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Reports

Bolivia’s Shimmering Gamble

Will a Barren Desert Be the Cradle for the Green Economy?

photo of a salt flat under a blue skyCristian Viarisio

On a recent sunny day, high up on Bolivia’s Uyuni Salt Flat, six men in beige overalls huddle in a circle. Almost a year into the Andean country’s highly valuable lithium extraction pilot project, workers for the state mining company COMIBOL have finally been given a drill to replace the pickaxes they had been using to cut brine sampling holes. But the new machinery (picture a circular saw on a long handle with a lawnmower pull-cord) doesn’t want to start. After 15 minutes and lots of jockeying for tries, the engine turns over, and a three-by-five-foot section is cut into the two-foot thick layer of salt at our feet. As the workers shovel the hole clear, brine rises to the surface, and back slaps are exchanged all around.

This low-tech operation is a glimpse at our high-tech green energy future. The brine underneath Bolivia’s Salar de Uyuni – a vast 4,085-square-mile blindingly white expanse of salt – is the world’s largest reserve of lithium, the ideal metal for making electric car batteries. Bolivia’s total lithium reserves are thought to be at least half the world’s total supply and so the country has got a new nickname: the Saudi Arabia of Lithium.

Bolivia has decided to gamble on the shimmering dried salt lake that has the stillness of a great frozen river stretched between Andean peaks. South America’s poorest country is betting its economic development on mass lithium production and a determination not to let foreign companies run away with the profits. So far, the process has been slow – more pickaxes than drills, so to speak – and it’s still unclear what the environmental impacts for Bolivia will be. But, says Bolivia’s left-wing President Evo Morales, it’s worth a try.

Magic Li

Lithium, the world’s lightest metal, is found primarily in salt brine or in ore. Known deposits are scattered from the Andes to Tibet, Nevada to Germany, and the total reserves are unclear. The US Geological Survey (USGS) estimates 11,000,000 tons of proven and probable reserves, though this number comes from research done in the 1970s. Less than half of these reserves are under production and it’s these limited facilities – primarily in the US, Chile, and China – that for years have supplied lithium for your cell phone and computer batteries, a range of pharmaceutical products (including bipolar medication), as well as agrochemicals.

Bolivia’s share of this world supply is constantly under debate. The USGS says Bolivia has 5.4 million tons, or just around half the planet’s total, though some say that new methods of measurement yield closer to 75 percent. Yet none of this has been extracted. In part, this is because the world had been in no great need of lithium. Also, say industry experts, Bolivia’s Salars – geographically isolated and filled with many other minerals – present difficult conditions for extraction.

Despite this, in 1992, US-owned Lithium Corporation negotiated a government contract to begin extraction. The company didn’t get very far. “It was a very unfavorable deal for Bolivia,” recalls Francisco Quisbert, executive secretary of FRUTCAS, the Spanish acronym for Southern Highlands Regional Federation of Workers and Peasants, an organization that represents farmers in the Salar de Uyuni region. The deal, he explains, effectively gave Lithcorp exclusive rights to a large chunk of the Salar – virtually tax- and royalty-free. “They were going to do what all the foreign companies used to do here: Take away our riches and leave nothing behind,” Quisbert says. So before Lithcorp could start operations, Quisbert’s union and other area organizations formed road blockades and launched strikes until the government rescinded the contract. Lithcorp ended up in Argentina. “We were blamed for ‘blowing our only opportunity,’” Quisbert remembers. “But we knew our time would come.”

That time seems to be now. Our planet’s dire condition has finally pushed wheezing Detroit (along with Japan, Germany, and Korea) to steer their product lines toward electric – and with that the race to power those cars has begun. Though there are many possibilities for electric car batteries – Toyota’s popular Prius hybrid uses a nickel-metal-hydride combo, for example – experts say that for a non-hybrid vehicle, there’s only one way to go.

photo of tanker cars on a railroad track in a high desertJessie ReederAn abandoned train from the silver era serves as a lesson for the
Morales government. “Bolivia is not just going to keep exporting raw
materials,” an official says. “We prefer to industrialize.”

