Bolivia's Grand Lithium Project: Ambitions, Challenges, and Opportunities

Bolivia's efforts to efficiently utilize one of the world's largest lithium deposits are gaining momentum. Despite currently low prices and growing opposition from politicians and civic groups, the Andean country is working intensively on new investment contracts for the construction of processing plants. At the end of 2023, Bolivia opened its first industrial plant, built by a Chinese consortium. Investments with Russia's Uranium One Group and a Chinese consortium were agreed upon in 2022, but these deals are still awaiting parliamentary approval. The aim is to produce 49,000 tons of lithium carbonate annually, as emphasized by the president of the state-owned lithium company YLB, Omar Alarcon. A new contract is to be presented to Congress in the first quarter of the year. Negotiations with European and Australian companies are ongoing. However, Bolivia's political instability and state control over natural resources have so far deterred private investors. The price slump in the lithium market also complicates the situation. To date, Bolivia's share of global lithium supply is minimal. Although the country has larger lithium reserves than neighboring Chile, they are not yet economically viable. To address the challenges of purity and production, the government is relying on new direct extraction techniques. A contract signed in September with Uranium One includes the construction of a facility with a capacity of 14,000 tons per year. Another contract in November with China's Catl Brunp and CMOC envisions the construction of two lithium plants with an annual production of 35,000 tons. Despite contradictory voices from civic groups, political actors, and researchers criticizing a lack of transparency and unfavorable conditions, Alarcon and the government remain steadfast. Administration remains in Bolivian hands, and investment repayment begins only at full production capacity of the facilities. These repayments are to be made over a ten-year period in the form of lithium carbonate to the Russian and Chinese companies, depending on international price developments. Although the contract price is estimated at $30,000 per ton, Alarcon emphasizes the necessity of a minimum price of $10,000 to ensure commercial feasibility. Operating the first YLB facility proved challenging with only 17% capacity utilization in the previous year and is expected to rise to 23% this year. These new contracts could be a significant step for Bolivia to tap into its vast potential. However, if they are rejected, it could delay industrial production by 15 years—a catastrophic scenario in Alarcon's view.