Bolivians Resist ‘Unfavorable’ Lithium Deal with China and Russia
Locals are challenging new contracts that would impose a considerable financial risk on the country.
The new agreements are being criticized by Bolivians for not providing any benefits to the locals.
However, the contracts were not initially made public, causing concern among many Bolivians, especially residents of Potosi, where the expanded lithium operations are planned in the Uyuni salt flat.
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The contract with China involves the construction of two new facilities with an expected production of 35,000 tons of lithium carbonate per year.
Meanwhile, the Russian operation is projected to produce 14,000 tons of lithium annually.
The revelations in the report raised concerns and suspicions among many locals accustomed to the left-wing government of Bolivia being more transparent with foreign investment deals.
Some of the alleged problematic aspects of the Russian contracts include ambiguous language concerning the transfer of ownership from Uranium One Group back to Bolivia and YLB assuming the majority of the financial risk.
Upon the disclosure of the full details of China’s lithium contract last week, Bolivians swiftly organized protests and demanded action against YLB and President Luis Arce’s administration.
A worker uses a shovel to show the raw material for the manufacture of lithium carbonate inside a salt recovery pool at the Llipi pilot Plant in the Uyuni Salt Flats in Bolivia on Aug. 13, 2022. Gaston Brito Miserocchi/Getty Images
According to Torres, China’s lithium agreement is deemed the “worst possible deal” as it lacks benefits for Bolivia.
Grounds For Annulment
Torres explained that in the initial phase, China will have the right to utilize the land for 36 years with 42 years total duration granted.
During this period, Bolivia is expected to cover all energy requirements, such as gas and electricity, at its own expense.
“Bolivia also must bear any additional extraction and purification costs related to the brine pools, essentially delivering an almost finished product to China,” Torres stated.
The department of Potosi, known as one of the poorest and least developed regions in Bolivia, will only receive 3 percent of the profits despite owning 100 percent of the Uyuni salt flat.
The remaining 48 percent of the profits from the China deal belongs to YLB, according to Torres.
He added that the operational expenses alone raise questions regarding the government’s decision to enter into such a detrimental agreement.
“The cost of producing all that lithium will be around $30,000 per ton. However, the current price of lithium per ton is approximately $10,000. This doesn’t make sense,” Torres emphasized.
According to Fastmarkets, a commodity insights group, the price of battery-grade lithium per ton witnessed a significant drop in 2024 due to oversupply and a decrease in electric battery demand.
Torres cautioned that if operating expenses exceed profits, Bolivia may find itself paying out “ghost money” to terminate YLB’s contract with China.
He also expressed concerns that the new lithium contracts with Hong Kong and Moscow could be a cover for money laundering.
This wouldn’t be the first instance of a member of the current administration being embroiled in a foreign money laundering scandal.
Meanwhile, skeptics like Francisco question why a business would willingly operate at a loss.
“It’s not surprising at all. It seems like we’re just giving away our resources without benefiting our country,” Francisco, a Bolivian policy analyst and business owner, remarked.
Vehicles line up to refuel during a 24-hour transport strike due to fuel shortages in La Paz on Oct. 23, 2024. Aizar Raldes/AFP via Getty Images
Francisco remarked, “The MAS [Movement for Socialism Party] inherited one of the richest gas reserves in the world in the early 2000s, but no one knew how to run it like a business.”
Bolivia possesses substantial natural gas reserves, which have been a source of intense conflict between government officials and the public for 22 years.
Arce currently leads the MAS party, which was previously headed by former president Evo Morales when he assumed power in 2006. Morales nationalized the nation’s natural gas reserves the same year.
Francisco asserted that YLB’s lithium contracts exemplify a predictable trend among leftist governments in Latin America: the nationalization of a country’s resources resulting in diminished production and debt.
Torres stressed that Bolivians may have grounds to annul the contracts with China and Russia under law 221.
The law also applies to private individuals who sign contracts considered detrimental to the national economy, and they could be subject to up to eight years of imprisonment.
In the case of the contested lithium agreements with China and Russia, Torres emphasized that law 221 is applicable to YLB staff, any secretaries or congressmen who approve the deals, and even the president of Bolivia.
“People should demand the nullification of this contract through legal channels,” Torres suggested, noting that the contracts were awaiting Senate approval.
Smoke and Mirrors
Reportedly, over 30 institutions in Bolivia have denounced parts of the contracts as unclear.
Simultaneously, residents in Potosi have swiftly organized protests.
However, Francisco believes that public outrage over the new lithium contracts might be a distraction for something else.
An analogous incident occurred during the turmoil of Morales fleeing Bolivia in 2019 amid allegations of election fraud.
Yet, an investigation revealed that millions indeed left the central bank between Nov. 7 and Nov. 8, allegedly funneled into five public projects without further elaboration.
Presently, Arce’s administration, which is facing significant challenges and lacks
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