Bolivia is to Lithium as Saudi Arabia is to Oil.

Discuss

50 Responses to “Bolivia is to Lithium as Saudi Arabia is to Oil.”

  1. JohnAspinall says:

    The analogy with oil is wrong on multiple grounds. First off, batteries do not “use up” lithium; the lithium is available for recycling from dead batteries.

    Secondly, a solid upper limit on the price of lithium is established by the cost of extracting it from seawater. One source (Goog the obvious search string) says “Seawater contains … 1650 times more than lithium land resources…”.

    So nice for Bolivia, yes. “OLEC” cartel, not likely.

  2. Neon Tooth says:

    Cheers to Morales and Bolivia for putting their people first. Of course historically this is what gets you overthrown, invaded or otherwise undermined by the C.I.A. I wouldn’t be surprised if we’re not organizing the social elite opposition right now.

  3. JJMS says:

    #6, #15 & #16

    Well of course having cheap lithium with which to build better batteries for electric cars & infrastructure is [i]good[/i]. I just find it aggravating when improvements to middle-man technologies are toted about as actual solutions to our energy problems.

    Great reading on this: http://www.city-journal.org/2009/19_2_carbon.html

  4. wgmleslie says:

    They also have the largest supply of tin in the New World.

  5. bjacques says:

    Regarding the present leaders of Latin and South America, their predecessors set the bar pretty low, which is why Chavez and Morales have a lot of political leeway now.

    Even nationalization is a net win for the masses of the poor. If corruption or ideology-based mismanagement cut oil or lithium profits to half of what they were before, to the poor it’s a lot more than the 0% they saw before. And history has shown that, given the chance, mining companies will warp the local politics to suit them. So if Chavez and Morales let them in, it’ll be on a short leash if at all.

    Yep, it sure sucks right now to be middle-class and conservative in South America (except Colombia & Paraguay). After decades of personal prosperity in exchange for silence on certain subjects (like the fate of leftist friends and relatives), it’s hard to feel sorry for them right now.

    Romance has nothing to do with it. Chavez, Ortega and Morales vs. Pinochet, Stroessner and Videla? No contest.

  6. Anonymous says:

    NYTimes did a story on this on 2/3/09.

    (Captchas = no preview)

  7. dculberson says:

    “foreign companies exploiting the country’s natural resources must reinvest all profits in Bolivia.”

    Good luck with that. Translated into plain english that means “must not invest in Bolivia at all” or “must lie about amount of profit made on Lithium.”

  8. Rindan says:

    Well, good luck to them, but I am pretty sure that after having listened to their “policy”, they are going to fai1.

    The risks with dealing with these revolutionary socialist governments in South America that are busy re-writing their constitutions for life long presidents is simply too high, even if 100% re-investment wasn’t. Luring companies to these countries is like trying to lure Jews to 1940 Germany. They have stated that they hate you, want you dead, and every time they open your mouth they call you the devil. Only an idiot is going to come running, and even that idiot is only going to set as much inside of those borders as he is willing to lose.

    Oh well, it could be for the best. As Venezuela is learning, even if you manage to confiscate a ready made industry, you still have three problems.

    1) Corporations really actually are good at distributing resources efficiently (which is of course different from fairly). It is why we tolerate them. When you kick the corporation out and try and do it yourself you almost inevitably do a worse job, hence your resource extraction rates go down and your expenses go up. They piles of money bags you saw the corporations extracting end up turning out to be far smaller once you get your hands on them.

    2) You are suddenly subject to the commodities market. Mineral resource prices don’t actually inevitably go up. They often go down. New resources are found, politically unstable countries become stable, we find better methods of extract, or we simply have less demand as technologies change. Even the king of resources, oil, can fall through the floor after over inflating its price in speculation and then having its crash continue as the world economies cool off. If over half of your government budget comes from these resources, watching your government budget get cut by 2/3s can be a real downer.

    3) Even if you make it all work, you are cursed by the fact that you are getting free money. It screws up your exchange rates and and it makes you dependent upon that resources income. Go try the wikipedia on “Dutch Disease”.

