Bolivia’s Lithium Agreements with China and Russia Under Scrutiny
Bolivia’s lithium contracts with China and Russia face public backlash and parliamentary suspension, with claims of inadequate local benefits and environmental concerns. President Arce warns of potential delays in production, with critics highlighting cost disparities and feasibility issues. Ongoing consultations aim to address community apprehensions alongside government assurances of profit retention.
Bolivia is currently confronting considerable public opposition regarding contracts with Chinese and Russian companies that were established to extract its extensive lithium reserves. Community organizations assert that these agreements do not confer meaningful benefits upon local populations, leading to a suspension of parliamentary discussions by the Bolivian Chamber of Deputies until a comprehensive information-sharing process with civil society is conducted.
The proposed contracts, estimated at $2 billion, encompass a $970 million arrangement with Russia’s Uranium One Group (UOG) and a $1 billion agreement with Chinese corporations CBC and Citic Guoan Group, aimed at creating lithium processing facilities capable of generating thousands of tonnes yearly. President Luis Arce has accused lawmakers of obstructing such investments in a political effort against his administration and warned of a potential decade-long delay in lithium production.
He indicated that if approval is postponed, Bolivia may lag behind until 2035 or 2040, when lithium may no longer be an energy source, replaced by alternatives like green hydrogen. Omar Alarcón, president of Yacimientos de Litio Bolivianos (YLB), affirmed that non-approval could defer industrial-scale production by as much as 15 years, while energy expert Sergio Hinojosa mentioned that large-scale lithium production would likely not commence until 2031 even if the contracts advance this year.
Community groups, environmental advocates, and leaders from Potosí, where significant lithium reserves are located, have raised alarms about the agreements’ lack of transparency and the potential for environmental degradation and economic detriment. Critics highlight a substantial cost disparity between the Russian and Chinese contracts, with the Russian project’s production costs reportedly 2.4 times greater without clear rationale.
Additionally, skepticism surrounds the feasibility of UOG’s project timeline, which allows only 18 months to operationalize a plant before contract expiration, risking incomplete infrastructure. Protests against the contracts have also interrupted government discussions. Under Bolivian law, foreign investors are required to consult with local communities and conduct environmental impact assessments prior to moving forward.
Currently, consultations are in progress, with projections suggesting that Potosí could yield royalties of $800 to $900 million over 30 years. Bolivia’s enormous lithium reserves, estimated at 23 million tonnes, have not yet been fully tapped due to various challenges including political instability and high magnesium levels in the deposits, contrasting sharply with the extensive lithium output from neighboring countries like Chile and Argentina. Despite YLB opening its first industrial-scale lithium plant in 2023, the facility operated at only 17% capacity last year and is expected to reach 23% capacity by 2025.
Government officials, including Vice Minister of Energy Resources Exploitation Raúl Mayta, have remarked that the contracts are not finalized and that they will continue to engage in technical discussions to address concerns. The Bolivian administration asserts that these partnerships would expedite the lithium industry development while ensuring that Bolivia retains 51% of profits from the ventures.
The controversies surrounding Bolivia’s lithium contracts with foreign entities emphasize significant public concern about the perceived lack of local benefits and environmental risks. Despite the government’s assurance of profit retention and potential economic advantages, fears of delayed production and unfavorable contract conditions persist. The outcome of ongoing public consultations and legislative discussions remains crucial in determining the future of Bolivia’s lithium industry.
Original Source: www.mining.com
