The article begins by naming the main potential competitors to which Bolivia will face when entering the market of the coveted metal. It then mentions that Sociedad Quimica de Minerales (NYSE:SQM) in Chile is the largest producer of lithium in the world with 40,000 metric tons per year of lithium carbonate with 37% share in the market. Right after, in an effort to explain a "benchmark strategy", it goes on to justify the acquisition of lithium carbonate from Chile "to determine its chemical composition and compare it with the compounds to be produced in Bolivia". The following paragraphs are devoted to an analysis of strengths, weaknesses, opportunities and threats (SWOT) that contains findings not supported technically. Finally, the article concludes with the usual speech that the strategy consists of a first phase of chemical-industrial production of lithium carbonate and potassium controlled by the state and a second or subsequente phase (s) for the manufacture of batteries and other industrial applications, open to private participation.
First, it should be noted that when the author of the unfortunate piece speaks of SQM he confuses production with production capacity. According to information obtained for 2009 at the second conference of supply and lithium markets, held in Las Vegas in January this year, I attended as a guest speaker, Chile´s SQM would have produced only about 24,000 MT of lithium carbonate equivalent (LCE), an amount which corresponds to 25% of global market and not 40.000 MT, an amount that would imply a share of 42%; the 40,000 tons of LCE mentioned by Mr. Vargas would in reality be the production capacity of SQM. It would be nice to know if this data inflation is due to a lack of updated information or a special interest in distorting reality.
Secondly, I wonder if the "benchmarking" proposed by Mr. Vargas also means overpricing, since according to the document published by El Potosi concurrently, as of December 21, 2009, the National Direction of Evaporites of COMIBOL would have issued a purchase order for, among other things, 350 kg of lithium carbonate (technical grade) at a price of Bs.577.11 (US$ 81.63) per kg, that is a price nearly 14 times higher than the international price at the time. If the veracity of that document is verified, this would be a clear indication of corruption in the pilot plant of lithium. Apparently, the problems continue at the most strategic project in the country without the national government and in particular, the State´s Comptroller General, taking action on the matter.
Thirdly, Mr. Vargas is also wrong when he states that one of Bolivia's strengths is its expertise in mining, without clarifying that the type of mining required in this case for an operation in brine is radically different from the extraction of mineral vein, in which the country has indeed developed a notable expertise for over five centuries and a half. Likewise, the author is in error when he refers to the emerging opportunities of the "incipient lithium market" and the long-term perspectives in the price of the metal, since what is now observed in the international arena is a growing market almost consolidated with the emergence of new competitors, mainly in Argentina and China that could very well be aimed at taking the post of Bolivia, and upward trends in prices not only in the long but also in the short and medium terms. Why, again, does he distort the real state of things? In addition, Vargas confuses threats with challenges in the SWOT methodology, telling us the story that the economic downturn will delay "the boom in electric vehicle batteries", implying that the retardment of the plant is not such a big deal. Here, the malicious author does not consider that the economic crisis is probably a weak factor in the process of adoption of lithium ion batteries, which can best be explained today in terms of the level and volatility of oil prices, the technological development of such advanced energy storage systems and resistance to or acceptance of technological change, as I showed in my presentation at the second conference on supply and lithium markets mentioned above.
Finally, with regard to the description of the strategy with which the said author closes his lamentable journalistic contribution, I can only say that the industrialization of lithium, a genuine aspiration shared by all Bolivians, now runs the serious risk of becoming a simple political discourse increasingly flabby and lacking in substance. And that is precisely the feeling that leaves the bold "specialist in the field of lithium" when he dares to sentence: "The strategy responds to the questions of most Bolivians: Where are we going? What are we doing? ". Such cynicism can not be seen but as a serious affront to the intelligence of the Bolivian people, which requires an urgent amendment from the highest authorities of the State.In conclusion, it is unfortunate that this gentleman continues to justify his inaction and complete lack of knowledge on the subject. For his information, strategy is not simply a desire for how to do things, but a set of steps to achieve a specific objective. In this sense, as I have argued ad nauseam, unfortunately, so far, the government lacks a strategy for industrialization of evaporite resources of the Salar de Uyuni. If that is the lithium strategy ...
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.