Could Bolivia be the Saudia Arabia of Lithium?

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bolivia lithium

In a recent issue of the New Yorker, one of their excellent reporters asked an interesting question — could Bolivia be the next big source of Lithium for the world’s batteries?

 

The Salar de Uyuni Salt Flats

The article gets to the heart of a lot of green issues these days — the intersection of politics, economics, and environmental concerns. Here’s a little breakdown:

  • Bolivia’s extremely popular president, Evo Morales, wants to modernize the Bolivian economy through the intelligent and fair collection of Lithium.
  • Bolivia has the world’s biggest supply of Lithium in a single area.
  • Unfortunately, Bolivia is also woefully under-developed and land-locked, meaning shipments must past through Chilean ports, a sensitive issue for a huge amount of the country.
  • Morales wants to start exporting Lithium and new products that use it — like cars.

 

A State-Run Vision

One of the more interesting aspects of the article is puzzling through Morales’ politics — he is a socialist, similar in many respects to Hugo Chavez of Venezuela, and he would like to use the vast resources of the salt flats to better the situation of average, poor Bolivians (Morales is Indian, and a former coca farmer who came into politics through leading a coca growers’ union).

But by aligning himself with leaders like Chavez, Castro, and even Iran’s Ahmadinejad, he is finding it difficult to drum up the kind of international interest necessary to start a large-scale project on the salt flats.

 

What This Tells Us About Competition and Green Energy

Morales’ dilemma brings up an interesting point — we often hear green technology criticized by environmental activists because it is serving a larger economic system, one that happily exploited the earth’s natural resources for years, and is only now waking up to the devastation it has caused.

And it is said that when green technology is pursued by these same companies, it is done in a cynical way — the economic system works only to make profits and increase consumption, and while a company might reduce its carbon footprint, the underlying reasons are simply to make more money, not for any altruistic purposes.

Well, fine — that’s the paradox of green capitalism, or at least one of many.

But when applied to a situation like Bolivia’s, you can begin to see where things get difficult. Why’s that?

 

Companies That Could Do the Job are Competitive, Private Ones

Keeping everything state-run leads to natural inefficiencies. Bureaucracies worldwide have tried to combat this for hundreds of years, but it remains the norm: when small, competitive, private companies with a profit goal in mind go into a sector, they will almost automatically do better than a government version of the same thing — if that government iteration is designed solely to bring in more revenue for the state.

And when it comes to high tech, difficult jobs like the extraction of lithium and the entire infrastructure that it requires, a government that is still paving roads and modernizing huge swaths of its country is — by necessity — going to have a hard time competing with, say, fast-moving conglomerates from South Korea, to take one example.

 

What This Means for Bolivia

It’s unclear where all this might end — studies have shown, according to the New Yorker article, that there is enough Lithium in neighbouring countries to meet global demand (even with an electric car explosion) until 2060.

Morales doesn’t want Bolivia to become a “Saudi Arabia”, using its massive natural resources to enrich an elite while but keeping the rest of the country economically impoverished and downtrodden, but in 2010, it’s difficult to see many other options (besides simply leaving the resources as they are).

Note: the article is not available in full online. Most local libraries should have a New Yorker subscription and a copy of the issue we’re talking about.