC, from Russia, and Citic Guoan, from China,” Arce wrote on a social network, alluding to the censorship of one of his ministers by a parliamentary front that included the traditional opposition and the “new opposition” made up of supporters of former President Evo Morales.

The companies with which Arce signed two agreements will invest $1.5 billion in the coming years, joining the Chinese consortium CBC (CATL, Brunp and CMOC), which was previously selected and will invest $1.4 billion in the exploitation of lithium. Uranium One and CBC will operate in two minor salt flats in the country’s southern Altiplano, Pastos Grandes and Coipasa; while Citic Guoan will work in the northern area of the Uyuni salt flat, the largest in Bolivia.

The goal is for each of the three plants to produce 25,000 tons/year of battery-grade lithium carbonate, thus becoming the main supplier of this substance in South America by 2025, surpassing Chile, which currently produces 40,000 tons/year, and Argentina, which exports 6,000 tons/year.

At this moment, with the conventional brine evaporation method, Bolivia only produces 600 tons, after having made high state investments for more than a decade. According to Arce’s government, this poor result was due to the method that was being used to obtain lithium. Uranium One, Citic Guoan and CBC are part of a group of six companies that the country shortlisted for their ability to operate the experimental “direct extraction” technology, on which all expectations have been placed. The method is so named because it does not use evaporation pools. Some experts, however, are skeptical about this new technology and maintain that it is productively risky and environmentally questionable, as the volumes of water it needs to function are not known.

The possibility of foreign companies participating in the exploitation of lithium was closed by Bolivian legislation until 2018, when the government of that time, led by Evo Morales, reached an agreement with the German company ACI Systems for the use of another technology with which lithium hydroxide would be produced, not carbonate (both substances are interchangeable and can be used to make batteries). The agreement established that the chemical products that the German company sold would not pay royalties to the Potosi region, where the Uyuni salt flat is located; royalties would only apply to the brines extracted from the salt flat. This clause triggered a harsh regional conflict against the government of Morales, which began in June 2019 and converged with the national protests that arose against this president due to the results of that year’s elections. Before falling, Morales canceled the agreement with ACI Systems in an attempt to demobilize Potosi, but his decision had no effect. In the end, he had to resign and go into exile.

For this reason, the agreements that Arce is signing are considered a “window of opportunity” to normalize foreign direct investment in Bolivia’s abundant lithium. It is expected that in the coming days, after completing a study of the smaller salt flats near Uyuni, which has already been quantified, the Ministry of Hydrocarbons and Energy will announce that Bolivian lithium reserves are even greater.

The terms of the agreements with the contracting companies are not publicly known. This fact, along with the current percentage of royalties, which is 3%, are once again arousing the susceptibility of the population and the civic leaders of Potosi, highly sensitive due to the memory of the plunder of silver during the Colony. Thus, Bolivia still has to face serious technical and political challenges to realize the dream of replacing its gas industry, which is running out, with the “white gold” from its salt flats.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition