Legendary Lithium Riches From Bolivia's Salt Flats May Still Just Be A Mirage

On Bolivia's Salar de Uyuni, a vast white salt flat that feels almost otherworldly, Karina Quispe is watching from the sidelines a global resource race for the world's largest - and almost untapped - trove of battery metal lithium.

Her village on the edge of the salar - from where most of the men have migrated to Chile to find work - has so far seen few jobs or benefits from the mineral wealth beneath the plains.

"This is a forgotten town," said Quispe.

As the government readies to award a lithium mining project to one or more of a global array of suitors, she is hopeful that could change.

It is the South American country's most ambitious effort yet to exploit its lithium at a time when carmakers and governments are scrambling to secure supplies for the metal that is needed for the batteries powering the electric vehicle revolution.

But the locals' dreams of lithium wealth may still be no more real than the shimmering mirages that appear over the Uyuni flats. The landlocked country faces steep challenges to meet its targets, according to Reuters interviews with a dozen current and former officials, as well as scores of local residents around the salt flats.

Among the key hurdles are technological challenges, simmering citizen resistance, a nonexistent legal framework for lithium mining, and looming infighting within Bolivia's ruling socialist party over taxes and royalties, the sources said.

"I see an exaggerated enthusiasm. It's not grounded in reality," said Juan Carlos Montenegro, a former top Bolivian official in charge of lithium extraction under the administration of ex-President Evo Morales.

Bolivia expects to announce later this month one or more partnerships with foreign firms to exploit the salar's riches. Eight competitors from China, Russia, Argentina and the United States are bidding - none of which have exploited lithium at a commercial scale before.

Lithium prices have skyrocketed this year and automakers from Tesla Inc to Volkswagen AG are struggling to source the metal.

Bolivia's long-shot goal: to make lithium-ion batteries locally by 2025, an ambition even neighboring and more affluent Chile, the world's No. 2 lithium producer, has not achieved after decades of production.

But in Potosi, the Bolivian region where the lithium is located, authorities do not expect any production until 2030, Juan Tellez, an adviser to the regional governor, told Reuters. That is five years behind the central government's timeline.

Bolivia has a history of unfulfilled promise with lithium.

It has tried and failed to develop its lithium several times since the 1990s, producing an accumulated 1,400 tonnes since 2018. Global lithium supply this year, led by Australia and Chile, is expected to hit 600,000 tonnes, according to Benchmark Mineral Intelligence.

Bolivia has poured hundreds of millions of dollars into traditional evaporation ponds that have produced little lithium, due in part to high naturally occurring concentrations of magnesium.

So current President Luis Arce has only solicited bids from firms using a different and untested technology called "direct lithium extraction" - which could produce lithium faster but needs different and new infrastructure that is not yet built.

Arce's administration declined to comment. A spokeswoman said only that lithium was a "sensitive" matter.

Bolivia's deputy minister for advanced technologies Alvaro Arnez, who oversees lithium development, acknowledged in a brief March interview with Reuters that the government needed to show results in order to prove that its ambitions are serious. Arnez restated its goal of achieving battery production and large-scale lithium extraction by 2025.

"The main thing is to be able to show results," he said.

Graphic: Lithium triangle -

'THE PAST IS THE PAST'

Bolivia is home to 21 million tonnes out of the 89 million tonnes that make up the world's known lithium resources, according to the U.S. Geological Survey, although none of it is listed as commercially viable.

The lure of Bolivia's potential prize has hooked some global players to its latest bid to kick-start extraction.

The list includes U.S. startups Lilac Solutions - backed by German carmaker BMW and Bill Gates' Breakthrough Energy Ventures - and EnergyX. China's giant battery maker CATL is also on the list.

Others include Argentina's Tecpetrol, Russia's Uranium One and Chinese ventures Fusion Enertech, TBEA Co Ltd and CITIC Guoan Group Co.

EnergyX has courted Bolivian officials in public, pledged community donations, and downplayed the risks generated by previous nationalizations of energy firms or the kind of community anger that killed off a Bolivian partnership with German firm ACI Systems in 2019 to develop lithium batteries.

"As far as past experiences between multinationals and Bolivia - the past is the past," said Teague Egan, EnergyX's founder and CEO, in a statement. "We believe in, and trust the Bolivian government's vision."

The head of another firm involved in the process, who asked not to be named, said the government "is very serious about seizing this opportunity."

While Arce's government is closely aligned with Russia and China, U.S. officials told Reuters they believe the two American firms in the running stand a fair chance of winning.

The other firms did not respond to requests for comment.

Graphic: White gold rush -

'WE OWN THESE RICHES'

Even if the lithium can be tapped, a battle is brewing over who gets to benefit.

Under colonial rule, the Potosi region became Spain's single largest source of silver, helping fund the Spanish Empire's might for centuries.

But the mines were notorious for the millions of mostly indigenous people who died working in appalling conditions, and the region remains one of Bolivia's poorest.

"We were the center of (silver) exploitation but remained at the fringes of the country's decision-making," said Tellez, the Potosi governor's adviser. "That is what we are trying to avoid now with lithium."

Potosi is a stronghold of the ruling MAS party. But local authorities criticized Arce in interviews with Reuters, saying the president's office was trying to control its lithium without their input.

"We don't even have a channel to express our opinion," Tellez said. "We are finding out (decisions) through the press."

The Bolivian government is proposing to create joint ventures to extract lithium and manufacture batteries, deputy minister Arnez said - with the nation owning 51% of the entity and taking around half the profits.

To do that it first needs to amend Bolivian law, which does not allow foreign firms to extract lithium. Local government officials are trying to use that as an opportunity to lobby for their share of the royalties to increase to 15% of sales from 3% under the current law, threatening to take to the streets like they did in 2019 if they do not get their way.

"As the owners of these riches, obviously we need to get the biggest benefit at least once in our lives," said Eusebio Lopez, the mayor of Uyuni, the tourist town that gives the salt flats their name.

At the pilot state lithium plant already in operation, few of the 700 employees are from the local communities, lamented Karina Quispe, the Uyuni villager.

"We have minerals, we have lithium," she said. "The people here should receive something."

Graphic: Lithium prices are "insane" -