“There really isn’t any alternative [to lithium] for fully electric cars – that is, if you don’t want a battery the size of your trunk,” says Timothy McKenna, vice president of communications and investor relations for Rockwood Holdings, Inc., owner of the lithium producer Chemetall Group, which represents about 50 percent of the lithium industry. Lithium’s lightness, he explains, makes for a battery small enough, powerful enough, and able to hold a charge long enough without an additional energy source inside the car. Indeed, every major car manufacturer – from GM to Nissan to Toyota – has a lithium battery car in the lineup. Bolivia has thus turned into a world phenomenon. According to Bolivian mining ministry officials, several car companies, including Mitsubishi and Sumimoto, have been knocking on the Bolivian government’s door for years. They each presented proposals for developing lithium operations on the Salar. They were all turned down.

More than a Mineral

Marcelo Castro is very concerned about his people’s teeth. “I think you can judge the health of a country by looking at its children’s teeth,” says the chief of operations for COMIBOL’s lithium pilot plant currently under construction along the southern border of the Salar, near the town of Rio Grande. “Go to any village and check out the kids’ teeth. They’re awful, rotting,” he says, his own mouth full of sparkling whites. “My dream is that every Bolivian family will be able to have access to good dental care. And that’s only possible if the country takes advantage of economic opportunities, like lithium, and uses the profits in the right way.”

Castro’s wistful dream actually speaks to official policy in Morales-governed Bolivia. For centuries, South America’s poorest country watched its natural resources, from silver to natural gas, fund Spanish colonial empires and line the pockets of modern-day transnationals’ executives, leaving behind black lungs, contaminated rivers, and generations of discontent. Then things changed. Since 2000, when the city of Cochabamba rose up to oust Bechtel Corporation for having privatized water through the election of former protest leader Evo Morales as president in 2005, Bolivians have made clear that that period in their history has ended.

Bolivia’s lithium strategy encompasses three central elements of the country’s new self-identity. First, state leadership and control: The government turned down foreign offers for lithium plants not out of lack of interest in extracting lithium, but because it wanted to build the first plant itself. The government has invested $5.2 million towards the project Castro oversees. The pilot plant, still under construction, will be a small operation, producing only 100 tons of lithium carbonate monthly. Once the process is smoothed out via this pilot project, the government aims to build a $250 million industrial-sized factory over the next few years.

This “do it alone” attitude often gets represented as if the Morales government has forever shut the door to all foreign participation in Bolivia’s lithium operation. Government officials say that’s an oversimplification.

“We are very willing to accept outside collaboration,” says Saul Villegas, head of COMIBOL’s lithium division. “But everyone who works with us must understand that we are the ones who will make the final decisions and we are going to steer this process.” An example of this is the government’s formation of a scientific advisory committee comprised of lithium and car experts from around the world who are helping Bolivia in its lithium industry’s nascent stages. Also, Bolivia is accepting offers for investment in the large-scale plant to follow the pilot project.

Bolivia’s second guideline will be a focus on returning profits back to the people. It’s a strategy Morales first tested in his 2006 gas “nationalization” plan: Let the foreign companies in, but demand hefty taxes and royalties, then put the money toward social programs. The idea worked. The transnationals agreed to stay and the state’s gas revenue jumped from $250 million to almost $2 billion annually. That money has gone toward literacy programs, yearly bonuses for school children and new mothers, and enhancing senior services.

For centuries, Bolivia’s natural resources went to colonial empires and corporate executives. Then things changed.

For the Salar region, this promise is the most important. No area of Bolivia has been more environmentally and economically destroyed than Potosí, its mountains of gold, silver, zinc, and tin having been carted away over the centuries. Residents know lithium extraction won’t create as much employment as other mining projects; even a large-scale plant is not likely to employ more than 200 workers. But Morales has promised that at least 10 percent of the lithium profit will go directly to the region. “This is going to be a huge help for us,” says FRUTCAS’s Quisbert. He and others are already planning on improving his home state’s infrastructure – there is no paved road leading to the Salar, and electricity is as inconsistent as phone service.

