Dawn on the Salar.
Under a burning sun, turning skin into sunburnt remnants, in no time lies a treasure attracting gold diggers and fortune seekers as the rotten fruit attracts the flies.
Hearing salt crouch beneath your sneakers’ soles and Condors screaming overhead, it’s hard to imagine that such a beautifully deserted place finds itself in the center of world geopolitics as a gigantic treasure chest.
Tourists at dawn on the surface of Salar de Uyuni.
The Salar de Uyuni, Bolivia’s most famous tourist attraction, impresses everyone who has seen it in persona with an endless expanse of flat, white salt, reminiscing a glacier or an infinite field covered by freshly fallen snow. However, as with so many of our earth’s most precious places, its beauty is not merely superficial but reveals its treasures at second sight. Hidden deeply beneath the mirroring white surface of the Salar slumber the world’s biggest riches of lithium, a resource sought after as no other nowadays.
The shores of the Salar attract visitors from all around the world.
For years and years, this sleeping beauty was left untouched by mankind and its affairs.
Now, this period of peace appears to have ended.
Shiny and easily flammable, this light metal may appear too hot to handle and rejective to any human touch. However, its chemical characteristics make it perfectly fit to serve as an indispensable component of electric car batteries, thereby fuelling the long-sought sustainable transition of the automotive industry. This plain trait catapulted the once-deserted salt flat into sudden global prominence and spotlight.
Unfortunately, this highly wanted metal does not recur the trajectory from the depths of the Salar to the surface level on its own; expensive and complex machinery is needed to extract, refine, and convert it. In a notoriously resource-rich and cash-poor region of this globe, differing approaches have been taken to amass necessary capital.
Chile and Argentina, fellow beneficiaries of the so-called “lithium triangle”, containing around 75% of global reserves, found themselves rather open to foreign investment to remedy their need for cash. Awarding licenses both to state-owned companies and foreign actors, both attempted to strike a balance between a too-liberal and a too-protectionist approach. Nothing new, right?
The old tune of resource exploitation seems to repeat itself; South America’s immense wealth impoverishes its people who cannot stop the continent’s open veins from bleeding out its potential.
Attempting the unthinkable
The Salar has long been used for Bolivian salt production. The rising lithium demand has opened new income sources.
Can’t there be an alternative way to further process this white gold, one may ask, without running the risk of foreign investors taking the monetary lion’s share and leaving nothing but crumbles of the cake in the country of origin? Let’s see how Bolivia deals with the issue.
The landlocked Andean country took an avenue that was long thought to be impossible.
A rigorous nationalization policy under President Evo Morales, the first Indigenous-elected leader worldwide, attempted to do away with overly assertive foreign investors and set the course for purely domestic lithium production. Suffering from post-colonial trauma and deep wounds such as the mines of Potosi, this strategy appears logical.
However, this project failed.
The Morales administration took power in 2006; a study conducted in 2021 shows a production of 400 tons on behalf of the state-owned company YLB. In 2022, production amounted to merely 600 tons. A lot in absolute numbers. Nothing, in relation to a total of 23 million tons of lithium underneath Bolivian soil. In comparison, Argentinian production, with the help of foreign investors, amounted to 65 – 70.000 tons in 2023 alone.
What do these numbers tell us? Are these simply proof of an unstoppable neo-liberal triumphal march? Maybe.
Following the presidential elections in 2019, Morales was forced to step down and leave leeway to his party colleague, Luis Arce. Although formally of the same party and couleur, Arce started implementing a further opening towards the world’s markets. As gates were opened, it did not take long for the arrival of the flooding. US-American and European, but especially Chinese and Russian companies, started their courtship to snatch away the oro blanco.
Just recently, this mission has appeared to be successful, as licenses were awarded to the Russian Uranium Group One and the Chinese Citic Guan to construct various extraction plants on the shores of the Salar. This joint inversion will have a volume of 1,4 billion dollars and amounts to a potential extraction of 100.000 tons annually. A great increase in productivity, surely.
The appeal of increased production and efficiency cannot be overseen. However, with this departure from nationalization and the yielding-in towards the temptations of the free market, the future of Bolivia seems more than blurry.
It is still unclear whether the country will keep its feet in the door of the production process or will fall victim to another South- American evergreen. Will the lithium production stay in Bolivian hands, and, most importantly, will the benefits produced by the lithium benefit its own people? What matters now is a government acting in concordance with the will of the people.
Well, as many are more qualified to speak on this matter than a noisy second-year undergraduate, I decided to reach out to one of these people.
My friend Renan probably knows the Salar and, thus, the center of our discussion, as no other. As a tour guide, he has made this beauty his workplace and shares its unique views and moments with us Gringos.
As I ask him about the failed nationalization attempt, he shares with me an answer that allures to the root of so many problems.
“We will need to conduct an analysis. Why didn’t it function? Bolivia is a country with a precarious education. Nationalization means making these resources benefit our country. With such precarious education, nationalization means nothing but corruption. This cannot work out.”
With low levels of technical proficiency, he reassures me that foreign participation is, in principle, vital.
“Just a few months ago, I talked to American engineers. They believed the Bolivian government needed to wait at least 10 years until sustainable extraction technologies were developed. However, Jakob, Bolivia is caught in a lithium fever dream. The corresponding contracts with Russian and Chinese firms have been made; no governor nor deputy thinks about local communities or nature.”
Foreign participation in lithium extraction appears not to be bad per se. The turn-out depends on those who regulate the extraction. Bolivian lawmakers.
“When it comes to the involvement of foreign companies, we come back to education. Foreign investment is not the root of our problems. But unfortunately, not only our technicians lack knowledge, which makes foreign participation inevitable, but also our politicians. This leads to them selling out our country.”
What then are strategies to break out of this vicious circle?
“What we need in this country is a figure that unites the people, a figure that states with honesty that they will work for our country. Not for themselves. What we suffer from in Latin America is social separation. How can there be unity if there is no one fighting for the united interests of the people? The key will be to raise our level of education and to form a government that is fighting neither for its own nor foreign interests, but for Bolivia.” *
Isolationism and protectionism follow promptly from a nationalization of natural resources.
With a precariously underdeveloped industry, Bolivia could not stem the challenges any isolated state in an interconnected economy faces. Fearing the temptations of foreign money, Bolivia found itself with none of it at all. Though temptations persist, the new administration took on a game of fire to kickstart the country's potential.
To avoid this game getting out of control, the player should not lose sight of his objectives. Only a prudent strategy that builds upon a distributive enjoyment of riches and fosters educational development will provide long-term benefits.
On one last note, I would like to express a huge thanks to Renan for his great contribution!
*Translated from Spanish.
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