    A truly sharp sharp and efficient government could exploit a big pile of exportable resources in a manner that doesn’t result in blasting their own foot off. Unfortunately for Bolivia, they don’t have one of those. They have an ideologue who is putting fellow ideologues in power and rooting out the heretics. Exploiting natural resources for the benefit if your country is hard even under the best of circumstances, and the conditions in Bolivia are the worst.

  9. phisrow says:

    Hmmm. Bolivia sounds like it could use some Freedom(tm)…

  10. Neon Tooth says:

    The risks with dealing with these revolutionary socialist governments in South America that are busy re-writing their constitutions for life long presidents is simply too high, even if 100% re-investment wasn’t. Luring companies to these countries is like trying to lure Jews to 1940 Germany. They have stated that they hate you, want you dead, and every time they open your mouth they call you the devil. Only an idiot is going to come running, and even that idiot is only going to set as much inside of those borders as he is willing to lose.

    Nice job comparing Morales to Hitler. Big difference between letting multi-nationals rape your people and country and simply requiring they play by your rules and operate in a responsible and ethical manner. Anything will be better than the failed “Chicago School/Friedman” CIA death squad backed policies that have kept so many in Latin America (and in the U.S.) in poverty.

  11. Anonymous says:

    Good job to Bolivia, if they can do what they say they can.

  12. DefMech says:

    Yeah, they might want to rethink the “all profits” thing a little bit before they start counting their eggs.

  13. Phen says:

    Cue a build up of spurious evidence for a US land invasion in 3-2-1….

    Whoops. Forgot. That was the other guy.

  14. JJMS says:

    “The mineral that could save the planet”

    Not if the energy plugged into an electric car is still generated by – surprise – coal. We need new ways to produce energy, not more efficient ways to store it.

  15. Anonymous says:

    Check out this earlier, and dare I say better, PBS Newshour piece:

    http://www.pbs.org/newshour/video/share.html?s=news01s24cbq8a7

  16. Anonymous says:

    Evo Morales is a great man. I’m very excited what he can do for the Bolivian people and not let any Westerners exploit the Bolivians or their natural resources.

  17. bardfinn says:

    JJMS: The Fallacy of the Excluded Middle. Google It.

  18. Takuan says:

    they’ll just corrupt the politicians.

  19. Stephen says:

    Hopefully it’s a bargaining position (or will become one over time) and they’ll eventually settle for a middle ground. Manufacturing all the cars that use their batteries in Bolivia is not plausible. Manufacturing the batteries there might be.

  20. the leisure says:

    How long ’til we use up their lithium?

  21. Roy Trumbull says:

    Most of you are too young to recall when Chilean nitrates had the world by the throat. Then came artificial fertilizers.
    The Edison battery, still used in Europe, deserves another look. No lead, no acid. It uses steel and nickel with alkaline chemistry. The batteries last 20 years.

  22. Anonymous says:

    @Rindan

    “Everyone from the head of state on down is getting an ideological work over such that the entire state shares the same point of view.”

    You just described America, circa 2001-2008.

    Not that I disagree with your assessment. Corporations are heartless, faceless entities with one purpose for their existence, profits. But they are also, on average, more efficient than governments in doing the thing it does to make those profits.

    Bolivia’s 100% reinvestment stance is unsustainable. It’s almost as if they are requiring the corporations to lie about their profits and to bribe their local officials. Not that corporations won’t do that but it typically isn’t a requirement to doing business with a government, just an expecation.

  23. Anonymous says:

    wow, this would make a great plot for a james bond movie.

  24. Takuan says:

    where’s GuidoDavid? I’d trust his vision here.

  25. phisrow says:

    @Roy Trumbull: Because a chemistry with something like 1/3 the energy density of Lithium and substantially higher costs than lead acid is going to be a huge hit in either mobile or stationary applications.

  26. Hugh says:

    The leftist movement in Latin America seems to have been more robust than some people thought it would be, although it also constantly seems to be on the edge of degrading into dictatorships. If a bunch of fresh money gets pumped into Bolivia because of lithium (even if it isn’t Saudi Arabian quantities) it sure will be “interesting” to see if that tips the scales towards or away from the pink revolution stabilizing into a long term way of governance.

