As we noted last week, Germany has had a bigger stake in Bolivia’s lithium reserves than China, ever since ACI Systems was awarded a partnership to develop the Uyuni salt flats. Well this week, everything changed.
On Wednesday, government-owned Yacimientos de Litio Boliviano (YLB) announced that it will hold a 51% stake in a joint venture with China's Xinjiang TPEA in $2.3b worth of lithium projects in the Coipasa and Pastos Grandes salt flats. The investment split is unclear: "The Chinese firm will provide initial investment and YLB will pay its share with future lithium production, YLB’s executive manager Juan Carlos Montenegro said.” YLB says it may also invest in a lithium battery plant in China with TBEA.
TBEA — relatively unknown in the Americas — is a privately held company based out of China’s Xinjiang Autonomous Region. TBEA and its head Zhang Jianxin have become strong proponent of China’s Belt & Road Initiative (BRI), with Zhang saying that "TBEA’s business is focused on BRI, a comprehensive and continuous developing strategy” (张建新表示，特变电工的业务也是围绕着“一带一路“战略全面的、持续的展开，这是我们既定的发展战略。). Worryingly, TBEA has been involved in a BRI project that has sent two Prime Ministers to jail in Kyrgyzstan.
Chinese coverage of the news has been colorful: 155亿元，中企终于啃下玻利维亚锂矿这块“硬骨头” (“With ¥15.5 billion, Chinese firm finally gets a bone to chew on in Bolivian lithium mine.”). And local press crows that — on the heels of Tianqi’s increased stake in Chile’s SQM, as well as Argentine investments — China has successfully entered the Bolivian lithium market (中国成功进军玻利维亚巨大的锂资源市场). But the BRI remains notably absent from the news, even though Bolivia was one of the first Latin American countries to join.
Bolivia is a country that deserve to benefit from its natural resources, and has struggled to do so in the past, such as with the natural gas fields in Eastern Bolivia. While this investment has the potential give Bolivia a boost, the lack of investment in the value-added lithium chain — like that in Chile— means the upside is limited. With lots of financing in natural resources and not as much oversight, we are left asking the question: is Bolivia the next Ecuador?
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