Lithium Economics

Lithium: The fallacy of fallacies *

Jun 07, 2012

Juan Carlos Zuleta's response to two articles published in March by the head of the lithium pilot project in Bolivia.

In this contribution I respond to COMIBOL’s national manager of evaporite resources in relation to "fallacies" 1-4 mentioned in two recent articles published in the government newspaper Cambio, which relate to my intellectual work on this topic. I will not comment on "fallacies" 5 and 6 because they do not correspond to my position on those points.

Comment on fallacy 1: "The Bolivian process is equal to discovering warm water."

In a clear allusion to my critical argument about the so-called "Bolivian process" for extraction of lithium in the Salar de Uyuni, the national evaporite resource manager sustains that it "is not a copy of any other" but "a combination of the classical process and a series of successive chemical processes which showed much greater recovery and, therefore, technical and economic feasibility." However, as it has become customary in the speeches of that public official, his explanation does not provide more economic and technical elements that would at least allow displaying the concrete achievement to which it refers. Neither does it provide any information about the processing of 8 patents – mentioned since late 2010 - to endorse the novelty of the "Bolivian process." It is time that the pilot project make public some information on the status of that process. If there is indeed such a thing, I wonder: What is the fear about providing a summary of each of the alleged 8 patents, as is done regularly in a process of this nature, for example, at the U.S. Patent Office? To say that the new process is a combination of the classical process and a series of successive chemical processes does nothing but sow more doubts about this, because I know the classical process involves not only solar evaporation processes but also chemical application to move towards the concentration of the brine. The question we must continue to raise in relation to the pilot project is: What is the difference between the process discovered by Bolivian professional engineers and all other processes invented so far? As I have said on numerous occasions, so long as the public servant mentioned continues arguing in a circle, repeating over and over that the Bolivian process is new because it is new, period, I will still think that "the Bolivian project is equal to rediscovering the warm water" or reinventing the wheel.

Comment on fallacy 2: "There are no human resources to develop this industry."

This is not to disqualify anyone, but to tell the truth. It is easy to see that the government didn’t summon the country's top professionals in the area to direct the project. Comparing my criticisms about it with the arguments put forward by the oligarchy in past decades in relation to the alleged failure to melt tin in Bolivia because of the altitude is certainly nonsense and only denotes an effort to confuse the public. It is appropriate that the Bolivian people know that, there are indeed other technical professionals capable they could have done a better job.

While the country has virtually no experience in mining of evaporite resources, we can find some Bolivian professionals with the highest academic credentials and technical expertise that have even enabled them to obtain true patents both in Bolivia and elsewhere. In this sense, we must ask: Why were these experts not invited to lead the most important strategic project in the history of the country? In other words, why was there not an exception in this case to simply avoid political favoritism? No doubt the project's technical staff professionals are valuable, but I think that they are not definitely the only technicians who may have worked in the pilot endeavour.  With apparent chauvinist posturing (because we know that not all professionals working in the project are Bolivians), project managers will fail to change reality; these people had their chance and failed.

Beyond the political shows mounted whenever "potatoes burn", the southwestern region of Potosi, the department as a whole and the full country, are still waiting for concrete and clear results from the enterprise. In this regard, I wonder: what other results - apart from the 5 kg of lithium carbonate of uncertain purity obtained in laboratory by August 2011 - may have the pilot project scientists as evidence of their work in nearly four years?

Comment on fallacy 3: "The project has an excessive delay".

Again, the evaporite resources manager intends "beating around the bush", arguing that "there was no delay" in view of the initial schedule that "erroneously assumed application of the classical process to Uyuni brines required only minor adjustments for the pilot implementation phase", which contrasted with "reality and research".  He then accommodates his new schedule to the project's inability to produce something. The immediate question one must ask is: Who prepared this timeline? Or is it that it just appeared by magic? The official argument is really pathetic; it becomes a bad precedent in the search for results-based governance in Bolivia. Instead of acknowledging his mistake, he blames the schedule, which, to make matters worse, he possibly endorsed during his tenure as minister of mining and metallurgy.

But the most worrisome aspect of this justification is that it shows again a stark reality: that the pilot project bosses were never able to lead this endeavor, because otherwise they would not have wasted so much time and money "reinventing the wheel" working on a classical process of lithium extraction, which was clearly doomed to failure. Why? Well, for the simple reason that when the project started, everyone knew that this process had been developed primarily for the treatment of evaporite resources of the Salar de Atacama with mineralogical concentrations subject to radically different and more favorable weather conditions, which translated inter alia on much higher evaporation rates and no rain, very suitable for use in brine recovery systems based on solar evaporation ponds.

Comments on fallacy 4: "Bolivia is not taking advantage of the lithium boom".

I reiterate that despite how difficult it has proved for the pilot project to produce some lithium, 30,000 tons of lithium carbonate will not be sufficient to cover global demand for the following years and position Bolivia as the market leader in the world. The problem is that the manager, just as he wants to accommodate his inability to ensure production of lithium carbonate on an industrial scale to the (past, present and future) schedule of the pilot project, he aims at speculating without any basis on the world lithium market. He doesn’t admit the possibility that world production of lithium would increase fivefold in the next 4 or 5 years because his analysis is anchored in lithium production data for 2009, the year that reflected the worst effects of one of the major financial crises the world faced over the past hundred years. For that reason, every time he has to improvise some comment on the lithium market he always refers to data for that year.

