More than a decade ago, the lithium industrialization process began in the salt flat in Uyuni, Bolivia. The formula to industrialize lithium in Bolivia has its roots in the National Development Plan (NDP) Bolivia with Dignity, Sovereignty, Productive and Democratic way to Live Well (NDP, 2006-2011) that marked the strategic guidelines of the Bolivian government of then President Evo Morales. That document proposed the following formula to get the country out of the extractivist, colonial and republican past:
Sovereignty, nationalization and control over the natural resources of the country;
Recovery, strengthening and creation of state owned companies to manage and decide over Bolivian resources;
Industrialization processes in the country to generate added value and increase surpluses;
Negotiation of balanced agreements with transnational companies, always maintaining the majority in any joint venture, in the search for a strategic partner;
Broad social participation and consultation;
Protection, preservation and harmony with nature;
Redistribution to the Bolivian population of the benefits of the said industrialization.
The myth of abundance
Due to the fact that the Salar de Uyuni (Salt flats of Uyuni) is the largest lithium reservoir in the world, this gives it a central role in all the proposals, plans and visions of the government, the opposition, the local population and Bolivian society. Because of the great magnitude of the Salar, authorities and leaders from the government and the opposition consider that through a process that generates added value (industrialization) inside the country, it is possible to transform Bolivia into the world capital of lithium and even manufacture electric vehicles Made in Bolivia.
Percentage of lithium resources based on USGS, 2021, Mineral Commodity Summaries.
The abundance of lithium in Bolivia clouds the vision and the plans for industrialization. The idea that the country is the reaches country in lithium reserves gives the false impression that all the other issues of technologies, investments, markets and exports with will be solved because everybody will end up needing our lithium.
On several occasions, the speeches around the possibilities of lithium industrialization have been unrealistic. Production, sales and income projections are made based on the magical belief that abundance will end up opening all doors if there is sovereign control over this resource and a strong public company capable of industrializing lithium in Bolivia. Thanks to this abundance, the government believes that it is possible to forge balanced agreements with foreign partners, even if these are profit-hungry transnational capitalist companies.
The evaluation up to 2019
Of the seven components of the formula mentioned above we can state that:
One is absolutely non-existent in the case of lithium industrialization (7. Redistribution) because the project is far from generating surpluses to be redistributed;
Two were implemented in a very poor, limited and rhetorical way (5. Social participation and consultation and 6. Harmony with nature);
Two were half applied and presented serious problems (3. Generating Value added and 4. The search for a strategic partner); and
Two were largely applied (1. Sovereign ownership and 2. State management).
Not all the elements of the formula have had the same weight in the process of implementation. In practice, the elements that have had to do with sovereign property, state management, value added and the strategic partner have had a greater weight in the equation than the issues of social participation and harmony with nature. The implementation of the formula has been reduced to its economic dimension to the detriment of its social and environmental components. Of the seven variables of the formula, four of them are determining, two are accessory and one is non-existent.
But even from the economic perspective, the industrialization process has not produced the expected results. Until 2020, the total amount of credit disbursed by the Central Bank of Bolivia to the state company Yacimiento del Litio Bolivianos (YLB) was 772 million dollars. This debt is equivalent to 72% of the debt of Bolivia with China (1,073 million dollars), is more than twice the debt of Bolivia with France (344 million dollars), and is equivalent to 58% of the debt disbursed by the World Bank (1,325 million dollars). Beside this, until 2019 the total accumulated sales were only 11.9 million dollars while the accumulated payments for interest and debt amortizations reached 25.7 million dollars.
Disbursements of extraordinary credits in favor of YLB [graph], own elaboration based on BCB, 2011-2020, Institutional reports.
The serious concessions that were made in the search for the strategic partner
In the constitution of the joint venture enterprise between YLB and the small German company ACISA (ACI Systems Alemania) the following incomprehensible concessions were given by the Bolivian government in the Supreme Decree 3738:
Contract for 70 years, when the calculations of the former YLB manager affirm that twice the investment of the lithium hydroxide plant can be recovered in just one year.
