Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Delays and possible conflict of interests cloud Bolivia´s lithium pilot project *

As we approach the launch date of the first all-electric car "Leaf" of Nissan and the first range-extended hybrid electric vehicle "Volt" of General Motors, South Korea says it will invest several million dollars in a project aimed at extracting lithium from seawater and Toyota, the largest automaker in the world, reports that it will launch the first hybrid electric vehicle with lithium-ion batteries on the market next year, some doubts are beginning to appear as to whether Bolivia, which holds more than half the world's lithium resources, may one day lead the small group of countries producing the coveted  “gray“  metal.


These reservations, which, given the tense moments we just faced in the southwest of Potosi, could be thought of as political and, therefore, dismissed upfront by the government, are, however, supported by the following facts. 


First, after about two years of the announcement by President Morales to start a pilot project beginning this year to produce 40 metric tons (NYSE:MT) per month of lithium carbonate, to proceed in some years to sell between 20,000 and 30,000 TM of the chemical, progress has been reduced to the construction of part of the civil works of the pilot plant in the region of Rio Grande, as well as obtaining a few kilos of lithium carbonate with 99.5% of purity at an experimental level in laboratories outside the project. While no one has an exact idea of the reasons for the delay, it has been said that the first tons of lithium carbonate may be produced by September of this year, or more realistically not until next year. As I argued in previous publications, at an early stage of industrialization of the Salar de Uyuni,  the country should start producing lithium carbonate as soon as possible primarily to: (i) signal the world that it will provide the required volumes of the metal to the market, since creating a situation of credibility is key for the largest investors in advanced energy storage systems to continue to bet on lithium, (ii) contribute to reducing the cost of lithium ion batteries, providing mass access to consumers of  the new electric vehicles, (iii) postpone the development of alternative technologies (hydrogen fuel cells and / or methanol, zinc-air batteries, bio-electrochemical batteries, etc.) or extraction projects of lithium from ore deposits (spodumene) or seawater, and (iv) positioning a firm foothold in the market for lithium, given the current metal fever mainly in Argentina, which practically is conducting the auction of whichever salt lake or lagoon can be found in that territory. 

In this sense, the Bolivian people need to know the specific destination of the financial resources allocated to the pilot project for industrialization of lithium in the Salar de Uyuni. Hence the national government should request as soon as possible an intervention by the State´s Comptroller General to proceed to a financial audit of the money spent and, more importantly, a technical and operational audit of progress to date in project. 


Second, given the information from "El Potosí" in its issue of April 20 this year that Tierra SA Company would be “after the lithium of southwestern Potosi”, it  is crucial the  intervention of the Ministry of Institutional Transparency and Combating Corruption to investigate a possible conflict of interest, given the fact that the pilot project has been led since its launch by former employees of that company under the (ongoing) guidance of Mr. Guillermo Roelants du Vivier, current CEO of Tierra SA, in his capacity as Secretary General of Bolivia´s Scientific Committee of Evaporite Resources Research. 
In this regard, the Comptroller General should find out, for example, if the delay of the project had anything to do with the debate held in recent months in "La Razon” between Mr. Roelants (seconded by the Sales and Financial Manager of the COMIBOL pilot project) and this author, as to whether lithium is secondary and potassium primary in the industrialization strategy of the Salar de Uyuni. 


Remember that in a special supplement published by "Energy Press" late last year, Mr. Roelants argued, inter alia, that "lithium has been made fashionable by the action of the global crisis and the effect of 
mass media "and that potassium is more important than lithium for its requirements in agriculture, photography and lithography, medicine, soaps, explosives and fireworks".  Additionally, he noted that the "media predicament" on lithium would have only "intensified imagination" to search for natural resources that supplant oil, pointing out that lithium is not a fuel but a constituent of the batteries, just as lead is for the batteries currently available for the automotive market". 


Given the information provided by "El Potosí", it is worth asking now whether Mr. Roelants´ disconcerting opinion on the relative importance of lithium of  the Salar de Uyuni is related to the fact that Tierra SA Company, apparently through one of its main partners, Carmen Rosa Burgos Ortiz,  was granted, as shown in a planimetry certificate dated March 12, 2010, issued by the National Service of Geology and Mining (sent in PDF format to El Potosi by this author) a total of 1,975 hectares of mining and water concessions (for property) located in the heart of the Salar of Pastos Grandes, known as a site with great potential for lithium? 
Does it makes sense that Mr. Roelants continue serving as Secretary General of the "Scientific Committee" mentioned above when he is striving to postpone the exploitation of lithium in the Salar de Uyuni, deliberately favoring potassium, an element with an infinitely inferior value chain,  with enormous economic implications for Bolivia?  What are the reasons for the national government to tolerate this situation? 


  
* A previous version of this article was published in Spanish in “El Potosi” on April 23, 2010



Disclosure: Author is a lithium economics analyst based in La Paz, Bolivia. In January 2010 he participated as an invited speaker at the Lithium Supply & Markets Conference held in Las Vegas, USA. He holds no positions in any stocks.