The Bolivian lithium project
The exploitation of the metal in the lithium triangle region is more than 30 years old and the first prospects date back to the 1970s. However, given its characteristics in the Uyuni salt flat, attempts at the concession for exploration by transnational companies have not been successful (Bravo 2018). Many interpretations indicate that Bolivian lithium is very ‘dirty’, making the business inviable. Lithium is obtained through the evaporation of brines and the Bolivian brines are rich in four chemical components: Lithium, Magnesium, Potassium, and Boron. This makes the exploitation very expensive for market prospects. However, the increasing demand for lithium commodities is changing the prospects in favor of the viability of the Bolivian project.
The Uyuni Salt Flat is located in a highland that remained isolated with little road, electrical, and telecommunications infrastructure up until the Morales administration. Only with the arrival of MAS to power the lithium became an object of interest for the Development Plan. In 2008, the first more concrete steps were taken toward formulating a national plan of extraction. DS No. 29.496 declares the exploitation of evaporative resources as a national priority, creating the National Management for Evaporative Resources (GNRE) as a department of the Bolivian Mining Company (COMIBOL). The guidelines for the lithium exploration were determined in 2010 by GNRE, establishing the National Strategy for the Industrialization of Evaporative Resources, commanding the State to, in a sovereign way, research, explore, industrialize, and commercialize the resources. Ergo, all salt flats and salt lagoons have become national reserve areas, reversing previous concessions and prohibiting new ones (Bravo 2018).
In 2017, the lithium strategy left the Ministry of Mines and Metallurgy to be incorporated into the newly created Ministry of Energies (in plural). The National Strategic Public Company Yacimientos de Litio Bolivianos (YLB) was created, replacing GNRE. In short, the strategy is laid out on two grounds:
i All exploration of raw material, processing, and commercialization involving basic chemistry will be carried out only by the state company.
ii Processing residues, semi-industrialization, and industrialization can be carried out through association contracts with private national or foreign companies, provided that there is majority participation of the Bolivian State.
The strategy is based on four well-defined phases that pursue one clear objective: end-to-end industrialization, which constitutes the exception in relation to the way other countries in the region have launched themselves in this market (Strôbele-Gregor 2013; Revette, 2016; Fornillo 2018; Valenzuela 2020).
The first phase is configured as a process of research and development. Since 2008, the project has started to develop the technology to transform the brines into lithium carbonate, with viable methods. It begins with the experimentation of evaporation methods, goes through the construction of pilot plants and concludes with the establishment of two research centers for permanent technology development.
The second phase moves towards industrial-scale production. In 2013, the industrial brine pool structure for evaporation started to be built at the Uyuni Salt Flat - Llipi Plant - while complementing the industrialization of brine through the construction of Potassium Chloride (KC1) and Lithium Carbonate (Li2CO3) Industrial Plants. The third phase is designed to add value to the lithium industry by industrializing the production residues from the Llipi Plant to produce lithium-ion batteries and cathodic materials. This phase is carried out at La Palea, 200 km from the Uyuni Salt Flat, in association with private companies with the necessary technological capacity. The fourth phase is intended to industrialize other Bolivian salt flats, mainly the Coi-pasa and Pastos Grandes. In this phase, the association with private companies is also foreseen so that there is greater added value in production. Figure 5.4 shows the salt flats and plants of lithium’s strategy.
Figure 5.4 Bolivian Lithium’s Map.
Source: authors elaboration.
Morales believed that by seizing the ‘comparative advantage’ of having the largest reserves of lithium in the world, it would be possible to promote industrialization through external partners and transform Bolivia into a big player in this market. The lithium industrialization strategy was guided by a kind of market reserve that, for ten years, built the conditions to achieve bargaining power in the international market.
The first phase project was concluded with relative success, achieving a structure for research and development of the chemical industry that is unique in Latin America (Bravo 2018), and developing the necessary technology to extract lithium from specific brines in Bolivian salt flats. In this context, agreements were also signed with Bolivian universities for innovation and patent registration. The second phase is partially completed. The industrial pools are already working with more than 60% of the capacity, with just a few pending phases. The KC1 industrial plant was opened in 2018, having a production capacity of 350,000 tons per year. The Li2CC>3 Industrial Plant is in the final stage of construction, scheduled for completion in 2020. Once in operation, it will be able to produce 15,000 tons per year.
YLB expected that by 2025 Bolivia would be able to produce 200 thousand tons of lithium commodities. A market of almost 2 billion dollars,8 equivalent to approximately 5% of the current Bolivian GDP, this level of production would position Bolivia as a player in the international lithium market. China, the largest lithium consumer in the world, estimates that it will demand 800 thousand tons of lithium in 2025, which presents a promising scenario for Bolivia if the state company YLB manages to complete the third and fourth phases by that time. To advance the third phase, Bolivia needs to negotiate agreements with foreign companies on the basis of the strategy:
a The Bolivian State will be the majority shareholder;
b The company must demonstrate a high technological capacity; c The company must guarantee the market for all production;
d The raw material available is only the residual brine from the production processes carried out by YLB.
Partly stimulated by the high prices due to the Chinese demand, Bolivia formed a mixed company between Y LB (51%) and the German company ACI System (49%) in 2018, for a duration of 70 years, with the ambition to export Bolivian batteries to the European market by 2023. The aim is to construct three industrial plants for the production of Lithium Hydroxide (LiOH), from residual brines; cathodic materials; and batteries.
First steps have also been taken to advance to the fourth phase. On August 20, 2019, a preliminary agreement of a mixed company was signed between YLB and the Chinese Xinjiang TBEA Group, to industrialize the Coipasa and Pastos Grandes’ salt flats: partnership still under negotiation that foresees the construction of seven industrial plants, with an investment of around USS 2,3 billion.
The lithium industrialization strategy breaks with the traditional logic of the export of raw materials as it aims to create an endogenization process of the battery production chain in a sovereign way. Although the expected growing demand for lithium supports this plan, the development of the industry still faces many uncertainties. The battery market tends to accelerate its demands as EVs spread, and Bolivia still needs to take some important steps to successfully position itself in the international arena. Entering the hegemonic dispute in one of the most dynamic markets in the world without a competitive technological foundation is a very high bet. The absence of a sovereign exit to the sea is another aggravating factor in this process. It means that being part of the global value chain that is at the heart of the contemporary global energy transition requires very efficient logistics. At the moment, Bolivia is isolated, without direct access to markets. A third pungent issue relates to the absence of qualified labor to take on the highly specialized jobs that the sector requires. Brugger and Zamora (2014) indicate how this issue can impact the possibilities for advancing the lithium project. In Uyuni, it was only in 2019 that the first Technology Institute for the training of qualified workers was opened. The education to qualified labor is a lengthy process and in a fast-developing market, Bolivia may not get there in time.
Despite the recognition of these difficulties, an agreement was reached with the German company to advance the project. In the dispute between the United States and China, which controls most of the lithium market, Germany, which aims to advance its EVs fleet, found itself without access to raw materials for the production of batteries. Making the agreement with Bolivia was a way to remain in the dispute, even accepting the high Bolivian conditions.