The contract does not ensure the construction of a plant to produce 300,000 to 400,000 batteries per year, as was initially announced, and only contemplates a lithium hydroxide plant.
It does not guarantee investment with its own capital by the strategic partner and establishes that the financing of 255 million dollars for the lithium hydroxide plant will come from credits to be contracted by YLB and ACISA.
Turns YLB into a supplier of residual brines and even lithium carbonate for the joint venture YLB ACISA.
YLB agrees to sell the residual brine at cost price to the YLB-ACISA joint venture.
Determines that the majority shareholder (YLB) cannot make any substantive decision without the approval of the minority shareholder (ACISA).
Accepts that the intellectual property of the technology provided by ACISA for obtaining lithium hydroxide is not transferred to YLB.
Grants exclusive sales and marketing rights in Europe and undertakes that YLB will not sell or market any product from its production chain in Europe, except through the YLB-ACISA joint venture.
Accepts that settlement of disputes between companies will be under the rules of the International Chamber of Commerce.
It establishes that the YLB-ACISA joint venture will not pay royalties to the State of Bolivia.
These concessions granted to the German company ACISA are affecting other elements of the lithium industrialization formula in Bolivia, such as those of sovereign ownership and state management. They also undervalued the investment that YLB made in the first phases of its industrialization plan. The German company, with a minimum contribution of 2.4 million dollars until October 31, 2019, obtained a decisive participation in a 100% Bolivian investment that, without taking into account the potassium chloride industrial plant, already exceeds 500 million dollars. In short, instead of generating balanced agreements with foreign companies it reproduced traditional subjugation relationships like neoliberal governments.
In November 2019, the government of Evo Morales had to repeal the Supreme Decree 3738 because of strong social protests, and currently the new government of MAS (Movement Toward Socialism) is in conversation with ACISA that can lead to the following scenarios:
the final breach of the contract;
the renegotiation of the contract with ACISA in favorable terms for the Bolivian State; or
the continuation of the contract as established in Supreme Decree 3738 with minor modifications.
The lost path
The implementation of the formula for the industrialization of lithium has not been comprehensive or holistic, but rather has prioritized extraction and production, forgetting that we live in a context of profound climate and ecological crisis. In this context, the productivist and industrialist vision has prevailed, without taking into account that rights of Mother Earth and social participation are essential. Both the government and the opposition do not raise the need to put limits on the manufactureing of fossil fuel and electric vehicles worldwide. None of them mention the unsustainability for the planet of maintaining a production of 90 to 100 million cars a year, whether electric or fossil fuel.
The formula proposed by the NDP sought greater consumption of electric vehicles and lithium batteries without proposing an energy transition that starts from promoting a more austere and simpler life to restore the balance of planet Earth.
The aforementioned formula for the industrialization of lithium has failed to establish balanced agreements with transnationals companies and in practice is reproducing an extractivist approach than tends to export raw materials with little processing at the service of value chains controlled by large transnationals. In this context, the lithium industrialization process in Bolivia as it was announced at the beginning is not on the way to establishing a «new pattern of development», but rather is on the way to recreate extractivist dynamics.
The case of Bolivia shows that the abundance of a resource such as lithium is a very relative precondition for any industrialization process that seeks to establish “new patterns of development”. The abundance of a resource must be valued comprehensively in all its interrelationships and not quantified only by taking into account economic and technological parameters. Abundance in absolute terms does not exist on a finite planet. Abundance is in a permanent process of redefinition from the worsening of the ecological and climatic crisis. The trend is that fewer and fewer resources can be extracted without further altering the vital cycles of the ecosystems where they are found and of the planet as a whole.
