Bolivia looks to opaque methods, firms to build lithium powerhouse

The Bolivian government is set this month to choose companies that would turn the lithium in reservoirs below its salt flats into economic resources exported to the world market.

Launched during a global commodities boom that emboldened the country, Bolivia’s lithium industry has struggled. The state lithium corporation, Yacimientos de Litio Bolivianos, or YLB, has produced only a fraction of what was hoped. The solution, it thinks, is a series of new technologies designed by new companies.

Six foreign firms – four from China, one from the U.S. and one from Russia – expect a decision from the Bolivian government about which will earn the opportunity to use new technologies, collectively called direct lithium extraction, or DLE, to speed up the country’s extraction of the world’s largest recorded reserves of lithium.

With scant public information about neophyte technologies, the ecosystems supported by the salt flats, and the companies vying for the government tender, researchers and advocates are worried that YLB and officials are rushing into a billion-dollar development scheme that risks failure at the expense of communities and the environment.

“I feel that Bolivia is somewhere down the line going to produce lithium on a commercial scale. Something I don’t know is whether this is something that is going to benefit the country,” says Juan Carlos Zuleta, a Bolivian lithium analyst and former head of YLB.

 

Contested reserves

As fossil fuel use aggravates climate breakdown, companies and governments are looking to lithium-ion batteries to replace technologies that produce greenhouse gasses. Lithium prices have hit all-time highs, pushing the market to seek more sources to meet forecasted demand. To fill the gap, companies have turned to Bolivia, whose 2019 election was marred by turmoil exacerbated by allegations of foreign powers seeking its lithium that some called an attempted coup.

Since 2018, Bolivia has produced just 1,400 metric tons of lithium. Over the same period, world production reached more than 350,000 tons. Benchmark Mineral Intelligence, a consultancy, expects global markets to produce 600,000 tons this year and demand for the metal to hit 2.4 million tons in 2030. Australia produces more than half of current global production, but the high-elevation deserts of the Lithium Triangle in Chile, Argentina, and Bolivia hold the largest reserves.

Information about the selection of companies and development of lithium has been tightly controlled by YLB and the Ministry of Energy and Hydrocarbons, both of which did not respond to requests for comment for this article. Both organizations are fielding simultaneous criticisms over a lack of transparency and weak results from years of lithium development.

A YLB statement in June included technical details about the government’s new DLE initiative, says Gonzalo Mondaca, a researcher with the Centro de Documentación e Información Bolivia (CEDIB). The state firm seems to prioritize the rate of lithium recovery, rather than waste and water management. A principal problem in the new push for lithium extraction, Mondaca says, is that the objective is not clear. Is it to produce lithium, or battery-grade lithium or lithium-ion batteries? YLB says a contract will depend on “sovereign conditions” that will dictate the terms.

“Neither the selection criteria nor the “sovereign conditions” have been openly discussed,” says Mondaca. “Participation is very important because Bolivia is a country of conflicts because it has not developed inclusive institutions.”

Bolivia’s lithium lies in salt flats where surrounding communities farm Andean grains like quinoa, amaranth and cañahua and raise wild llamas that transport salt and produce wool. The 77 communities of the Indigenous Lipez Nation, which recently received recognition of their right to territory in southern Bolivia, struggle to participate in the development of the lithium industry, says Vivian Lagrava, a human rights lawyer with the Plurinational Observatory of Andean Salt Flats. The Uyuni salt flat, where extraction has so far focused, has also been the site of contested claims to land, mineral and water resources between the state, departments and the Lipez Nation.

Turning lithium operations on Bolivia’s salt flats into a world-class industry may require rewriting a foundational mineral law, which requires the state to be sole owners of the primary production of lithium. By involving foreign companies in extracting lithium, the state risks violating this rule, unless it is changed.

The Civic Committee of Potosí, or COMCIPO, which says it represents communities around the Uyuni salt flat, has taken the opportunity to propose additional amendments to the law. The department of Potosí, home to the lithium operations on the Uyuni salt flat, currently receives 3% of lithium sales. When lithium prices stand at $10,000 per metric ton, COMCIPO says royalties should be raised to 11% and distributed to communities. At $20,000, royalties under the proposal would rise to 20%. Lithium prices averaged more than $55,000 per metric ton last quarter.

Royalties were at the heart of complaints against a previous partnership Bolivia had in the private sector. When Zuleta led YLB, he chose to cancel a contract with German firm ACI Systems, because he felt a lack of royalties and technology transfer would leave the country at a disadvantage. Prior to the cancellation, protests criticizing the contract had erupted in Potosí led by COMCIPO, for which Zuleta acted as an advisor. “I didn’t feel it was the best Bolivia could aspire to,” he said.

