The excellent Simon Romero writes about Bolivia, which has the world’s largest lithium reserves:
In Bolivia, Untapped Bounty Meets Nationalism
Demand for lithium, long used in small amounts in mood-stabilizing drugs and thermonuclear weapons, has climbed as makers of batteries for BlackBerrys and other electronic devices use the mineral. But the automotive industry holds the biggest untapped potential for lithium, analysts say. Since it weighs less than nickel, which is also used in batteries, it would allow electric cars to store more energy and be driven longer distances.
The United States Geological Survey says 5.4 million tons of lithium could potentially be extracted in Bolivia, compared with 3 million in Chile, 1.1 million in China and just 410,000 in the United States. Independent geologists estimate that Bolivia might have even more lithium at Uyuni and its other salt deserts, though high altitudes and the quality of the reserves could make access to the mineral difficult.
Unfortunately, Bolivia’s ever-present nationalism, which has gotten in the way of other large-scale projects in the past, gets in the way of lithium production:
At the La Paz headquarters of Comibol, the state agency that oversees mining projects, Mr. Morales’s vision of combining socialism with advocacy for Bolivia’s Indians is prominently on display. Copies of Cambio, a new state-controlled daily newspaper, are available in the lobby, while posters of Che Guevara, the leftist icon killed in Bolivia in 1967, appear at the entrance to Comibol’s offices.
“The previous imperialist model of exploitation of our natural resources will never be repeated in Bolivia,” said Saúl Villegas, head of a division in Comibol that oversees lithium extraction. “Maybe there could be the possibility of foreigners accepted as minority partners, or better yet, as our clients.”
To that end, Comibol is investing about $6 million in a small plant near the village of Río Grande on the edge of Salar de Uyuni, where it hopes to begin Bolivia’s first industrial-scale effort to mine lithium from the white, moonlike landscape and process it into carbonate for batteries.
With Bolivia’s history of nationalizing private industries (such as last year’s natural gas seizure) I’m not optimistic, since the plant manager is intent in raising “the revolutionary consciousness of our people.” Adding to that is lithium’s prior history,
Mining lithium in Bolivia has its own history of fits and starts. In the early 1990s, nationalist opposition reportedly led by Gonzalo Sánchez de Lozada, a wealthy holder of mining concessions who later became Bolivia’s president, thwarted a plan by Lithco, an American company, to tap the lithium deposits here.
The Lithco venture was abandoned by the American company that owned it after street protests, hunger strikes, and the hostile business environment made it non-feasible.
The country’s socialist president, Evo Morales, and its powerful union leaders are all deeply suspicious of foreigners, and their politics could stymie yet another opportunity for Bolivia to improve the lives of its citizens.
Bolivia, though, has long experience with foreigners who’ve exploited its minerals – tin, silver and gold – and its mineworkers, and with neighbouring countries that have annexed its Pacific coast, part of its oil fields and its rubber-growing region.
That helps explain why in 2003 and again in 2005, Bolivians hit the streets to oust their presidents and protest what seemed to be a sensible business proposition: exporting Bolivian natural gas to Chile, the neighbour that cut off Bolivia’s access to the Pacific.
Those protests led to the 2005 election of Morales, the country’s first president of self-proclaimed indigenous ancestry.
He said that the government should own and operate any lithium mining operations, and that foreign companies can invest their cash but must play only secondary roles.
There are physical hurdles, as well as political ones. Heavy rainfall interferes with the evaporation process, and there are no good roads to truck lithium out of landlocked Bolivia.
The Salar de Uyuni is the world’s larges salt flat, 11 hours by car from La Paz, and the lithium processing facility is another two hours’ drive from there. The high-altitude desert is subject to 0F temperatures in winter, and the new plant is still under schedule.
“There are fairly significant barriers to developing the resource in Bolivia,” said Timothy McKenna, vice-president of investor relations at Rockwood Holdings, one of the three major lithium producers in Latin America.
American companies are staying away so far, but “the empire”, as Evo Morales & his buddy Chavez refer to the Americans, are not the problem. This is Bolivia’s one chance to hit the market, or, as economist Juan Carlos Zuleta said to Romero,
“We have the most magnificent lithium reserves on the planet, but if we don’t step into the race now, we will lose this chance. The market will find other solutions for the world’s battery needs.”
For now, Chile and Argentina hold over 70% of lithium supplies, and the Chilean economy is certainly much better run than Bolivia’s.
The inhospitable region where the lithium is located, in addition to corruption and murder (where one of the guys in charge of the natural gas nationalization has been arrested target=), upcoming land reform now that Morales has been granted more powers under the new constitution, and 7,200 confirmed and probable dengue cases, with five deaths add to the inhospitable business environment.
I’ll be talking about this in today’s podcast at 11AM Eastern.