Bolivia has the world’s largest reserves of lithium, the new ‘white gold’ Tesla (TSLA) and rivals such as General Motors (GM) or BMW (BMW) are rushing to procure to make increasingly-demanded electric vehicles (EVs).
With 80 million metric tons (MT), the impoverished nation’s troves of the silver-white metal trump neighbors Chile and Argentina’s own reserves. These three countries, which comprise the so-called Lithium Triangle, hold more than two thirds of global reserves. Chile is the world’s second largest producer with 39,000 annual tons, ranking just behind Australia. Argentina, in turn, makes 6,000 tons, according to the U.S. Geological Survey.
Bolivia, however, has failed to catch up, hurt by political turbulence and technological setbacks. It currently makes just 600 tons a year through a pilot plant held by state-owned producer Yacimientos de Litio Bolivianos, though it plans to boost it to 15,000 tons in the coming year.
Global EV giants, however –notably China’s battery supplier Contemporary Amperex Technology, which counts Tesla and Ford (F) as customers – are set to plough billions into Bolivia to help it churn out 300,000 tons of lithium between 2025 to 2030. This as demand for the silver-white metal, also used to make cell phones and laptops, is set to rise five-fold by 2030, according to consultancy Li-Bridge.
CATL will build two facilities in the fabled Uyuni salt flats, home to the bulk of Bolivia’s reserves but also a major tourist attraction and the set of past Star Wars films. It plans to initially produce 100,000 tons, then ramp up with additional investment. On top of this, China’s government-backed Citic Guoan Group and Russian state energy firm Rosatom will earmark $1.4 billion to extract another 100,000 tons of the world’s lightest metal.
Eyeing opportunities
For starters, they can invest in a slew of publicly-traded companies including CATL but also Chile’s Sociedad Quimica Minera (SQM) and Australia’s Albemarle (ALB) and Lion Town Resources (LINRF), all of which are rushing to mine lithium in Bolivia, South America and around the world.
“The best thing investors can do right now is to invest in Chile and Argentina” where mining firms are also allowed to own state lithium resources unlike Bolivia where the constitution bans it, said industry expert and Texas A&M University professor Diego Von Vacano. “You have SQM and Albemarle who are major global companies with proven businesses all over the world. Then there is Lake Resources, which is working to unearth 50,000 tons from Argentina by 2030, pitting itself against the likes of Rio Tinto which is also looking to muscle in the country.
EnergyX’s Bet
Von Vacano, who advised Bolivia’s President Luis Arce on his latest lithium investment initiatives, also likes U.S.’s EnergyX which recently completed a pilot project to obtain lithium through a new technology called direct lithium extraction (DLE). The site, located in Uyuni, had 94% “recovery rates,” a term used to describe the purity of the metal as extracted from brines or deposits, using much less energy and water than competing facilities. EnergyX raised $50 million in April through a GM-led funding round.
“Of the 9 firms that bid for Bolivia’s projects, EnergyX was the only one that actually had a viable project for Bolivia. They had very good results and they plan to replicate the project in Chile and Argentina,” added Von Vacano.
Regarding the future, he expects Bolivia will schedule a second bidding round in the next 12 to 18 months to enable U.S. and/or European entities to develop lithium projects. Next time, however, the process should be more competitive as the government is expected to approve a much-awaited law to govern the industry.So how can investors profit from Bolivia’s EV ambitions?
Legal Framework
Called the Law of Lithium and Evaporitic Resources, the bill is expected to provide greater clarity on how much lithium, if any, foreign entities will be allowed to own. Simultaneously, it will outline how much Bolivia’s different regions (such as Uyuni’s home, the Potosi Department) will receive in royalties.
Von Vacano expects the bill to clear Congress early next year, possibly allowing foreign firms to strike joint ventures with the government where the former will own 49% and the latter 51%, a similar structure that’s been used in the breadwinning natural gas industry.
Institutional investors, such as Aegon Asset Management, say Bolivia must do more before they can consider backing its lithium ambitions.
“It’s not something I am looking at,” said Jeff Grills, who heads EM debt for the New York-based firm, adding that the fledgling projects won’t have a near-term benefit on the nation’s economy or worsening debt profile.
He added, “I haven’t even tried to look at Bolivia’s lithium potential because it’s very hard to get information and future return projections. I am more concerned about the country’s economic projections and debt ratings. Bolivia is a country with high debt, very little liquid reserves and a large fiscal deficit.”
Grills expressed concerns about whether the landlocked nation will be able to pay its nearly $2 billion in debt as $1 billion and $850 million in sovereign bonds comes due in spring 2028 and 2030.