  27. Hal says:

    Chile seems to have managed their copper industry pretty well I don’t see why the Bolivian’s couldn’t do at least as good a job.

  28. MrsBug says:

    I’m all for poor countries finding a way to feed their economy and their people, but I wonder what the environmental impact would be of drilling all over that salt flat? The first picture that popped into my head is the Kennecott Copper Mine in Utah. Granted, this doesn’t sound like it’d be open pit mining or anything, but still….

    Hard to find a balance sometimes between preserving/caring for a unique ecosystem and being able to exploit the mineral wealth your country has and desperately needs to utilize.

  29. Takuan says:

    oh? Chilean copper was long in the hands of international mining companies (and to their benefit) at least until Allende was elected. You remember him? He was the one who committed “suicide” by shooting himself a dozen times.

  30. Rindan says:

    Nice job comparing Morales to Hitler.

    My point wasn’t that Morales = Hitler, nor that Pinochet politics is the answer. My point was that it is a government run by revolutionary ideologues whose philosophy and grip on power revolves around corporations, rightly or wrongly, being the devil. Everyone from the head of state on down is getting an ideological work over such that the entire state shares the same point of view. From a completely practical point of view, you would have to be a bat shit insane corporation to invest any substantial amount of money in such a place.

    Hence, I think his gambit to do a Venezuela style resource driven state is pretty unlikely. Venezuela was only able to do it because the infrastructure the government seized had already been set up. Even as it is, that infrastructure is starting to fall apart and Venezuela’s oil output has tanked off by a quarter since Chavez came to power. Slap on top of that the fact that oil prices have tanked and the manufacturing base is shrinking, and you see the problem. Anti-corporate nationalist resource states just don’t work in the long run.

    Exploiting natural resources in a state that has no use for those natural resources is tough. You need to find a balancing act between getting someone to dig the stuff up for you, collecting money from the resources, balancing budgets against a changing commodity cost, and ensuring that you don’t utterly destroy your manufacturing sector when the value of your currency starts to climb. It is a tough balancing act for even the most efficient, coldly calculating governments. For an ideologue like Morals, it is frankly impossible. I would be shocked if he gets past step one, which is to setup and maintain infrastructure, much less avoids all of the other dangers of being a resource exporter.

    In other words, the value of revolutionary socialist governments aside, the answer to Bolivia’s woes isn’t going to be its lithium deposits.

  31. IWood says:

    #5 posted by JJMS

    Not if the energy plugged into an electric car is still generated by – surprise – coal. We need new ways to produce energy, not more efficient ways to store it.

    Solar power relies on efficient storage, otherwise it’s useless for most of the day. Likewise, intelligent load balancing and grid management require better storage technology.

    Battery technology has lagged behind all other energy-related technologies, and it’s going to be a critical piece of any alternative energy infrastructure.

    That need might not be fulfilled by lithium–and if Bolivia insists in turning itself into damage, new tech will route around it–but it’s still a need.

  32. Anonymous says:

    @ #41 – Thank you!
    @ # 6, Neon Tooth, and everyone else who thinks he’s some sort of hero:

    Yes, Bolivia has a long sordid history of under-representation of it’s indigenous population in politics. However, having a former farmer with little formal education who rose to power through violence, coersion, and lies.

    Violence: The “poor innocent protestors” who, according to Morales, were killed by the military under his predecessor, were acutally violent rioters throwing dynamate at fuel trucks moving through populated areas, throwing molotov cocktails at police, businessmen, stores, basically anything representing government or business.

    Coersion: Morales was a union leader, union reps basically went around El Alto (indigenous city abbuting the capital, La Paz) threatening to burn down the houses/businesses of anyone NOT joining the protests against Morales’ predessesor. I know this because I was there, and because women I know who live in El Alto and managed to get out told me his union reps threatened their husbands and homes.

    I could go on and on about the lies and misinformation he spread, but I guess it doesn’t matter anymroe how he rose to power.

    What matters is that the state of the nation is spiraling downards, it’s come close to civil war a few times, it’s more polarized than ever since a good chunk of the population, specifically the eastern low-land states, are of different indigenous descent than Morales and feel he doesn’t represent them at all, hate his policies, and basically would succeed if they could.

