ANALYSIS-Bolivia's bold lithium plans face uphill road
by Reuters News on 25 September 2009, 15:19 PM
communities.thomsonreuters.com
* Large deposit could make Bolivia big supplier
* Investors might be wary
* Quality of the deposit in question
By Eduardo Garcia and Diego Ore
LA PAZ, Sept 25 (Reuters) - Bolivia's Uyuni salt lake may hold the world's largest lithium bounty, but the socialist policies of President Evo Morales and questions about the quality of the deposits may prevent the impoverished nation from benefiting from the resource.
Lithium is a key component in rechargeable batteries that power laptop computers, digital cameras and cell phones, and demand for the metal may skyrocket if automakers ramp up output of hybrid cars or start large-scale production of electric vehicles.
Bolivia has around 50 percent of the world's lithium deposits at about 5.4 million tonnes, but -- unlike neighboring Chile and Argentina, which also hold lithium reserves -- it does not exploit the metal.
Morales, who has nationalized energy and mining firms, has told potential investors that any firm seeking to tap into the reserve at Uyuni, in the central Potosi region, has to take the Bolivian government as a majority partner in a 60/40 tie-up.
"The state has to have a majority stake and that's part of the negotiations that the (mining) minister has to carry out," the leftist leader said earlier this year.
Moreover, he has told the companies that have shown an interest, including France's Bollore, South Korea's LG, Japan's Sumitomo and Mitsubishi, that if they want to win a contract they should offer to build batteries, or even cars, in the landlocked nation.
The government's stance is popular with Bolivians and is born of a history of centuries of exploitation of the country's riches by foreign firms from miners to rubber barons, but it could backfire with potential investors, analysts said.
Since Morales, a self-declared anti-capitalist, took office in 2006 only a handful of companies have unveiled investments in the resource-rich country.
For the past three years he has marked May 1 seizing control of privately run companies, including Air BP, a division of British oil major BP Plc. And he has entered in bitter disputes with other foreign companies long operating in the country, such as Glencore International AG.
"Morales' tactics are self defeating," said Keith Evans, a leading lithium expert. "(He) should be courting partners with expertise in projects of this nature and his actions ... cast serious doubts on Bolivia's reliability as a long-term supplier."
LOW GRADE, LOW INFRASTRUCTURE
Evans, a geologist working in the lithium industry since the 1970s, also questions the grade level of the deposits in Uyuni. The concentration levels of lithium are low in the lake and the brine is high in magnesium, which makes lithium recovery more expensive, he said.
On top of that, the lake floods every year and that may lower the efficiency of solar evaporation ponds from which lithium is extracted.
"The high altitude and higher rainfall reduce net evaporation rates in comparison with the Salar de Atacama in Chile, the main current lithium source, which also has very large reserves," Evans said.
Others also note the limited infrastructure in the area.
"There are no decent roads linking the Uyuni salt lake with the rest of the country. There are no basic services there, no electricity, no water. We need a lot of time (to solve) these problems," former Mining Minister Jorge Espinoza told Reuters.
TRU, a consulting firm with expertise in the lithium industry, says the media has overstated Uyuni's potential.
The U.S.-based firm, which visited the lake with Japan's Mitsubishi last year, says on its website that Lithium processing "in the case of Uyuni will be particularly tricky."
BOLIVIA GOING SOLO?
If the government fails to strike a deal with a foreign company, Bolivia plans to build a lithium plant on its own.
State-run mining company Comibol is building a small pilot plant, and it wants to build a $300 million unit that will produce some 30,000 tonnes of lithium carbonate a year.
"The government's goal is to capture between 20 and 30 percent of the global market in a first stage," said Guillermo Roelants, who works as mining consultant for the government.
But analysts say the government's goals are unrealistic, because neither Comibol, nor the companies vying for a contract, have expertise in lithium mining.
"They may be able to solve the chemistry problem with the brine, and I hope they do, but we don't know at this stage whether this is economically viable. It isn't (only) the size of a deposit that counts," Evans said.
(Additional reporting by Monica Machicao; Editing by Walter Bagley) |
