As lithium demand rises, investors sharpen focus on Bolivia

From the Mining Weakly, excerpts pertaining Bolivia follows:

As lithium demand rises, investors sharpen focus on Chile, Argentina and Bolivia

Screen Shot 2016-06-14 at 5.13.02 PMTORONTO (miningweekly.com) – In step with the breakneck growth in demand for lithium, driven by the unprecedented use of the soft, silver-white metal in new battery technologies, investors are increasingly scrutinising South American countries such as Bolivia, Chile and Argentina, where about 70% of the world’s known lithium deposits are found, to ascertain investment stability.

Despite various market analysts contesting the pace at which lithium demand was growing, London-based risk management consultancy PGI Intelligence believed market trends indicated that lithium would be an increasingly profitable sector within mining in the next five years.

 

 

In its latest ‘PGI Insight: An evaluation of the lithium mining environment in South America’ report, the firm pointed out that demand for lithium grew at an average yearly rate of 11% between 2010 and 2015, and that the price of 99% pure lithium carbonate exports to China – the world’s largest lithium market – more than doubled in the last two months of 2015 alone.

According to PGI, the demand growth was expected to continue on the back of forecast supply shortages and a predicted increase in demand for lithium-ion batteries for use in electric vehicles and battery-based energy storage.

PGI cited advisory firm Global Lithium president Joe Lowry expecting global demand for lithium carbonate to rise to between 280 000 t and 285 000 t by 2020, up from about 163 000 t in 2015, with larger spikes to follow.

Bolivia, Chile and Argentina were likely to become key players in the lithium industry, with the ‘lithium triangle’ of salt flats, or ‘salars’ of Uyuni in Bolivia, Atacama in Chile and Hombre Muerto, in Argentina, accounting for more than 70% of the world’s known reserves. All three countries had made clear their intentions to invest in and develop their lithium deposits, offering a mix of different opportunities and obstacles for investors.

BOLIVIA

According to PGI, Bolivia boasted the largest single deposit of lithium, but rudimentary infrastructure, a challenging regulatory environment and doubts around the security of investments would continue to pose obstacles to investors.

Located in a remote location some 3 600 m above sea level with little surrounding infrastructure, the transport of product from Uyuni would be costly, not least given that Bolivia lacked a seaport.

Although no specific local content requirements on lithium mining had been announced, the government’s strict general local content requirements of a maximum 15% of foreign employees created an additional obstacle to the expected high start-up costs.

High levels of state control over lithium mining and a burdensome tax regime also presented hurdles to investment in Bolivia’s lithium sector. While government was pushing an agenda of creating a domestic lithium value-added industry, previous proposals to exploit lithium reserves from foreign companies with substantial expertise in lithium battery and electric car technology including France’s Bolloré, South Korea’s LG Group and Japan’s Mitsubishi and Sumitomo had so far failed to materialise.

A letter of intent was signed between the Bolivian government and French Atomic Energy and Alternative Energies Commission in 2014 to explore cooperation around the lithium industry but few details of these developments had subsequently emerged. President Evo Morales had also stated that the government aimed to retain at least 60% of revenues from any partnership arrangement.

Investment security would remain another critical concern in light of the previous nationalisation of foreign mining companies and the limited investor protections provided by the 2015 law on arbitration, PGI stated. In 2012, the government nationalised Glencore’s Colquiri tin/zinc mine and South American Silver’s Malku Khota silver/indium mine.

According to PGI, government law offered no guarantees of investment security, as the 2015 law on arbitration stipulated that disputes arising from investment in natural resources were not subject to arbitration.

The success of the government’s current pilot lithium development programme with Germany-based K-Utec and its ability to engage foreign partners in joint-development projects would be indicative of wider investor appetite and the prospects for mineral processing in Bolivia more broadly.

“The growing interest of manufacturing companies dependent on lithium to engage in the production phase and secure longer-term contracts guaranteeing supply at more stable prices could incentivise some to invest in such joint ventures,” PGI stated.

EDITED BY: CREAMER MEDIA REPORTER

http://www.miningweekly.com/article/as-lithium-demand-rises-investors-sharpen-focus-on-chile-argentina-and-bolivia-2016-06-14/rep_id:3650

Having the 70% of the lithium in one region of the world could be advantageous but could also be a curse in the case of Bolivia.

Not to mention the lack of access to sovereign harbors to export this product, but also in terms on how competitive Bolivians are regarding our neighbor’s which will turn into our more crude competitors… Chile and Argentina certainly could grab better segments of this new market and live us with the scraps …

Bolivia needs to get rid off the absurd road/street blockade practices to demand this or that. Bolivia needs to have similar public policies to boost the lithium as do have those countries, otherwise it will be just a major disappointment …

A big challenge for the existing ochlocracy in Bolivia …

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