    Ugh, the man has done NOTHING good for the country thus far. He’s Chevez’ minion, and Bolivia can’t withstand Morales doing to it what Chavez has done to Venezuela.

  33. Norm DeGuerre says:

    @ #5

    Funny you should mention that, lithium and heavy water is used to power fusion reactors, which could become a safer replacement to modern nuclear and coal power for our baseline needs. Not that they are going to be able to bring that technology online anytime soon.

  34. Anonymous says:

    None of this will happen if the Quantum cabal manages to get control of the lithium. Daniel Craig, where are you?

  35. Anonymous says:

    Bend over, Bolivia! The military-industrial complex thinks you have a sweet, sweet ass.

  36. markyg says:

    Someone is confused. CBS evening news just stated Chile is to Lithium as Saudi Arabia is to oil. Hmmmm big difference….which is it or is it both?

  37. Anonymous says:

    This is Amerika.
    I’m sure if we want the lithium badly enough we’ll just create an artificial threat, invade, and then torture them for it.

  38. hds says:

    Makes me think how long the world’s lithium supplies actually will hold, as soon as tons of this material are used to build cars? Does anybody know? Are we reaching Peak Lithium any soon? Are there alternative materials?

  39. Anonymous says:

    B*ll*cks, said Nile, who can’t log in and comment on his iPhone.

    Lithium is abundant in the Earth’s crust and there are accesible deposits everywhere, Cornwall has commercially-recoverable deposits in the tailings of our China-Clay mines and open-cast pits and it is certain that the USA has them too; you can start by looking in tailings left wherever Bauxite is extracted.

    Also: there are battery technologies which don’t use lithium.

  40. Arragnathor says:

    Interesting. The makers of the last Bond film missed a trick there!

  41. Anonymous says:

    I’d say Bolivia will be just fine with it’s plans…..until the news media releases the bombshell that it was Morales, in concert with Saddam and AlQ that attacked us on 9-11.

    Then we’ll be duty bound to invade and occupy in an attempt to find the still missing WMD’s.

    Enjoy.

  42. Anonymous says:

    The litany of corruption scandals that have come to light since Morales has been at the helm, quite frankly rivals if not surpasses what has been done in other governments (I could also write about human right violations, attacks on freedom of speech, electoral fraud, civilians shot by military special forces but those are topics for another post)

    Morales’s nationalization policy is failing miserably. Look at what just what was uncovered 2 months ago about our newly nationalized oil company (YPFB) and its former president Santos Ramirez. This guy who is an oil businessman gets shot in the neck while he was carrying a suitcase with $450,000 USD to a house La Paz. The money had been withdrawn from the Banco Union (all fiscal accounts for the Bolivian government are at this bank). There is a thousand things that happen from that point on, and whoever is interested in the specifics should check the Bolivian news outlet of their choice, But here are the alarming things that came to light after the investigation:

    1) The $450,000 was a coima (bribe) to Santos Ramirez (a member of the inner circle of Morales)

    2) The house that the money was being taken belongs to the brother of Santos Ramirez’s wife.

    3) The oil businessman paid this coima to Santos Ramirez as a result of a 85 million dollar contract that was given to him without a) due protocolarizacion – when a contract is remitted in Bolivia to the appropriate overseeing agencies for approval b) boletas de garantia – licitation processes in Bolivia require 3 boletas the garantia, think of them as guarantee bonds.

    4) After all those basic prerequisites were blatantly ignored, YPFB paid this businessman 6,8 million dollars…

    When YPFB was reborn in a pompous ceremony, Evo said: “se acabó el saqueo de nuestros recursos naturales por parte de las transnacionales,” and I kinda agree with that, it it just that nowadays “nuestros recursos naturales” are being robbed by his cronies instead of the transnationals. To be fair Santos Ramirez is now in “jail” (some newspapers have reported that shuttles in and out of jail) but there are other scandals in which the government has not taken any action whatsoever (Quintana and the contraband trucks in Pando, Patricia Ballivian and the contracts of the Bolivian national road agency, etc, etc, etc)

    I believe that many people have a romantic view of Morales because he is of indigenous descent. I would urge those people to please look more deeply into what he is really doing in Bolivia.

