Recharging Bolivia: Evo Morales' Lithium Dilemma

Article excerpt

One of the poorest nations in Latin America, Bolivia saw a record-high 6 percent economic growth in 2008. Despite this improvement, the citizens of the landlocked country have yet to reap the benefits. The nation continues to lack basics like adequate health care and extensive infrastructure. And the outlook for 2009 is grim, as the IMF predicts only 2.2 percent growth. However, Bolivia's large lithium reserves have the potential to revitalize the country's economy.

The world's lightest metal, lithium has been rising in prominence for its use in batteries, powering everything from cameras to laptops to electric cars. Most of the world's lithium reserves lie in the Andean region of South America, with Bolivia containing an estimated 5.4 of the total 11 million tons of the mineral under the Salar de Uyuni, the largest salt flat in the world. Controlling such a large share of the world's resources, Bolivia potentially stands to profit immensely. But President Evo Morales will face a dilemma as he leads the development of lithium mining in Bolivia. Only if he can quickly find the right balance between his people's needs and international demand will he successfully be able to recover his country's economy.

The first indigenous president of Bolivia, Morales is committed to ensuring that his people reap the benefits of their natural resources. Nationalization of the lithium industry is one option which Morales is considering in order to reach his goal. The Bolivian people would probably support such a step, as 61 percent of them approved a new, strictly socialist constitution in January 2009. And Morales has set a precedent. In 2006, on his one-hundredth day in office, he nationalized both the oil and the natural gas industries. In addition, Bolivia has also taken steps to begin lithium extraction independently. Comibol, the government-controlled mining company, is currently in the process of constructing a lithium plant. Though it is set to begin some operations in 2010, it is not scheduled to be complete until 2012.

Although still an option, nationalization seems unlikely in the near future. Despite the construction of the Comibol plant, Morales and his advisors know that Bolivia lacks the infrastructure and the money to invest in the lithium industry, much less the technology to extract the mineral effectively on a large scale.

Given Bolivia's lack of expertise, Morales has been searching for foreign companies willing to partner with his nation to extract the lithium. Many companies are eager for extraction contracts, but Morales will not settle for foreign companies coming into his nation, mining the lithium, and then leaving with the proceeds. Instead, as he told reporters in March 2009, at least 60 percent of the profits from the lithium must stay within the country. …