Bolivia’s Lithium Contracts with China and Russia Face Controversy and Delays

Bolivia is facing public backlash over $2 billion lithium contracts with China and Russia. Concerns include lack of benefits for locals and potential environmental damage. The Bolivian Chamber has halted discussions, and the government warns of significant production delays, expressing commitment to ensure local profit retention amidst ongoing consultations.

Bolivia is currently facing significant public dissent regarding contracts established with Chinese and Russian firms for lithium extraction. Community organizations assert these agreements do not provide tangible benefits to local populations. In response, the Bolivian Chamber of Deputies has postponed discussions on these contracts, awaiting a detailed information-sharing process with civil society groups.

The contracts, valued at approximately $2 billion, include a $970 million agreement with Russia’s Uranium One Group and a $1 billion deal with Chinese firms CBC and Citic Guoan Group, designed to construct lithium processing facilities. President Luis Arce has accused lawmakers of intentionally hindering critical investments in Bolivia, asserting that the country could suffer delays in lithium production of up to ten years if these contracts are not ratified this year.

Moreover, Omar Alarcón, head of Yacimientos de Litio Bolivianos, has voiced concerns regarding the potential 15-year delay in production if approvals are withheld. Even under favorable circumstances, large-scale lithium production in Bolivia is not expected to commence until 2031, according to energy expert Sergio Hinojosa.

Environmental advocates and local leaders from the lithium-rich Potosí region have raised alarm about the contracts’ lack of transparency and the environmental perils they pose. Notably, the costs of the Russian project are significantly higher per tonne compared to the Chinese contract, raising questions about the rationale behind this discrepancy. Critics are also wary of the feasibility of the UOG deal, which stipulates a rapid timeline for construction that some perceive as unreasonable.

Bolivian law mandates that foreign investors engage in prior consultations with local communities and conduct extensive environmental impact assessments prior to the advancement of industrial projects. Government representatives have suggested that lucrative royalties from lithium production could amount to $800 to $900 million over the next 30 years.

Despite possessing vast lithium reserves, Bolivia has struggled for years to establish a sustainable lithium industry. Factors such as political instability, an outdated state-controlled model, and high magnesium content in its deposits have hindered progress. Yacimientos de Litio Bolivianos recently inaugurated the country’s first industrial lithium plant, yet it is operating well below capacity. Nonetheless, Bolivian officials remain committed to these partnerships, assuring that the nation will retain a majority stake in profits from lithium extraction.

In summary, Bolivia’s lithium agreements with Chinese and Russian companies are currently mired in controversy due to public dissent over their lack of transparency and environmental risks. The Bolivian government is under pressure to ensure that these contracts genuinely benefit local communities while also committing to maintain a majority of profits. The future of Bolivia’s lithium industry remains uncertain as political and regulatory dynamics evolve.

Original Source: www.mining.com