Bolivia Looks To Lithium To Foster Industrial Economy

Bolivian President Evo Morales believes that lithium – the world’s lightest metal with half the density of water – may help turnaround the poor landlocked nation, which has roughly half of the world’s proven lithium reserves.

Lithium is used in batteries that power cell phones, laptops, iPods and other devices. Many believe lithium batteries will ultimately power thousands of hybrid and electric vehicles.

“Lithium is the hope not just for Bolivia but for all inhabitants of the planet,” said Morales, who is seeking partners to extract the metal from the nation’s remote salt flats.

Morales made his remarks speaking before a meeting in Paris last month with Bollore Group, one of several companies vying to extract the metal from Bolivian lands.

Morales says he’s prepared to invest $200 million into lithium mining.

Japan’s Sumitomo Corp. and Mitsubishi Corp. are also interested in partnering with Bolivia to mine lithium.

However, Morales is insisting on conditions that could turn all the suitors away, leaving the remote Salar de Uyuni flats as the vast crystalline dry sea that they have been for a thousand years.

Job creation and economic development are a vital part of any potential partnership for Bolivians.  A partner can’t be like some foreign firms who they say shortchanged Bolivia’s hardscrabble Indians while extracting tin, copper and silver from the nation’s vegetation-starved highlands.

President Morales also wants lithium batteries manufactured in Bolivia, and even hopes to ultimately assemble battery-powered cars.

“We don’t even manufacture a pin here,” Mining Minister Freddy Beltran told The Associated Press.

“It’s a story that must change.”

However, the nation lacks the expertise to compete with Argentina, Chile, Australia and China. Chile and Argentina together account for more than half the 27,400 metric tons of annual worldwide lithium production.  

Morales has secured for Bolivians the bulk of profits from their natural gas since his election in 2005.  The nation contains South America’s second-largest known deposits after Venezuela’s. 

And Morales now sees lithium as a way to foster an industrial economy.

“The state doesn’t see ever losing sovereignty over the lithium,” he said.

“Whoever wants to invest in it should be assured that the state must have control of 60 percent of the earnings.”

A $6 million pilot project managed by state owned mining firm Comibol plans to begin some production in 2010.  To accelerate the plans, Bolivia has asked Mitsubishi, Sumitomo  and Bollore to join a “scientific committee” to determine the best way to mine the flats’ 5.4 million tons of lithium.

“Right now, most of the lithium that is used (industrially) is drawn from South America because it is the easiest to extract,” Haresh Kamath of the Electric Power Research Institute in California told the AP.

The economy of Bolivia, South America’s poorest country, is already reliant upon mining and natural gas extraction, heavy industries whose contamination is accepted because the profits and jobs are so badly needed.

Any new car factory or battery plant would create more pollution, and would likely be located in an urban area with some infrastructure and available workers.

One possible location is El Alto, the slum surrounding the capital and a huge base of Morales’ political support.

Meanwhile, any lithium extraction would plant a significant human footprint in one of the world’s most remote locations — a 12,000 foot high desert with flocks of pink flamingos visited only by occasional tourists.

Lithium, found in salty water typically just a few yards below the Earth’s surface, would be pumped into evaporation pools and then transported away.

Scrubbers at modern plants can contain sulfur dioxide and other byproducts of lithium processing, Kamath said, which is shipped as non-hazardous lithium carbonate for use in ceramics, heat-resistant glass, anti-psychotic drugs and of course batteries.

Marco Octavio Rivera of Bolivia’s Environmental Defense League says that since details of Morales’ vision have not yet emerged, he can’t estimate the environmental impact.  Nevertheless, he says extracting and processing lithium in the same way that Argentina and Chile do won’t cause the degree of contamination that Bolivia’s other mining industries do.

Sumitomo supplies Toyota, which currently uses nickel-metal hydride batteries in its popular Prius hybrid vehicles.  However Toyota has plans to have a lithium-battery by the end of this year, and an all-electric car in 2012.  And Mitsubishi plans to begin making electric cars later this year.

In the United States, Chevrolet’s Volt is set to go on sale next year, and will use lithium-ion batteries supplied by South Korea’s LG Chem Ltd.

Meanwhile, mass production of Bollore’s electric car, designed by Pininfarina, is planned in Turin, Italy, later this year.  Bollore promises top speeds of 80 mph and 150 miles on a single charge.

After a meeting with Morales in Paris, Thierry Marraud, the Bollore Group’s financial director, told the AP his company is preparing a detailed plan to develop Bolivia’s lithium industry.

“We told him, ‘For you, it’s better to transform the lithium than just to export it straight,'” he said.

“If President Morales wants a car plant, we can help him, Why not? It’s not impossible.”

Sumitomo spokesman Koji Furui told the AP the company is in preliminary discussions with Bolivia, and believes its chances are good because it just purchased a nearby silver mine concession.

While offering no details, Mitsubishi described its talks as more serious than preliminary.

Neither Japanese company has publicly committed to producing the batteries in Bolivia, industry analysts remain skeptical.

“Some of the most carefully guarded technologies in the world today are lithium-ion and nickel-metal hydride battery technologies,” metals consultant Jack Lifton told the AP.

“The Japanese and Koreans do not export these technologies, not even to the United States.”

The production of batteries is a capital intensive endeavor.  The process is highly automated, produces few jobs and requires nearly the same precision as semiconductor production. Furthermore, auto manufacturers typically want batteries made near their assembly plants.

Many factors will play a role in determining how quickly Bolivia’s lithium deposits are developed, such as the potential bailout of the U.S. auto industry, whether Chevrolet’s Volt sells well at prices of up to $40,000 a car and whether gas prices in the U.S. will rise, according to an AP report citing Bill Moore, editor of the online electric-vehicle journal EVWorld.

Other analysts say gas prices will need rise substantially to achieve President Barack Obama’s goal of having 1 million plug-in hybrids vehicles on U.S. roads by 2015.

Some demand could be created as a result of the recent U.S. stimulus package, which includes $2.3 billion to develop U.S. battery technologies.   In his speech before Congress Tuesday evening, President Obama lamented that many such batteries are now produced in South Korea.

For now, estimates of a lithium shortage and a surge in gas prices appear groundless.  There is currently a slight oversupply, and plenty of capacity to meet existing needs during the recession.

“Everything I’ve been hearing from the producers and industry consultants indicates there won’t be any shortage for the next 10-15 years,”  Brian Jaskula, a commodity analyst with the U.S. Geological Survey, told the AP.

SQM S.A., Chile’s top producer, says it supplies one-third of the global market and that it recently expanded capacity to 40,000 metric tons of lithium carbonate annually.  That’s enough to power roughly 5 million vehicles utilizing current technologies.

It is fairly simple to move and refine Chile’s lithium from Andean salt flats to cargo ships for transport to the United States and Asia. 

However, improving roads and developing other infrastructure in  remote parts of landlocked Bolivia, could take years.
Indeed, it would take at least two years to identify the deposits and construct a processing plant, Marraud said.

Considering these challenges, Bolivians shouldn’t ask too much of foreign partners, according to Bolivia-based metals analyst Juan Carlos Zuleta.

“The people could exaggerate their demands and that could, in the end, lead to the business going elsewhere,” he told the AP.

Image 1: Pieces of Lithium metal. Courtesy Wikipedia

Image 2: Salar de Uyuni Flats, Bolivia. Courtesy Wikipedia

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