The United States and Bolivia played a football match on Sunday (23) in the first round of the America’s Cup in Dallas. But the two countries are competing off the pitch for a crucial resource for the US industry: lithium.
Bolivia has the largest lithium reserves in the world. Around 23 million tons are in the southern region of the country. Known as the Uyuni, the salt flat forms a triangle of large reserves with Argentina (which has 17 million tons) and Chile (with another 9.3 million tons).
In recent years, demand for lithium has skyrocketed following the growth in electric car production. The industry depends on the ore to make high-performance batteries for electric vehicles. As a result, its price has risen and, in 13 years, it has jumped from US$ 5,000 per ton of carbonate in 2010 to more than US$ 80,000 in 2022. In 2023, the price fell to US$23,000, a consequence of what experts believe will be a drop in sales of electric cars in China.
The United States is trying to control Bolivia’s lithium production to avoid competition from China and Russia. This became more obvious during a conference of the US House of Representatives in March 2023. The head of the Southern Command (SouthCom), Laura Richardson, said that the lithium triangle is treated as a matter of "national security over our backyard.”
Professor Paulo Niccoli Ramirez had previously exposed this situation in his book O Golpe de 2019 na Bolívia – Imperialismo contra Evo Morales (The 2019 Coup in Bolivia - Imperialism against Evo Morales, in a rough translation, 2023). According to him, the country played a direct role in the coup against then Bolivian President Evo Morales in 2019 – and lithium was its main goal.
The Bolivian government, on the other hand, has adopted strategies to keep the resource under state production and make strategic partnerships with other countries that have the necessary technology to exploit the ore.
Bolivia created Law 928, which prioritizes national sovereignty in lithium production with the full participation of the state-owned company Yacimientos de Litio Bolivianos (YLB, in Spanish) at all stages of production. It has also implemented a technology called Direct Extraction of Lithium (EDL, in Spanish), which is less polluting and uses less water to clean raw lithium.
The government intends that, over time, the country will have the know-how to produce the equipment needed to extract lithium.
As part of the plan to industrialize the lithium production chain, the country signed a partnership with China in 2023 to expand the annual production capacity of the chemical compound. The CBC consortium, which includes the Chinese companies Contemporary Amperex Technology Limited (CATL), Brunp and China Molybdenum Company Limited (CMOC), is responsible for installing two lithium carbonate production plants in the Bolivian salt flats of Coipasa and Uyuni.
The Uranium One Group company, an arm of the Russian state-owned Rosatom company, has also signed a project accepting the Bolivian government's conditions to carry out tests and pilot projects in the country.
With an investment of more than US$1 billion, each plant would produce a maximum of 25,000 tons of lithium carbonate per year. In 2022, Bolivia produced only 600 tons of the mineral, according to YLB.
For Bolivian economist Martin Moreira, the ideal situation is for the South American country to have control over its production – and, in this regard, the relationship with the US is not positive.
"First of all, we must maintain our sovereignty. Doing business with the United States means losing sovereignty and accepting conditions. We try not to negotiate with companies that adopt the same conditions as those imposed by the US, but we can negotiate with investors who accept the country's conditions regarding the exploitation of strategic mineral resources, and do not restrict the free management of YLB as the company that will guide. The idea is that companies from other countries respond to this strategic Bolivian company," he told Brasil de Fato.
The nationalization of lithium production in 2008 and, in 2017, the creation of YLB, allowed investments and exports in the area to be directed towards Bolivia’s public structure. For Moreira, this has solved most of the country's structural problems.
"Thanks to nationalization, Bolivia's structural problems have been solved – from infrastructure to health and education. Now, lithium is our opportunity to attract investment and foreign currency to the country," he said.
What do other South American countries do with their lithium reserves?
Unlike Bolivia, lithium is not nationalized in Chile and Argentina. In Chile, part of the constituent parliamentarians presented proposals in 2022 to regulate Chilean copper and lithium mining and end private concessions, determining state sovereignty over these activities. The proposals, however, were rejected by the Constitutional Convention, and did not even make it into the final text of the first version of the country’s new Constitution, also rejected in a plebiscite.
In Argentina, the debate on the nationalization of lithium has also gained momentum in recent years, with proposals to create a state-owned lithium company discussed in a country where mineral assets belong to the provinces. The Argentinian business sector, represented by the Argentinian Chamber of Mining Entrepreneurs (CAEM, in Spanish), the Argentinian Industrial Union (UIA, in Spanish) and the Argentinian Chamber of Construction (Camarco, in Spanish), has opposed the initiative.
With 880,000 tons of lithium reserves already identified, Peru is the 13th country on the list of the US Geological Survey (the US agency responsible for natural resources). Two months before the recent coup against Pedro Castillo, the so-called Bloque Magisterial de Concertación Nacional presented a bill in the Peruvian parliament to nationalize the prospecting, exploration and industrialization of lithium in the country.
Edited by: Rodrigo Durão Coelho