Mining companies have long targeted Bolivia, making metals and minerals the country’s most valuable exports and polluting air and water. President Luis Arce has called on the military to protect lithium resources, as it does other mineral resources. A recent Mongabay investigation revealed widespread government negligence that allowed gold miners to pollute with impunity.

Protections for Indigenous Peoples to be consulted and participate in industrial projects are weak, says Lagrava, who also works with the human rights group Empodérate. A study in collaboration with CEDIB found that “the exploitation of lithium puts the ecosystem at risk, and there is no political will… to prevent environmental impacts, and even less to maintain the unity of Indigenous people who have always been considered weak and dispersed,” she said.

 

New technology

Proponents of DLE place hope in the new methods, but without a successful, fully operating plant, it’s difficult to say whether it can live up to the hype. As a result, sustainability with DLE remains poorly defined, according to researchers at the British Geological Survey.

Traditionally, companies get lithium from salt flats by sucking up slimy brine from beneath them and letting the sun evaporate away the water to leave condensed minerals. Evaporation can take more than a year of baking under the sun, and the practice has received criticism for using up scarce water in delicate ecosystems. Bolivia’s salt flats don’t have the luxury of consistent sun, and evaporation methods have had minimal success.

DLE methods aim to speed up the process and reduce water use by applying chemicals to the brine, extracting specific minerals, and replacing the remaining brine. Trial runs using patented DLE methods have spent just hours on what would take evaporation months.

DLE has been limited to lab tests, except for a few places where pilot operations are underway, including Arkansas, U.S. and Kachi, Argentina, where results have yet to be published. Bolivia’s lithium exists with a host of other minerals and particularly high concentrations of magnesium, which makes the lithium notoriously difficult to extract, according to Brian Jaskula, a lithium specialist at the U.S. Geological Survey.

“Many argue DLE is ready to go, and it has been part of some commercial operations, but it needs demonstrated technical and economic performance with transparency around that performance and the data that quantify performance,” says Ian Warren, senior geoscientist at the National Renewable Energy Laboratory.

Lithium activities have so far focused on the Uyuni salt flat, a conspicuous, Hawai’i-sized white patch among the singed beige of the Andes mountains. The DLE tender gives companies the opportunity to design projects on two other salt flats, Coipasa to the north and Pastos Grandes to the south.

Widening the net to across salt flats, also called salars, may insure against a monopoly of one or a higher likelihood of success with DLE, says Manuel Olivera Andrade, a researcher and lecturer at the Universidad Mayor de San Andrés in La Paz. However, Pastos Grandes lies within a wetland zone of global importance, called a Ramsar site.

Bolivia has ratified the Ramsar convention to promote conservation at such sites, which are recognized for biodiversity and importance for local livelihoods and water supply. The region, called Los Lípez, is home to threatened bird and wildcat species, as well as a quarter and half the global population of Andean and James’s Flamingos, respectively.

“If we use the same technology in Pastos Grandes, I think it would be irresponsible, because Pastos Grandes is more fragile, more vulnerable than Uyuni,” says Andrade, who was also trained in biology. If countries change the status of Ramsar sites in cases of “urgent national interest”, they must compensate for loss of wetland resources and provide alternative habitats for animals.

As a step in applying for the government contract, eight companies conducted trial runs of their own DLE technology, and just one of them conducted it in Bolivia. The company, U.S.-based EnergyX, patented a process called LiTAS that recovers 90% of the lithium in the evaporation ponds at the Uyuni salt flat without using freshwater and returns the remaining brine to the evaporation ponds. EnergyX CEO Teague Egan said it is “impossible to overstate” how positive the results were. EnergyX did not make the final list of companies because it submitted materials after the deadline.

“We don’t have hydrological studies to see how much water we can extract from the salt flat without affecting the rest of the ecosystem,” says Andrade. Because EnergyX built its plant on top of existing infrastructure for potash operations, it did not study the region’s hydrology before starting work. Hydrological research may exist in company or government hands, but Andrade says that learning whether research has been conducted requires months of communication with central government agencies.

For Evi Petavratzi, senior mineral commodity geologist at the British Geological Survey, scientists’ understanding of the brine and water cycle and their relationship to biodiversity and society is limited without baseline data beyond individual projects. “We ought to stop looking at mining projects in isolation without a proper systemic assessment of their impacts and benefits to the environment-society-economy,” she says.

