Bolivia Taps Into Lithium Boom Amidst Challenges
Bolivia is ramping up efforts to capitalize on its vast lithium reserves, attracting investments for processing plant construction despite low prices and resistance from certain stakeholders.
Industrial-Scale Plant and Investment Deals
In late 2023, Bolivia opened its first industrial-scale lithium processing facility, constructed by a Chinese consortium. Last year, agreements were signed with Russia's Uranium One Group and a Chinese consortium for further investments, pending congressional approval.
"We aim to achieve an annual lithium carbonate production capacity of 49,000 tons within three years," said Omar Alarcon, President of state-owned lithium company YLB. "A new contract is slated for submission to Congress in the first quarter."
Negotiations are ongoing with firms from Europe and Australia, Alarcon confirmed.
Challenges: Unrest and Market Dynamics
Bolivia's history of political instability and government control over natural resources have hindered private investment. The recent decline in lithium prices due to market saturation has also posed challenges.
Bolivia's contribution to global lithium supply remains minimal, despite its larger reserves compared to neighboring Chile. Extracting lithium from brine deposits beneath the remote Uyuni salt flat proves costly due to high magnesium content, reducing purity and increasing production expenses.
Direct Extraction Techniques and Contracts
The government is exploring new direct extraction technologies to address purity issues and enhance production efficiency. A $970 million contract with Uranium One involves constructing a plant with a targeted capacity of 14,000 tons annually. A $1 billion agreement with China's Catl Brunp and CMOC plans two lithium plants with a combined output of 35,000 tons.
Controversy and Criticism
Critics, including civic groups, politicians, and researchers, raise concerns about the lack of transparency in the approval process and advocate for raising royalties to 11% from the current 3%. Protests and petitions against the contracts have been organized.
Government's Rebuttal and Risk Mitigation
Alarcon dismisses these criticisms as politically driven or based on misinformation. He emphasizes Bolivia's control over lithium sales and majority stakes in the ventures. YLB will only repay investments when plants reach full capacity, minimizing financial risk for the state.
Capital expenditure of almost $2 billion will be repaid in lithium carbonate to the Russian and Chinese firms as preferential buyers over an average of 10 years, subject to market price fluctuations.
Commercial Viability and Future Prospects
While the contracts anticipate a lithium price of $30,000 per ton, Alarcon highlights the need for a price of at least $10,000 for commercial viability. Bolivia's previous lithium development efforts have faced setbacks, with its first processing plant operating below capacity.
Alarcon believes the new deals are crucial to unlocking Bolivia's lithium potential. Their rejection could potentially delay industrial-scale production by up to 15 years, which, he cautions, would be "catastrophic" for the country.