Lithium Economics

Lithium: Are we Witnessing the Birth of Trans-Statal Companies in Bolivia?

Aug 14, 2011

With the recent signature of an agreement to start exploring the Salar de Coipasa, China and Bolivia appear to mark the beginning of trans-statal companies in the lithium industry

In recent weeks I have written endlessly about the rhetoric of a 100% state participation in the pilot lithium project carried out by the government of Bolivia. As time passes, the intricacies of the administration of President Evo Morales are becoming increasingly evident. The agreement recently signed with China to advance the exploration of the Coipasa Salar is further evidence of double standards that have – sure - begun to worry the people of Bolivia. Let's see.

The government told us first that the first two phases (pilot and industrial production of potassium chloride and lithium carbonate) of the so-called industrialization strategy of evaporite resources of Bolivia will have a 100% state participation and ended up signing agreements for "industrialization" with companies specialized in "extraction" of minerals from Korea (Kores and Posco) and China (Citic Group). True to its logic, it wanted to make us believe that the mining companies would be responsible for making batteries as well. This could not be more absurd!

Interestingly, a recent news item from South Korea informs that now they would be looking at the possibility of incorporating LG Chemical in the consortium, which itself is a leading producer of advanced energy storage, but still did not sign anything with COMIBOL. The improvisation is indeed worrying!

Now, with the agreement with the Citic Group to explore the Salar de Coipasa, I guess the government will start talking about a strategy of lithium 100% "trans-statal", namely directed by a state company of Bolivia (COMIBOL) and another state company of China. Brilliant!, right? One would think that this is a new success on the part of the government. Is it so? Only time will tell.

Meanwhile, let's say that what is salvageable of all this is that at last there are some indications of rationality to the extent that, apparently, in Coipasa the strategy will start from the beginning, that is from exploring the fields and not as in the case of Uyuni, skipping this important stage with the excuse that the amount of resources is so great that there is no need to quantify anything.

Obviously, although the government is endeavoring to show things differently, all this will be at the expense of a loss of credibility. But let's continue. Amid all this confusion is also seen something rather nasty: That, again, the government is discriminating Potosí, leaving the Salar de Uyuni with a failed experiment, a promise hard to fulfill in terms of industrial scale production and industrialization aimlessly. And, in contrast, Oruro is embarked, with Salar de Coipasa, on the train of "progress." Didn´t anyone say to President Morales that he should govern for everyone, even for those who disagree with him?

The question that my readers should be asking themselves at this moment is: What is the strategy? And the answer is very simple. The strategy is not to produce significant amounts of lithium in many years. Why? Well, because everything indicates that the Coipasa potential is definitely related to potassium rather than lithium. Therefore, under the impetus of China, sooner than anyone imagines, the country will most likely produce a lot of potassium chloride and little or no lithium. Why? Well, because China's Citic Group has taken many years to achieve still modest volumes of production of lithium carbonate from its brine deposits in the region located in Tibet, similar to those existing in the Salar de Uyuni.

At this point, I hope we can all understand how well it all fits in the strategy of the government's main strategic allies (Venezuela, Iran and Cuba), that is oil and nickel producing and exporting countries which have not been able to diversify their economies and depend to an overwhelming extent on oil and nickel revenues - that an eventual launch of lithium could start to wane - for their livelihood. As we live a time of havoc, the government will maintain the 100% state trap to Uyuni, but not for Coipasa. In these circumstances, the results are predictable: backwardness and more poverty for Bolivia.

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