It seems that those who proposed this formula for a «new development pattern» did not take into account the new phase of neoliberal globalization in the XXI century. They believed that by having sovereign ownership over the abundance of a resource, plus state management and financing, it was possible to achieve industrialization and establish balanced agreements with transnational corporations. The experience of lithium in Bolivia in the last decade shows that the process is much more complex and that the terms of negotiation with foreign companies and value chains cannot be easily solved just because a country has a relative abundance of a resource.
We live in an international context of accelerated technological advances that make any industrialization process that is not constantly updated at a technological level obsolete in a very short time. The technologies for obtaining lithium carbonate and hydroxide and the manufacturing of lithium ion batteries are evolving at great speed. The direct extraction of lithium, that is now the new bet of the government as well as the new technologies for lithium ion batteries, will leave many enterprises outdated if they are not conceived with a dynamic vision of the future. In addition to overcoming the problems of ineffectiveness, waste and misplaced confidence of the lithium industrialization process in Bolivia, it is necessary to build policies adjusted to this new era of abrupt changes.
It is necessary to deepen the reflection on the structural causes of the problems identified until now to rethink the process of industrialization of lithium in Bolivia.
This is a summary of the publication in Spanish, “Tunupa 119: What happened to the industrialization of lithium?” that is based on the book “Mirages of abundance — The myths of the industrialization of lithium in the Salar de Uyuni” by José Carlos Solón.
fundacionsolon.org 
By José Carlos Solón
More than a decade ago, the lithium industrialization process began in the salt flat in Uyuni, Bolivia. The formula to industrialize lithium in Bolivia has its roots in the National Development Plan (NDP) Bolivia with Dignity, Sovereignty, Productive and Democratic way to Live Well (NDP, 2006-2011) that marked the strategic guidelines of the Bolivian government of then President Evo Morales. That document proposed the following formula to get the country out of the extractivist, colonial and republican past:
The myth of abundance
Due to the fact that the Salar de Uyuni (Salt flats of Uyuni) is the largest lithium reservoir in the world, this gives it a central role in all the proposals, plans and visions of the government, the opposition, the local population and Bolivian society. Because of the great magnitude of the Salar, authorities and leaders from the government and the opposition consider that through a process that generates added value (industrialization) inside the country, it is possible to transform Bolivia into the world capital of lithium and even manufacture electric vehicles Made in Bolivia.
The abundance of lithium in Bolivia clouds the vision and the plans for industrialization. The idea that the country is the reaches country in lithium reserves gives the false impression that all the other issues of technologies, investments, markets and exports with will be solved because everybody will end up needing our lithium.
On several occasions, the speeches around the possibilities of lithium industrialization have been unrealistic. Production, sales and income projections are made based on the magical belief that abundance will end up opening all doors if there is sovereign control over this resource and a strong public company capable of industrializing lithium in Bolivia. Thanks to this abundance, the government believes that it is possible to forge balanced agreements with foreign partners, even if these are profit-hungry transnational capitalist companies.
The evaluation up to 2019
Of the seven components of the formula mentioned above we can state that:
Not all the elements of the formula have had the same weight in the process of implementation. In practice, the elements that have had to do with sovereign property, state management, value added and the strategic partner have had a greater weight in the equation than the issues of social participation and harmony with nature. The implementation of the formula has been reduced to its economic dimension to the detriment of its social and environmental components. Of the seven variables of the formula, four of them are determining, two are accessory and one is non-existent.
But even from the economic perspective, the industrialization process has not produced the expected results. Until 2020, the total amount of credit disbursed by the Central Bank of Bolivia to the state company Yacimiento del Litio Bolivianos (YLB) was 772 million dollars. This debt is equivalent to 72% of the debt of Bolivia with China (1,073 million dollars), is more than twice the debt of Bolivia with France (344 million dollars), and is equivalent to 58% of the debt disbursed by the World Bank (1,325 million dollars). Beside this, until 2019 the total accumulated sales were only 11.9 million dollars while the accumulated payments for interest and debt amortizations reached 25.7 million dollars.
