Behind the Coup: The Industrialization of Lithium in Bolivia
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Agustina Sánchez
International Relations (UNLa) and member of CENACK
Approximately 85% of the world's lithium reserves are located in the so-called "Lithium Triangle," comprised of Argentina, Bolivia, and Chile. These reserves are in unique conditions for exploitation, allowing for processing and production costs significantly lower than those of fossil fuels.
We have been saying that lithium is currently considered a strategic natural resource, having become:
1) Key factor in the change of energy matrix: lithium is needed for the manufacture of electric accumulators that allow the storage of energy generated by renewable resources, since this is intermittent and fluctuating, so it must be stored.
2) This is a determining factor in the shift to a new technological paradigm, as lithium-ion batteries will be the driving force behind mobility in the coming years through electric cars. Furthermore, these batteries are used in almost all portable electronic devices such as cell phones and computers.
We also mentioned that, in the case of lithium, the general dynamics of natural resources are not broken: lithium is consumed in the “core” countries, but it is expropriated from the “periphery” countries through its exploitation by large multinational corporations. This reflects the classic dependent model of manufacturing and value-added industrial products for the former, and exporting raw materials for the latter—a dynamic that has bound our countries to “underdevelopment.”
Therefore, if lithium emerges as a key factor to guarantee the transformation of the energy matrix and the technological pattern, and the world's largest reserves are located in the countries of the so-called lithium triangle, it is easy to understand that the global geopolitical chessboard will be marked by the dispute over strategic natural resources, as these constitute an essential element of power, because they allow for modifying or maintaining the current status quo.
It is important to clarify that the dynamics of the current international system are marked by a hegemonic transition of the poles of power, characterized by the loss of relative power of the United States, in the face of the growth of the People's Republic of China.
China's advance through the Belt and Road Initiative poses significant threats to the United States' role as a global superpower, which is why it must guarantee its hegemony, at least regionally, to compete for power on the international stage. This is why, since Donald Trump took office, the United States has once again invoked the Monroe Doctrine as a foreign policy tool toward Latin American and Caribbean countries, seeking to revitalize its hegemony over what it considers its immediate geopolitical sphere of influence—its "backyard." For the United States, Latin America and the Caribbean constitute a key region in geostrategic, geoeconomic, and geopolitical terms for maintaining its power in the West.
From these statements it is quickly deduced that all actions carried out from our countries, tending to question the hegemony that the United States needs to consolidate in the region, will be the focus of the foreign policy of the North American country.
Through the use of all kinds of policy instruments—judicial, financial, economic, diplomatic, military, communications, cultural, and intelligence—or through lending institutions like the IMF or multilateral organizations like the OAS, it will seek to subjugate the will of the countries of Latin America and the Caribbean to its desires. It needs the region controlled and acting in its own interests.
In light of this, the point mentioned at the beginning of this note becomes important: lithium is a key factor in the change of energy matrix and technological pattern, that is, it is a power factor to lead the geopolitical dispute for natural resources and guarantee the consolidation of the current hegemonic transition.
Bolivia possesses the world's largest lithium reserves in brine, located in the Salar de Uyuni. Unlike Argentina and Chile, where the resource is controlled by multinational corporations serving foreign interests, in Bolivia the Plurinational State sovereignly controls and exploits the resource according to national interests. This undoubtedly creates tensions with the United States, as the policies implemented by Evo Morales are quite different from those the U.S. desires for Bolivia.
The victory of Evo Morales Ayma in 2006 marked the beginning of a process that aimed to end the oppression and subordination of the Bolivian people to the interests of large corporations and powers.
Regarding lithium resources, the nationalization and industrialization process began in 2008, when Evo Morales decided to grant legal standing to the long-standing demand of Bolivian mining communities: that the evaporite resources of the Salar de Uyuni be exploited by the State. From colonial times until its establishment as a nation-state, Bolivia's natural resources were exploited by major powers through various extractive methods. This exploitation, of course, paid little attention to the interests of local communities.
Thus, the Salar Uyuni industrialization project was presented by the peasant labor unions who decided to raise the demand with the new President. The project aimed to achieve the production of lithium carbonate and potassium chloride through the creation of a public, state-owned company.
Thus, a popular demand was transformed into a state policy.