For his information, according to the U.S. Geological Survey, world (excluding the US) production of lithium carbonate equivalent (LCE) evolved very interestingly between 2010 and 2011. In fact, it increased from 100,016 MT of LCE in 2009 to 149,492 MT in 2010 and 180,880 TM in 2011, i.e. an average growth rate of 35%. If we assume that the latter figure will remain constant over the next 4 or 5 years, we show that it is possible that the global production of lithium will increase fivefold between 2016 and 2017. This trend is essentially consistent with the recent forecast of the prestigious consulting firm Pike Research released in the middle of this month that the global market for lithium-ion batteries will grow by 450% between 2012 and 2017, noting that this growth is attributable largely to the demand for electric car batteries (See: This information refutes all speculations by  the evaporite resources manager and also shows his insolvency to refer to this subject. While the said government official wastes his time changing the project timeline at his convenience, Bolivia is increasingly delaying its entry into the lithium market and is jeopardizing the possibility that the country will become the powerhouse of the world.

Thus, even if the country managed to produce 30,000 MT of LCE in 2016, this would mean only 6% of the market. But the problem does not end there. The market may go away partially or completely from Bolivia. If the country does not enter the market with firm foot in the next 2-3 years, it is possible that the major car manufacturers in the world would give up to their idea of ??moving forward with a rapid pace toward electric propulsion and decide to seek energy alternatives to lithium-ion batteries. Why? Well, because the later Bolivia enters the market, the greater the uncertainty surrounding the availability of sufficient lithium on earth which could generate the necessary incentives to look for substitutes. An additional effect of this set of things would be a pressure on the price of lithium, because the world will probably have to be forced to produce lithium carbonate from ore deposits which have the particularity to generate higher production costs. So the uncertainty regarding the availability of lithium added to the price pressures could become a major problem for the future aspirations of Bolivia. It might happen, indeed, that when Bolivia is ready to introduce 30,000 MT of lithium carbonate into the market, the world could have evolved in another direction.

As I suggested in a previous piece on the possibility that Apple substitutes lithium-ion batteries, currently used in their iPhones, iPads and laptops, for fuel cells), this situation could be complicated further because of other competing uses of lithium that may well produce similar effects on the market. Apparently, the manager of evaporite resources does not really understand that when we refer to Bolivia in connection with the lithium market we are not talking about a potential producer of lithium, but the country with the largest identified lithium resources on earth, at a time when lithium is projected as the main factor in the upcoming CleanTech Age in the world, advanced by me more than four years ago. Based on the foregoing, all statements by that public official about the lithium market virtually crumble, giving rise also to the fallacy of his sub-fallacies, as follows:

4.1: "Neither lithium production nor consumption will increase fivefold by 2020. In the best scenario, it will double in the next 10 years."

As I demonstrated above, it is highly likely that both production and consumption of lithium carbonate will increase fivefold by 2020 or, in the worst possible scenario, this will happen in the next 10 years.

4.2: "The boom of lithium is neither here now nor in the medium term (6 - 8 years), it will be around after 2020."

As I noted earlier, his intention here is to accommodate the lithium market at his convenience, namely the inability of the pilot project to produce lithium.

4.3. "Since 2009 up to now (2011), prices have declined from $ 6,500 to $ 4,700 a metric ton."

The falling price of lithium carbonate in the last two years is largely explained by the positive evolution of Talison in the market.  As I mentioned in another contribution, in 2011 it became the first producer of lithium in the world. Talison mainly produces lithium concentrates primarily used in the glass industry and ceramics, which are priced lower than other types of lithium chemicals. It is therefore possible that this progress of Talison in the market had created a momentary downward trend in the price of LCE. This may change in the coming years as demand for lithium ion batteries for electric vehicles that require battery grade lithium carbonate increases. In this regard, in November 2011 Talison has announced the expansion of its production by 40,000 metric tons of lithium carbonate, through a new conversion plant of lithium concentrates to lithium carbonate (See:

4.4. "Global consumption and production have fallen in the last 3 years (2009-2011)". Nothing is more false. I have argued that production of LCE actually grew at an average rate of 35% over the past two years. Regarding consumption, Roskill, one of the most prestigious firms on lithium market analysis in the world, has just established that the use of lithium carbonate between 2009 and 2011 grew at an average rate of 13.5%, approximately. It is important to note that production and consumption data are not strictly comparable because they come from different information sources (USGS and Roskill), but they show the same trends, revealing the fallacy of the evaporite resources manager.

4.5. "A different trend is shown by potassium chloride; due to the global food crisis, this product (a fertilizer) has a growing market, its price and global consumption recorded a fall in 2010 and recovered in 2011. All projections indicate an increase in its world price and consumption, driven by demand from China, India and Brazil".

Nothing is more false. The potassium chloride market continues stagnant since 2010 and its price has been virtually frozen at US$ 470 per metric ton. Projections of the evaporite resources manager have no solid foundation and are just trying to justify the next focus of the pilot project in the production of potassium chloride. Again, his inability to produce lithium carbonate would be forcing the manager to resume the meaningless discourse of his friend Guillermo Roelants, to bet in the short term on potassium chloride instead of lithium carbonate.


* This article was first published in Spanish on 03/22/2012 (See:

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