The final element of Bolivia’s strategy is “industrialization.” Minister of Mining and Metallurgy Luis Alberto Echazú explains: “Bolivia is not just going to keep exporting raw materials. We are not interested in [foreign companies] arriving with $100 million to produce large quantities of lithium carbonate and offering the state a lot of money in return. We prefer to produce less but to aggregate more value and industrialize our country.”

This, however, has become a sticking point. Lithium’s “downstream chemicals,” as they are known, are certainly more profitable to produce, but also more complicated. “Can it be done? Sure it can be done,” says Chemetall’s McKenna in response to Bolivia’s industrialization plans. “But you’re talking about the need for an enormous amount of energy and in the end, volatile substances that need to be handled with the utmost care and safety. The infrastructure and geographical challenges presented by the Salar de Uyuni region are serious obstacles.”

There are five stages between taking brine from a salt flat and turning it into a battery and, the government says, Bolivia wants to do all five. It’s willing to go slow and has said that any foreign investment proposals must contain a plan to invest in some industrialization. But the responsiveness of transnational corporations hasn’t been encouraging. In recent months, Bolivia has rejected several multimillion dollar investment proposals from the French automaker Bolleré, as well as from Japanese interests, in part because they did not satisfy this requirement.

How “Green” Is It?

“Green” energy, it turns out, is no magic pill for weaning ourselves off fossil fuels. Each new supposedly clean technology seems to bring nasty side effects. Wind energy installations can harm migrating birds; hydroelectric dams wreak havoc on their surrounding ecosystems and off-gas heat-trapping methane; mass biofuel production is quickening deforestation and endangering global food supplies.

So what’s the catch with lithium? The answer is not easy to come by. “We simply don’t know much,” says Marco Octavio Ribera of Bolivia’s Environmental Defense League, explaining that there are few in-depth studies on the environmental impacts of lithium processing. “We can say that it is less harmful than other mineral extraction processes and that’s a plus.”

That’s because processing lithium from Salar brine can barely be considered extractive. Rather, it looks something like this: First, scientists dig dozens, even hundreds, of small holes in the Salar (with pickaxe or drill) to pull brine samples and detect which area has the highest concentration of lithium. Once an ideal location is determined, evaporation pools of up to two square miles are constructed. The sun and the wind create slow evaporation, which bring the brine’s heavier metals like magnesium and potassium to the surface to be removed. After a period of anywhere between several months and a year (depending on the size of the pool and evaporation factors), the brine – now only salt and lithium – is sucked through underground pipes to a processing plant for separation. The end result is lithium carbonate.

Green energy and automotive journalist Jim Motavalli recently wrote that lithium extraction is “not particularly eco-friendly,” because, he says, the evaporation pools are “lined with toxic PVC plastic. Lithium is corrosive, and breathing its dust can irritate nose and throat; in big doses, it can cause fluid buildup in the lungs.” When questioned on these issues, the Bolivian government is cautious. “We will use this pilot plant to study the environmental impacts of lithium processing,” says Guillermo Roelants, a Belgian-born nuclear scientist who is now one of Bolivia’s leading technical advisors on its lithium development. “We admittedly don’t know what the effects are, but we are going to pay very close attention and try to mitigate them before building our large-scale facility.”

photo of electronics atop a bank of batteriesArgonne National LaboratoryThe Obama administration has pledged $2.4 billion to fund
research into the next generation of batteries, which are an
essential part of moving away from the internal combustion
engine.

Regardless of lithium’s potential toxicity, there is one pressing environmental question for the Salar de Uyuni plant: water. Located in one of the driest regions on Earth, the plant is going to need water, which is not easy to come by. Operations Chief Castro explains that at first, water had to be trucked in just for his 100 construction workers. The government is building a pipeline to bring water from a glacial summit several miles away, but that’s a long way from completion and it takes vital resources from surrounding farmers. When asked about environmental impacts, union leader Quisbert evades the issue of water scarcity. “We are hoping to get some good fertilizer,” he says of the lithium operation. Potassium taken out of the evaporation pools will be turned into potash, an excellent organic fertilizer that will help the majority of Salar region residents who make their living growing quinoa.

