SALAR DE UYUNI, Bolivia, May 23 (Reuters) – On Bolivia’s Salar de Uyuni, a vast white salt flat that feels almost otherworldly, Karina Quispe watches from the sidelines as a global resource race to become the world’s largest – and almost untapped – treasure trove battery metal lithium.
Her village on the edge of the Salar – from where most men have migrated to Chile in search of work – has seen few jobs or benefited from the mineral resources beneath the plains.
“It’s a forgotten city,” said Quispe.
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As the government prepares to award a lithium mining project to one or more bidders from around the world, it’s hoping that could change.
It’s the South American country’s most ambitious attempt yet to harness its lithium at a time when automakers and governments are scrambling to secure supplies of the metal needed for the batteries powering the electric vehicle revolution.
But locals’ dreams of lithium wealth are perhaps still no more real than the shimmering mirages that appear over the Uyuni Plains. The landlocked country faces major challenges in meeting its goals, according to Reuters interviews with a dozen current and former officials, as well as scores of residents around the salt flats.
Key hurdles include technological challenges, simmering popular opposition, a nonexistent legal framework for lithium mining, and looming infighting within Bolivia’s ruling Socialist Party over taxes and royalties, the sources said.
“I see an exaggerated enthusiasm that has no basis in reality,” said Juan Carlos Montenegro, a former senior Bolivian official in charge of lithium mining under the administration of ex-President Evo Morales.
Bolivia expects to announce one or more partnerships with foreign firms later this month to exploit the wealth of the Salar. Eight competitors from China, Russia, Argentina and the United States are bidding – none of which have previously exploited lithium on a commercial scale.
Lithium prices have skyrocketed this year and automakers from Tesla Inc (TSLA.O) to Volkswagen AG (VOWG_p.DE) are scrambling to source the metal.
Bolivia’s long-term goal: to produce lithium-ion batteries locally by 2025, a goal that even neighboring and wealthier Chile, the world’s second-largest lithium producer, has failed to achieve after decades of production.
But in Potosi, the Bolivian region where the lithium is located, authorities don’t expect production until 2030, Juan Tellez, an adviser to the regional governor, told Reuters. That’s five years behind the central government’s schedule.
Bolivia has a history of unfulfilled promises with lithium.
It has made several attempts and failed to mine its lithium since the 1990s, producing a total of 1,400 tonnes since 2018. Global lithium supply is expected to reach 600,000 tonnes this year, led by Australia and Chile, according to Benchmark Mineral Intelligence.
Bolivia has poured hundreds of millions of dollars into traditional evaporation ponds that have produced little lithium, in part due to high naturally occurring concentrations of magnesium.
As such, current President Luis Arce has only solicited bids from companies using a different and untested technology called “direct lithium extraction” — which could produce lithium faster, but requires a different and new infrastructure that hasn’t been built yet.
The Arce administration declined to comment. A spokeswoman said only that lithium is a “sensitive” matter.
Bolivia’s Deputy Minister for Advanced Technologies Alvaro Arnez, who oversees lithium development, conceded in a brief March interview with Reuters that the government needs to produce results to prove its ambitions are serious. Arnez reiterated its goal of achieving battery production and large-scale lithium extraction by 2025.
“The most important thing is to be able to show results,” he said.
‘PAST IS PAST’
Bolivia hosts 21 million tonnes of the 89 million tonnes that make up the world’s known lithium resources, according to the US Geological Survey, although none are listed as commercially viable.
The lure of Bolivia’s potential prize has lured some global players into its latest bid to boost production.
The list includes US startups Lilac Solutions – backed by German automaker BMW (BMWG.DE) and Bill Gates’ Breakthrough Energy Ventures – and EnergyX. China’s giant battery maker CATL is also on the list.
Others include Argentina’s Tecpetrol, Russia’s Uranium One, and Chinese companies Fusion Enertech, TBEA Co Ltd (600089.SS) and CITIC Guoan Group Co.
EnergyX has publicly courted Bolivian officials, pledged community donations and downplayed the risks posed by past energy company nationalizations or the kind of community anger that scuttled a 2019 Bolivian partnership with German firm ACI Systems to develop lithium batteries.
“In terms of past experiences between multinationals and Bolivia, the past is the past,” said Teague Egan, founder and CEO of EnergyX, in a statement. “We believe in and trust the vision of the Bolivian government.”
The head of another company involved in the process, who asked not to be named, said the government “takes this opportunity very seriously”.
While Arce’s government is closely allied with Russia and China, US officials told Reuters they believe the two American firms have a fair chance of winning the race.
The other companies did not respond to requests for comment.
“WE POSSESS THIS WEALTH”
Even if the lithium can be tapped, a battle is brewing over who benefits.
Under colonial rule, the Potosí region became Spain’s greatest source of silver and helped fund the power of the Spanish Empire for centuries.
But the mines were notorious for the millions of mostly indigenous people who died at work in appalling conditions, and the region remains one of Bolivia’s poorest.
“We were the center of (silver) exploitation but remained on the fringes of the country’s decision-making process,” said Tellez, the Potosi governor’s aide. “We are now trying to avoid that with lithium.”
Potosi is a stronghold of the ruling MAS party. But local authorities have criticized Arce in interviews with Reuters, saying the president’s office is trying to control its lithium without their input.
“We don’t even have a channel to express our opinions,” Tellez said. “We learn (decisions) from the press.”
The Bolivian government is proposing to set up joint ventures to extract lithium and make batteries, Deputy Minister Arnez said – with the nation owning 51% of the company and taking about half of the profits.
To do this, it must first change the Bolivian law that does not allow foreign companies to extract lithium. Local government officials are trying to use this as an opportunity to lobby for their share of royalties to be increased from 3% under current law to 15% of sales, threatening to take to the streets like 2019 if they do don’t do their way.
“Obviously, as possessors of these riches, we must reap the greatest benefit at least once in our lives,” said Eusebio Lopez, the mayor of Uyuni, the tourist town that gives the salt flats its name.
At the state-owned lithium pilot plant, which is already operational, few of the 700 employees are from local communities, lamented Karina Quispe, the Uyuni villager.
“We have minerals, we have lithium,” she said. “The people here should get something.”
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Reporting by Marcelo Rochabrun in Salar de Uyuni, Bolivia; Additional reporting by Ernest Scheyder in Houston; Santiago Limachi and Claudia Morales in Salar de Uyuni, Bolivia and Monica Machicao and Daniel Ramos in La Paz; Edited by Adam Jourdan, Christian Plumb and Rosalba O’Brien
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