Formally, the process began in 2008 with the enactment of Decree 29.496, which eliminated the concessionary regime and granted national status to the exploitation of the evaporite resources of the Salar de Uyuni. This was followed by Law No. 3720, which restored to the Bolivian Mining Corporation (COMIBOL) the ability to participate directly in the entire production chain, with the functions of prospecting and exploration, exploitation, concentration, smelting and refining, marketing of minerals and metals, and administration of the fiscal areas. (1)
In 2008, through Resolution No. 3801, the Comprehensive Development Project for the Brines of the Uyuni Salt Flat and the installation and commissioning of a Pilot Plant for lithium processing were approved (2). Also that same year, the National Evaporitic Resources Management (GNRE) was created within the structure of COMIBOL, a precursor to the creation, in 2017, of the public, state-owned and national company Yacimientos Litiferos Bolivianos.
The process of nationalizing and securing natural resources as our own, understanding this as key to the development and execution of a sovereign foreign policy, continued with the approval in 2009 of the New Political Constitution of the State (3), where natural resources are declared to be of strategic character and public interest.
To carry out the industrialization process, the National Strategy for the Industrialization of Evaporitic Resources (4) was designed, which included three phases through which the Bolivian State would begin to control the entire value chain of lithium production.
Phase 1: This phase involved the pilot-scale production of lithium and potassium commodities. It was successfully completed with the inauguration of the Lithium Carbonate Pilot Plant in Lippi in January 2013.
Phase 2: Industrial production of lithium carbonate, potassium chloride, and potassium sulfate. This phase involved the construction of the necessary infrastructure and conditions for the Bolivian State to produce lithium and potassium commodities on an industrial scale.
This was expected to give the Bolivian state complete control and knowledge of the processing and production of resources from the Salar de Uyuni. Once consolidated, this would allow it to enter the global lithium market without depending on the resources, machinery, investments, technology, or conditions of large multinational corporations. The lithium from the Bolivian salt flats would be extracted from and for the benefit of Bolivia itself.
Back in 2017, Law No. 928 created the National Strategic Public Company Bolivian Lithium Deposits (YLB), replacing the National Evaporitic Resources Management (GNRE). The law stated that “Bolivian Lithium Deposits was responsible for carrying out the activities of the entire production chain: prospecting, exploration, exploitation, beneficiation or concentration, installation, implementation, start-up, operation and administration of evaporitic resources, inorganic chemical complexes, industrialization and commercialization” (5)
The institutional change from GNRE to YLB involved the transfer of oversight of the entity from the Ministry of Mining and Metallurgy to the Bolivian Ministry of Energy. This demonstrates the understanding, as mentioned at the beginning, that lithium is key to the transformation of the energy matrix, as it is the resource that will allow the production of lithium-ion batteries necessary for electric cars and the manufacture of energy storage devices.
The creation of YLB also allows progress in Phase 3 of the initial industrialization process: Industrial manufacturing of cathode materials and lithium batteries.
In relation to the latter, it is important to clarify that few countries have the scientific, technological and technical resources for the manufacture of batteries and cathode materials; for this reason, one of the provisions of this third phase is that the manufacturing process of these materials with a high technological-scientific level be carried out in alliance with a strategic partner.
In April 2018, the German company ACY Systems was selected for offering the best economic, technological, and market opportunities. This followed the Bolivian government's definition of the minimum conditions that the company or consortium had to meet to be selected for Phase III as a strategic partner of YLB (notably maintaining the majority state stake of 51% and guaranteeing a market for the products manufactured by the partnership in Bolivia, especially lithium-ion batteries). The agreement between the Bolivian and German companies aimed to establish a production plant for cathode materials and lithium-ion batteries.
The agreement between Bolivia and Germany has sparked multiple debates, and in that sense it is important to clarify that it is far from implying a transfer of sovereignty in the exploitation of lithium in Bolivia. As Luis Alberto Echazú A., Manager of Bolivian Lithium Deposits (YLB), states, “What will the German company do? Well, it will contribute technology, market access, and financing so that the joint venture formed by YLB (Bolivian Lithium Deposits with a 51% majority stake and ACI Systema with 49%) can jointly process a residue called residual brine to produce, first, Lithium Hydroxide, a high-value industrial product, and from there, a second high-tech industrial complex consisting of a cathode materials plant (nanotechnology = hydrated sulfates of Cobalt, Nickel, and Manganese and Iron Phosphate of extremely high purity, practically pure) and finally the cells and assembly of Lithium-ion batteries, all in Bolivia. This entire industrial chain is thus obtained from a residue, the so-called residual brine. But will this residual brine be given to the German company? Absolutely not. This brine will be SOLD, not to the German company to be taken to Europe, but to the joint venture or partnership in which the Bolivian company YLB holds the majority stake and will therefore receive the majority of the profits. Furthermore, this sale generates revenue for YLB, and therefore it must pay the corresponding royalty to Potosí.
