Bolivia Inks Deals with Chinese and Russian Companies for Lithium Extraction

Bolivia [South America]: The Arce Government is Allowing More Foreign Company Involvement in Extracting Bolivia's Lithium Reserves with the Target to Export 75,000 Tons of Lithium Carbonate per Year by 2025.

The Bolivian government under Luis Arce's leadership has granted permission to two additional companies, a Chinese, and a Russian firm, to extract Lithium from the nation's salt flats. Bolivia holds the world's largest Lithium brine deposit, estimated at 21 million tons. Despite the recent political tensions, the government prioritizes the national economy and signed essential agreements with Uranium One Group JSC from Russia and Citic Guoan from China on June 29th.

Arce has signed two agreements with companies that will invest $1.5 billion in the next few years. These companies will join the Chinese consortium CBC, which was previously selected and will invest $1.4 billion in Lithium exploitation. Uranium One and CBC will be operating in Pastos Grandes and Coipasa, two minor salt flats in Bolivia's southern Altiplano. Meanwhile, Citic Guoan will focus on the northern area of the Uyuni salt flat, which is the largest in Bolivia. The objective is for each of the three plants to produce 25,000 tons/year of battery-grade Lithium Carbonate, making Bolivia the primary supplier of this substance in South America by 2025, surpassing Chile's production of 40,000 tons/year and Argentina's exports of 6,000 tons/year.

Currently, using the traditional Brine evaporation technique. Bolivia's Lithium production has fallen short, despite significant investments made by the state over the last decade. The Arce government attributes this underperformance to the outdated extraction method employed. To improve production levels, the country has identified a group of six companies, which includes Uranium One, Citic Guoan, and CBC, for their ability to operate the experimental "direct extraction" technology. This innovative technique doesn't rely on evaporation pools, but some experts remain skeptical about its potential productivity risks and environmental impact due to unknown water requirements.

In Bolivia, foreign companies were not allowed to participate in Lithium exploitation until 2018. However, the government under Evo Morales later reached an agreement with German company ACI Systems to use a different technology to produce Lithium Hydroxide instead of Carbonate, both of which are interchangeable substances used for battery production. As per the agreement, the German company is not obligated to pay royalties to the Potosi region, which is the location of the Uyuni salt flat, for their chemical products sold. Instead, royalties would only apply to the Brines extracted from the salt flat, which caused regional conflict against Morales and eventually converged with national protests due to the results of the 2019 election. Despite Morales' attempts to appease the Potosi region by cancelling the agreement with ACI Systems, he was forced to resign and flee the country.

Arce's recent agreements to develop Bolivia's Lithium reserves are seen as a "window of opportunity" for foreign direct investment in the country. The Ministry of Hydrocarbons and Energy is expected to announce even greater reserves after studying smaller salt flats near Uyuni. However, the terms of the agreements with the contracting companies remain unknown, causing concern among the population and civic leaders of Potosi due to historical plundering of resources. Bolivia still faces technical and political challenges in replacing its dwindling gas industry with Lithium from its salt flats.