The government also promises that the Salar itself will not be damaged, which is good news for the locals who rely on the tourism industry and the tens of thousands of visitors from around the world who like to cruise along the salt flats in SUVs. Roelants says that less than one percent of the entire Salar will be taken up with evaporation pools, so there’s no need to worry about lithium’s effects on tourism. Also, he says, those pools will be far from the Salar’s other main economic activity: salt gathering. For generations, humble men and women have made their living taking salt from the Salar and selling it nationally. Roelants explains that the salt-gathering area happens to have the lowest grade of lithium brine under its surface, so evaporation pools will not be built on or near salt-gathering land.

In Your Hands

Forces beyond Bolivia’s control could ruin the country’s gamble and force the government to close its hand.

“It is difficult to predict just how many electric vehicles we will see on the market,” says Ford spokeswoman Jennifer Moore, explaining that Ford plans on introducing their BEV (battery electric vehicle) family to the North American market by 2012. In part, that’s because the auto industry has no idea how consumers will react to their new designs: Will drivers get annoyed at having to plug in their cars every 40 miles? Can electric-powered engines have enough torque? Will people like driving electric?

Bolivia and the car industry are hoping the answer is yes. Almost every major car company has plans to bring some hybrid or fully electric vehicle onto the market over the next three years, and there’s a lot of US money going toward battery development as well. To that effect, the US has got its own nationalistic spurt going on. “We cannot allow ourselves to become dependent on foreign sources of lithium-ion battery cells as we have become dependent on petroleum from the Middle East,” James Greenberger, director of the National Alliance for Advanced Transportation Battery Cell Manufacture, a group of a dozen-plus US battery makers, said in an interview with the Christian Science Monitor in January. The association plans to raise $2 billion to fund a major lithium battery- manufacturing facility. The Obama administration has vowed $2.4 billion for new battery programs, and one of the US’s premier battery developers, Massachusetts-based A123Systems, has asked the US Department of Energy for $1.8 billion of that to build a lithium battery factory in Detroit. The factory would supply enough batteries for all major US auto companies and could employ up to 14,000 workers.

Such plans are intended to mitigate the other major hurdle to electric car success: cost. Right now, the lithium-ion battery vehicles on the market contain anywhere from 2.6 pounds to 33 pounds of lithium carbonate, depending on whether they are integrated with another fuel source. Those batteries range in price accordingly, from about $1,000 to as high as $17,000. But this is partially because it’s still a nascent industry. The only full all-electric production vehicle on the road today is the luxury sports car Tesla, a two-seater produced in California that sells for about $110,000. Even Chevy’s proposed Volt, to be released next year, is rumored to have a price tag of $40,000, in part because of this technological gap. Everyone is therefore hoping that the market’s magic hand will do its work, should electric cars become a hit. “If electric cars catch on, the cost of the car and the battery will come down through economies of scale,” McKenna says.

Only when the panorama is clearer will we be able to answer the final pending question: Does the planet have enough lithium to keep us driving into the next century and beyond? Years ago, there were rumors of a lithium shortage, but these have been dismissed as scare tactics. Chemetall’s projections have the world running on lithium-ion electric cars for more than 1,000 years, if those cars are only about 10 percent of the total market. How much that percentage increases is the big unknown.

Even if it skyrockets, there’s little cause for concern. Many observers are convinced that lithium will fuel the future. “As a civil engineer, I can’t in good conscience say that lithium is a renewable resource, because it’s not,” Marcelo Castro says. “But the Salar just keeps regenerating itself year after year. We could go out and dig a hole tomorrow, come back a few months later, that hole will be gone, filled in completely. Really, I’m not worried.”

Jean Friedman-Rudovsky is the correspondent for TIME Magazine in Bolivia. Her work has been published in The Economist, In These Times, Newsweek Russian edition, América Economia, and other magazines and newspapers around the world. She is also a producer for ABC News.

   

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Can you tell me what the reference is for the quotes from Jim Motavalli

By Jenn Davis on Tue, April 20, 2010 at 8:27 pm

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