    Needless to say, I am worried about what would happen with our lithium if Morales stays in power.

  43. Mindpowered says:

    @Tak

    And that damn Communist Pinochet confirmed the nationalization and creation of Codelco in 1976.

    When discussing things like reserves and resources it’s worthwhile to remember that it’s not enough to simply have a lot of the commodity. It depends on extraction and transport. The US has more oil than Saudi Arabia, but it’s locked in the Green River Shale, failing the extraction test.

    Likewise, the extraction part of the Lithium seems simple but the transport is more difficult. For example Chile has a very large lithium resource as well, with infrastructure already, hence any production from Bolivia will have to be competitive with Chile. That seems unlikely given the mandate to re-invest in Bolivia.

    For more info: http://minerals.usgs.gov/minerals/pubs/commodity/lithium/

    (especially the mineral commodities summaries section)

  44. Grimnir says:

    Hey, they may be poor as shit, but if they devote a good chunk of their capital resources toward developing their lithium resources, they can certainly handle it themselves. They can hire the experts they need, start state-owned corporations to cover the extraction, transportation and refinement, sell the lithium on the open market to generate more funds to build battery plants, and as the plants come on line pull more and more of the raw lithium off the market, driving up the price of the stuff and the profit margin of Bolivian batteries. At that point, with the cheap labor and ready supply of lithium available, they can practically corner the market, and build up their auto manufacturing with or without foreign investment.

    What they’re looking for is not impossible, or even improbable. They will get it (or die trying, given the low low price of fomenting revolution in Latin America), but it’d go a lot faster with the sort of capital investment the big multinational corporations and groups like the IMF can offer. That being said, I don’t think Bolivia’s current government is willing to do any deals that will fuck it over. As a socialist country, their best option is to spend a LOT of money getting it set up quickly, even at risk of bankrupting the country. Hire whoever you need to hire, but do it yourselves.

  45. Mindpowered says:

    Also, I should note that as the price of a given commodity increase the resource base increases, as previously uneconomic deposits become feasible.

    Hence most estimates of how much of a given commodity is out there severely under represent the total resource, as they are only based on what is economically extractable at a given level.

    If the price of Lithium took off, I would expect to see a lot more resources all over the world pop up, and become competitive. Again it’s not enough to have it. You have to make it economic to get out.

  46. channel4news says:

    Lindsey Hilsum, the reporter in the film above, gives her account of the trip in her blog here. The blog also contains a longer version of the film.

  47. Cupcake Faerie says:

    Hmmmm….now how did all that American Lithium end up under their mountains? Oh well no matter… Let’s see….CIA Playbook…. play #223… it says here… plant some drugs on your opponent and then call for police action…hmmmm Bolivia…didn’t they used to produce some drug, what was it called….co

  48. Neon Tooth says:

    #29,
    The problem is that anything short of giving multi-nationals free reign to do as they please is seen as “anti-corporate” or “anti-business”. Bolivia had it’s laissez-faire experiment and it’s clear the people weren’t happy with it. Massive multi-nationals won’t be able to behave like slave driving, wealth stealing colonialists, some won’t be able to deal with that, others will step up. It’s true that Morales will have to walk a fine line and be careful not to demand too much lest they figure it’s not worth their while, but I’m sure he’s quite aware of that.

    Poor multi-nationals, they won’t be able to behave like modern day robber conquistadores. My heart bleeds for them…….

    Of course as mentioned earlier, Morales will be demonized in the Western media and we’ll have to see if he’s *allowed* to run his country the way he wants.

  49. ab5tract says:

    No one has mentioned the indigenous rights angle.

    These salt flats are literally the “property” (legally) of various indigenous tribes who have lived there for untold generations.

    In that context, if the option is either multinational corporate, leveraged development where the people Living There would get scraps and a ruined landscape, or non-development, well, the election of Morales proves where the indigenous people stand. They stand to gain much by holding out, and nothing by caving in.

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