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General Market Commentary
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General Energy
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General Market Commentary
Bolivia seeks investors to power up lagging lithium output
Bolivia hopes surging global lithium demand can lure foreign investors to the country where nearly a decade of state-led development has left output far short of goals for the metal, coveted by makers of batteries for devices from laptops to electric cars.
The poor South American nation boasts nearly a quarter of the world’s known resources of the world’s lightest metal. Still, production lags far behind neighboring Chile and Argentina. Bolivia hopes to sign a deal with at least one foreign partner to invest up to $750 million in factories to meet rising demand from China and other countries for lithium-ion batteries.
The country is eager to cash in on tightening supplies of lithium. Experts say spot prices have more than doubled to around $25,000 per ton from below $10,000 in 2015.
Rain and other natural challenges, along with execution hiccups, have hampered state-run operations. Foreign companies with more expertise may be spooked by the left-leaning government of President Evo Morales, whose interventionist policies in other sectors have riled some big corporations and made others hesitant to invest, analysts said.
Bolivia had hoped its project at Uyuni, the world’s largest salt flat, would produce 40 tonnes per month of lithium carbonate by 2011. Nine years and $450 million into the project, it is producing just 10 tonnes per month.
Elsewhere in South America’s Lithium Triangle, Chile produces 70,000 tonnes a year and Argentina 30,000. Total global production is about 230,000 tonnes. Bolivia has sold exports at far below market prices; an employee of state-run lithium company YLB said it was trying to secure market share.
YLB CEO Juan Carlos Montenegro dismissed concerns about slow production.
“That criticism does not hurt us or interest us,” he said. “The important thing for us is ... the results we are going to see in 2018 and 2019.”
He said Bolivia was talking with potential partners it hopes will invest up to $750 million. He declined to name them but said a deal could be awarded this month for a 49 percent stake in a major expansion that could include up to seven new plants for cathodes, batteries and more.
Next month, bids are due to build an industrial lithium carbonate facility designed by Germany’s K-UTEC. That plant, which was slated to produce 30,000 tonnes per year in 2017, is now expected to produce half that in 2019.
However, critics doubt whether foreign industry heavyweights such as Albemarle Corp (ALB.N) and Chile’s SQM SQMa.SN will risk their capital in Bolivia. Morales has expropriated a series of foreign holdings since taking office in 2006.
Last year, Swiss-based mining and trading firm Glencore Plc (GLEN.L) said it would begin arbitration against Bolivia over nationalization of some assets.
Foreign companies with the right expertise, including one from Korea, have turned down the opportunity to operate in Bolivia, said Robert Baylis, managing director at Roskill Information Services Ltd, a consultancy.
“They felt either the risk that they would be nationalized or they would face a lot of problems,” he said, adding that no one has yet completed a study that shows Bolivian resources could be extracted economically.