The Rush for Lithium
According to recent news coming from Bloomberg, Mitsubishi and Sumitomo of Japan would have decided to propose a joint venture to exploit and industrialize the Salar of Uyuni. The report, which introduced a good deal of expectation in the global energy and car industries, does not appear to have had practically any repercussion in the national sphere where other problems – mostly political – seem to continue to captivating the attention of most Bolivian press.
Following Bloomberg's correspondent in La Paz, in the opinion of Luis Alberto Echazu, Mining Minister of Bolivia, both Bollore and the new Japanese consortium would have accepted to manufacture lithium batteries in the country which in essence means that they're all prepared to follow the mining policies of Bolivia.
As is known, the government's strategy contemplates initially the production in its own pilot plant of reduced amounts of lithium carbonate (together with other chemical compounds derived from elements existing in the salar) beginning in January 2010, to proceed thereafter to obtain such intermediate products on an industrial scale, possibbly, with the help of private (foreign) investors.
To this effect, the government has established two fundamental conditions for the process of negotiation with them. First, that the country have a 60% participation in the new endeavour and, second, that they accept to advance towards production of lithium batteries and, eventually, electric vehicles within national boundaries.
It is clear that the above mentioned percentage is nothing but an indication of the government's intentionality to keep for itself the control of the operation. Hence in the absence of a feasibility study for the exploitation and industrialization of the Salar of Uyuni that justifies such or other participation for Bolivia, it does not deserve further comments.
The second condition, though, can be subjected to some consideration since it is important to know, for example, not only whether the companies interested in coming to Bolivia are already producing lithium batteries and electric cars in a competitive fashion but also if, by doing so in association with the government, they could generate the most benefit for the country.
I can only hope that in the evaluation of the two proposals thus far submitted, the government will take these points into account. In any event, to begin a discussion around a subject that – I am certain – will give much to talk about in the following months, I will proceed to summarize the central aspects of the true technological capacity of these companies as well as its positioning in the lithium battery and electric vehicle global markets.
Regarding Bollore, it is important to mention that it is in fact a company with experience in the production of batteries whose technology utilizes metal lithium as one of its inputs. This distinguishes the French company from the rest of lithium ion battery producers in the world that use lithium carbonate as a raw material. Even though we know very little about the characteristics and specific qualities of these batteries, one can conjecture that by using a product with a larger value added than lithium carbonate as an input, Bollore's batteries could well also have greater lithium and technological requirements than the rest of the existing formulations in the market, with implications in their cost and its competitiveness.
Thus, in order to obtain a significant share in the emerging advanced battery market, the French group would be almost forced to insure the largest source of lithium supply of the planet, that is the Salar of Uyuni. However, it is not clear whether this is the best for Bolivia. Moreover, public opinion should be aware that this firm does not have experience in mass production of vehicles and that the announced launching of its completely electric "Blue Car" for the following months in Europe is only the result of a recent alliance with Italian firm "Pininfarina", specialized mostly in design rather than in mass production of cars.
Likewise, as far as the new Japanese consortium is concerned, the country should know that Sumitomo's experience in the production of batteries and electric cars is essentially linked to manufacturing of components of nickel metal hydride batteries and recently lithium ion batteries, whereas that of Mitsubishi's (fourth or fifth largest automobile producer of Japan) refers to the first lithium ion batteries that has been developing since 2007 with the assistance of battery maker "Yuasa", which will utilize in its "i-MIEV" electric car to be introduced also next year into the market.
In previous articles published in Bolivia, the United States and the United Kingdom since 1992, I have emphasized the enormous importance of the Salar of Uyuni's base reserves of lithium to the transition to electric propulsion of the global automobile industry. In this sense, I feel that Bolivia should aspire to obtaining the best possible business proposals for the exploitation and industrialization of the greatest natural resources it has ever had throughout all its republican life. Based on the precedent analysis, it is not totally evident that we have to date on the table the most adequate options to the country's national interest.
* A previous version of this article was published in Spanish on 05/23/09 and 05/25/09 by Bolivian newspaper "El Potosi".
** Economist and invited speaker at the inaugural Lithium Supply & Markets Conference in Santiago, Chile, 01/09.
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