Therefore, YLB, as the owner and parent company, sells the residual brine to its subsidiary, the joint venture, which purchases the product. As we have already seen, this product does not leave Bolivia; it is transformed into high-value products that will be exported to Europe.
Can this be characterized as a handover of the salt flat? Absolutely not. The German company has no rights whatsoever over any portion of the Uyuni salt flat, just as no other national, much less foreign, private company can or will have any rights. There is no handover whatsoever, but rather industrialization in Bolivia of the evaporite resources of the Uyuni salt flat, which remains and will remain the sovereign property of the Bolivian people.” (6)
In addition to the agreement signed with Germany, Bolivia, through YLB, signed a preliminary agreement this year with the Chinese consortium TBEA-Baocheng to build lithium processing plants in the Coipasa and Pastos Grandes salt flats. This plant would process a type of brine that produces lithium metal. This is a high-value product used in cutting-edge technology that few countries manufacture; through this agreement, Bolivia also becomes one of the few countries in the world to produce it.
It is therefore important to mention the significance of this agreement, since China is currently the world's largest producer of electric vehicles through its company BYD, which has overtaken the American company Tesla. It is also the world's largest consumer of lithium carbonate, as well as industrial products derived from this resource. Industrial and technological activity is concentrated in China; it is the largest exporter of electric cars and controls the market for lithium batteries and electric storage devices.
In June 2019, President Xi Jinping and Evo Morales held a meeting where, among other things, the two nations agreed to establish a strategic partnership at four levels:
-Strengthen mutual political trust, supporting each other's core interests and exchanging experiences on governance.
-Expand cooperation within the framework of the Silk Road. This includes the joint establishment of a new cooperative model with the integration of the investment, trade, and services sectors, as well as the pursuit of trade balance through the development of various projects such as agriculture, manufacturing, renewable energy, and infrastructure.
-Improve cooperation in sectors such as culture, education, sports, media, tourism and the preservation of cultural heritage to deepen exchanges between people.
-To promote multilateral coordination within the framework of the United Nations on sustainable development and climate change, in order to safeguard the rights of developing countries. This will include building a new type of international relations and building a community with a shared future for humanity. (8)
-Without a doubt, the agreement between China and Bolivia is a very important strategic alliance and represents enormous potential; being, of course, a nuisance for the United States, which sees in this alliance a "Chinese advance" in what it considers its direct area of influence.
Adding to this process, the first electric car manufactured entirely in Bolivia recently went on sale. The company Quantum, located in Llajta, Cochabamba, developed this vehicle, whose battery and assembly were all done in the country.
As we detailed in Report No. 1 (9), the manufacture of electric cars is at the heart of the dispute over control of technological change. Few states are pursuing this process, which of course grants enormous advantages to whoever assumes control, and precisely for this reason it is at the center of the dispute between the United States and China.
Let's pause for a moment to consider the magnitude of this: a Latin American country controls its natural resources and exploits them according to its needs. Furthermore, without any "help" from the United States, it has established itself as a key player in the lithium market. And it's not doing so by exporting raw mining commodities without any added value, like Argentina and Chile, but by manufacturing batteries, accumulators, and electric cars—cutting-edge technology.
Historically in our countries, all processes, like this one, that from the structure of the State have sought to end the subordination exercised by the United States, have been boycotted by this power through the use of various instruments of power.
Shedding light on these processes will allow us to easily understand that the coup against Evo Morales is a consequence of the actions of various sectors of civil society and the armed forces and security forces who, in their state of subordination and subjected to total cultural imperialism, often fueled by intelligence agencies, act in pursuit of interests that are neither their own nor theirs, and which allow the perpetuation of an oppressive, unjust, and unequal system. These intelligence agencies operate abroad in accordance with the interests of the United States through mechanisms of local destabilization, constructing scenarios of fragility and vulnerability that allow for the implementation of direct policies to put an end to those processes that represent a threat to the security of the United States. (10)
The OAS has been acting as the instrument that guarantees US interests in the region. In this regard, its role in the various political conflicts in Latin America over the past year is particularly noteworthy. The most prominent cases are:
-Lack of recognition of the elected president in Venezuela, Nicolás Maduro, and recognition of Juan Guaidó for that position.