The serious concessions that were made in the search for the strategic partner
In the constitution of the joint venture enterprise between YLB and the small German company ACISA (ACI Systems Alemania) the following incomprehensible concessions were given by the Bolivian government in the Supreme Decree 3738:
These concessions granted to the German company ACISA are affecting other elements of the lithium industrialization formula in Bolivia, such as those of sovereign ownership and state management. They also undervalued the investment that YLB made in the first phases of its industrialization plan. The German company, with a minimum contribution of 2.4 million dollars until October 31, 2019, obtained a decisive participation in a 100% Bolivian investment that, without taking into account the potassium chloride industrial plant, already exceeds 500 million dollars. In short, instead of generating balanced agreements with foreign companies it reproduced traditional subjugation relationships like neoliberal governments.
In November 2019, the government of Evo Morales had to repeal the Supreme Decree 3738 because of strong social protests, and currently the new government of MAS (Movement Toward Socialism) is in conversation with ACISA that can lead to the following scenarios:
The lost path
The implementation of the formula for the industrialization of lithium has not been comprehensive or holistic, but rather has prioritized extraction and production, forgetting that we live in a context of profound climate and ecological crisis. In this context, the productivist and industrialist vision has prevailed, without taking into account that rights of Mother Earth and social participation are essential. Both the government and the opposition do not raise the need to put limits on the manufactureing of fossil fuel and electric vehicles worldwide. None of them mention the unsustainability for the planet of maintaining a production of 90 to 100 million cars a year, whether electric or fossil fuel.
The formula proposed by the NDP sought greater consumption of electric vehicles and lithium batteries without proposing an energy transition that starts from promoting a more austere and simpler life to restore the balance of planet Earth.
The aforementioned formula for the industrialization of lithium has failed to establish balanced agreements with transnationals companies and in practice is reproducing an extractivist approach than tends to export raw materials with little processing at the service of value chains controlled by large transnationals. In this context, the lithium industrialization process in Bolivia as it was announced at the beginning is not on the way to establishing a «new pattern of development», but rather is on the way to recreate extractivist dynamics.
The case of Bolivia shows that the abundance of a resource such as lithium is a very relative precondition for any industrialization process that seeks to establish “new patterns of development”. The abundance of a resource must be valued comprehensively in all its interrelationships and not quantified only by taking into account economic and technological parameters. Abundance in absolute terms does not exist on a finite planet. Abundance is in a permanent process of redefinition from the worsening of the ecological and climatic crisis. The trend is that fewer and fewer resources can be extracted without further altering the vital cycles of the ecosystems where they are found and of the planet as a whole.
It seems that those who proposed this formula for a «new development pattern» did not take into account the new phase of neoliberal globalization in the XXI century. They believed that by having sovereign ownership over the abundance of a resource, plus state management and financing, it was possible to achieve industrialization and establish balanced agreements with transnational corporations. The experience of lithium in Bolivia in the last decade shows that the process is much more complex and that the terms of negotiation with foreign companies and value chains cannot be easily solved just because a country has a relative abundance of a resource.
We live in an international context of accelerated technological advances that make any industrialization process that is not constantly updated at a technological level obsolete in a very short time. The technologies for obtaining lithium carbonate and hydroxide and the manufacturing of lithium ion batteries are evolving at great speed. The direct extraction of lithium, that is now the new bet of the government as well as the new technologies for lithium ion batteries, will leave many enterprises outdated if they are not conceived with a dynamic vision of the future. In addition to overcoming the problems of ineffectiveness, waste and misplaced confidence of the lithium industrialization process in Bolivia, it is necessary to build policies adjusted to this new era of abrupt changes.
It is necessary to deepen the reflection on the structural causes of the problems identified until now to rethink the process of industrialization of lithium in Bolivia.
This is a summary of the publication in Spanish, “Tunupa 119: What happened to the industrialization of lithium?” that is based on the book “Mirages of abundance — The myths of the industrialization of lithium in the Salar de Uyuni” by José Carlos Solón.
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