Bolivia's recent partnership with a Chinese consortium is not likely to lead to an explosion of lithium production from the slumbering giant of Latin America's "lithium triangle" region, according to analysts.

Unlike Chile and Argentina, which have unlocked at least some of their lithium reserves, Bolivia has struggled to maintain policy that secures the foreign investment and expertise it needs to access the largest lithium reserves in the world.

The Jan. 20 announcement of a partnership with a consortium led by battery manufacturing giant Contemporary Amperex Technology Co. Ltd., or CATL, to develop lithium projects in the Uyuni and Oruro salt flats was met with enthusiasm in Bolivia's political establishment. However, industry observers believe that the country will struggle as it has in the past.

"The Bolivian government has historically been too difficult to deal with and overestimated the value of their difficult-to-process brine," Joe Lowry, president of lithium advisory Global Lithium, told S&P Global Commodity Insights. "This is likely just another in the series of announced deals that won't come to fruition."

A fresh start

The Chinese consortium won the contract through a lengthy bidding process that involved three other Chinese groups, including a consortium with a Citic Group Corp. subsidiary, Russia-based Uranium One Group JSC and U.S.-based Lilac Solutions Inc. CATL will help the country implement direct lithium extraction technology, while mining giant CMOC Group Ltd. will develop two lithium plants, each aiming to produce up to 25,000 tonnes of battery-grade lithium carbonate per year.

The consortium agreed to invest over $1 billion during the first stage of the project to help Bolivia build out basic infrastructure as the government of President Luis Arce resumes a largely unsuccessful industrialization program that started under former President Evo Morales.

"Today begins the era of the industrialization of Bolivian lithium," President Arce said at the signing of the partnership agreement in La Paz. "By the first quarter of 2025, Bolivia should be exporting lithium batteries with domestic raw material."

Reason for doubt

For decades, Bolivia has failed to complete the geological studies needed to measure its proven reserves and has limited production to pilot projects. State-owned mining company Yacimientos de Litio Bolivianos, or YLB, estimated that it exported 600 tonnes of lithium carbonate during 2022, according to a November 2022 news release. Bolivia's lithium reserves are estimated at 39 million tonnes, according to S&P Global Market Intelligence data.

"Even if they are successful in achieving production, the volumes are likely to be much lower and later than announced," Lowry said. "Bolivia will not have a significant impact on global supply and demand dynamics in this decade."

Bolivia requires that YLB holds a majority stake in all lithium projects and has tasked the company with supervising the Chinese consortium. In 2018, YLB agreed to partner with Germany's ACI Systems, which committed to investing $1.3 billion to start producing lithium hydroxide by 2022. However, the deal was annulled following protests from local communities demanding higher royalties and other social benefits.

Another lithium deal, a joint venture announced in 2019 with China's Xinjiang TBEA Group Co. Ltd., failed to advance due to political turmoil caused by the ousting of former President Morales. Morales had repeatedly attempted to nationalize the metal during his term in office.

Little has improved in the intervening years.

"The investment climate in Bolivia is markedly worse [than in Chile and Argentina], and the level of state control is expected to be higher," Ryan Berg told Commodity Insights. Berg is director of the Americas Program at the Washington-based think tank Center for Strategic & International Studies. "There is a good chance that Bolivia's efforts to develop its lithium industry continue flagging."

In addition to the political uncertainty, extraction from the salt flats will require strong technical know-how, considering the brines' high level of magnesium and the early-stage nature of direct lithium extraction technology.

A blow for the U.S.

If development is successful, China would secure a new lithium supply line and bring its lithium industry that much closer to the doorstep of the U.S., which is desperate to break its dependency on Chinese refining of lithium and other critical minerals in the electric-vehicle supply chain.

"It is yet another setback in Western efforts to push back on China's dominance of critical minerals extraction and supply chains," Berg said.

President Arce, a former economic minister under Morales, said talks are ongoing with other foreign firms about additional partnerships.

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