-Support for Lenin Moreno in the face of massive protests by the Ecuadorian people against the neoliberal policies implemented by the latter.
-Support and legitimization towards Sebastián Piñera in Chile, through silence in the face of institutional violence exercised directly by the Chilean government against the mobilizations carried out by the people, against neoliberal policies.
These events, coupled with the OAS's ominous role in the entire Bolivian electoral process, demonstrate the interventionist tendencies of the United States through this organization. They reveal that, far from being an instrument for guaranteeing peace in the region, it is used to consolidate US interests in Latin America and the Caribbean.
Trump's praise of the actions of the Bolivian military also shows that the coup was a planned action intended to put an end to the process of insubordination that Evo Morales' Bolivia had been carrying out since 2006.
Even while respecting the OAS audit, whose report does not provide accurate data, and calling for new elections to guarantee peace in Bolivia, the pro-government and lackey sectors of the country, in alliance with the Armed Forces, urged the resignation of Evo Morales, which was compounded by the execution of multiple acts of violence against all the political leaders of the MAS.
Bolivia had consolidated its position as a key player in the global lithium market and was poised to take the next step, establishing itself as a leader in the energy transition and technological shift in the Latin American and Caribbean region. However, the coup d'état has halted this process. On Tuesday, we learned that in a parliament lacking a quorum and comprised solely of deputies opposed to Evo Morales, Jeanine Añez proclaimed herself president of Bolivia, despite not having the constitutional means to do so.
Furthermore, on Sunday, November 9th, the shares of the American company TESLA, whose products are made from lithium, increased exponentially, a trend that continued in recent days.
The United States needs to acquire the region's strategic natural resources to consolidate its regional hegemony in the face of the current global hegemonic struggle. In response, the Bolivian people must protect their sovereignty and ensure that the sovereign and strategic national policies they have achieved in this area in recent years are not subjected to the control of foreign interests.
Strength to Evo Morales and all the Bolivian people.
Notes:
1- Regarding Law No. 3720, see http://www.mineria.gob.bo/juridica/20070731-16-26-44.pdf
2- Regarding Resolution No. 3801, see https://www.ylb.gob.bo/resources/normativa_legal/02_rd_3801.2008.pdf
3- Regarding the Political Constitution of the State, see https://www.oas.org/dil/esp/Constitucion_Bolivia.pdf
4-To see more about the National Strategy for the Industrialization of Evaporitic Resources: http://www.revistasbolivianas.org.bo/pdf/rmym/n7/n7a08.pdf
5-To see more about Law No. 928: https://www.ylb.gob.bo/resources/normativa_legal/04_ley_928.2017.pdf
6-Full article available at: https://cenack.com/los-detractores-de-la-industrializacion-del-litio/
7-https://www.ende.bo/index.php
8-Nota completa disponible en: https://news.cgtn.com/news/3d3d414d35496a4d78457a6333566d54/index.html
9-https://cenack.com/informe-no-1-cambio-de-matriz-energetica-y-patron-tecnologico-la-importancia-estrategica-del-litio/
10- Full article available at: https://cenack.com/la-doctrina-militar-estadounidense-los-organos-de-inteligencia-y-su-injerencia-en-el-extranjero/
Bibliography used:
-Bruckmann Mónica. 2011. Natural Resources and the Geopolitics of South American Integration.
-Castello Andres and Kloster Marcelo. 2015. Lithium Industrialization and Local Value Addition. Buenos Aires. CIECTI.
-Fornillo Bruno. 2019. Lithium in South America. Geopolitics, Energy, Territories. Buenos Aires. Editorial El Colectivo. CLACSO.
-Fornillo Bruno. 2014 What do we call strategic natural resources? The case of lithium batteries. State and Public Policy Journal No. 3. Year 2014. ISSN 2310-550X pp 79-89
-Montenegro Bravo, JC The lithium industrialization model in Bolivia. Social Sciences Journal, second period, year 10, no. 34, Bernal, Editorial of the National University of Quilmes, spring of 2018, pp. 69-82, digital edition.
-Nacif Federico and Miguel Lacabana. 2015. ABC of South American Lithium: Sovereignty, Environment, Technology and Industry. Buenos Aires. Cultural Center of Cooperation. National University of Quilmes.
-Sabino Vaca Narvaja and Zou Zhan. 2018. China, Latin America and the geopolitics of the New Silk Road
Pages consulted:
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