YLB did not respond to questions about the tender process or DLE technology. Its president, Carlos Ramos, told the Financial Times recently that any resulting contract would “respect our laws and seek the maximum benefit for the Bolivian people.”

“It’s an exaggeration to say all DLE methods have environmental problems. But it is also an exaggeration to say that DLE is going to solve all the problems,” says Zuleta.

 

Who will get the contract?

With few, if any, DLE experts in Bolivia, YLB has looked abroad to figure out how to get hold of the lithium in its salt flats. Yet DLE is still in its infancy, and the six foreign companies have little experience with the technology that could determine whether Bolivia produces lithium at all. Public information suggests just two companies have experience with DLE technologies, and none on an industrial scale.

Six-year-old California start-up Lilac Solutions, with funding from Bill Gates’ Breakthrough Energy Ventures and a Department of Energy grant to further U.S. projects, has patented a process that it says reduces land and water use and produces lithium in just two hours. In partnership with an Australian firm, it is preparing to pilot DLE at a plant in Argentina and hopes to finish by 2024. Lilac, whose president of South America operations was a former right-wing MP in Chile, did not respond to questions.

Fusion Enertech, a Chinese firm, has worked on lithium extraction methods in collaboration with Russian scientists since 1990. Earlier this year, it announced it had recovered 95% of lithium from brines using DLE techniques.

The four other companies do not have publicly available information regarding DLE projects.

Uranium One, the sole Russian company to be selected, became part of Russia’s state mining and nuclear power company, Rosatom, in 2010. In 2020, it proclaimed a goal to produce 10% of global lithium supply by 2030. It has partnered with a Canadian company that owns a lithium deposit in Chile, claiming it has a technology more efficient than evaporation. The company could not be contacted.

Canadian analyst Joseph Bouchard recently argued that accepting the Uranium One bid would make Bolivia an outcast on the international stage because of the company’s links with Russian oligarchs who encouraged war in Ukraine. Uranium One has so far escaped sanctions from Europe and the U.S., as politicians argue that the firm’s products are too valuable to nuclear energy. Ukrainian president Volodymyr Zelensky said it was “not normal” that there have been no western sanctions on Rosatom yet.

Including Fusion Enertech, Chinese companies comprise the majority of applicants. Chinese companies also dominate the global production of both materials and batteries.

TBEA Group is a sprawling corporation with interests in coal mining, coal power plants, aluminum manufacturing, and electrical equipment in several countries. TBEA’s silicon operations are located in Xinjiang province, which produces almost half of the world’s supply of the materials used in solar panels, and where human rights groups say the Chinese state has detained more than a million Uyghur people in re-education camps that use forced labor and sterilize women.

Last year, an extensive investigation by researchers at Sheffield Hallam University found evidence that TBEA Group had “taken extensive advantage” of the programs that China calls “poverty alleviation” and include state-sponsored labor transfers to support its industry. TBEA had installed 921 televisions in Uyghur households for “spreading the voice of the Party and modern culture to every household.”

“Of all the companies studied, TBEA has most enthusiastically heeded the call to engage in Xinjiang’s “poverty alleviation” programmes,” the authors write. TBEA did not respond to the accusations in the report. A company subsidiary had signed an agreement with YLB in 2019 to produce lithium at the Coipasa and Pastos Grandes salt flats, but it is unclear what came of it, after the 2019 election initiated a government administration overhaul.

CITIC Guoan Group, a Chinese firm, has produced lithium from salt lakes in central China, which also have a high magnesium content but don’t use DLE technologies according to publicly available information. It has long pursued Bolivia’s lithium, having secured an agreement to explore resources at the Coipasa salt flat in 2011.

The fourth Chinese applicant to be long-listed for DLE development in Bolivia is a partnership between mining giant CMOC and CATL Brunp, a subsidiary of CATL, the world’s largest car battery company. The two firms recently agreed to develop a copper and cobalt mine in the Democratic Republic of the Congo.

TBEA, CITIC Guoan Group and CMOC did not respond to requests for comment.

Relying on foreign companies to develop the industry in Bolivia risks making the country dependent on faraway shareholders to lead a significant part of its economic development, says Zuleta, the analyst and former YLB chief. Major industrial deals can often put poor countries in debt to large multinational corporations. Zuleta hopes the government can ensure that Bolivian scientists and engineers can also gain expertise.

“This is going to be solved politically rather than technically,” he said.

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Banner image: Lithium mine at Salinas Grandes salt desert Jujuy province, Argentina. Image courtesy of Earthworks.