Germany secures access to world's second-largest lithium deposit

Germany and Bolivia sealed Wednesday a partnership for the industrial use of lithium, key ingredient for the batteries that power electric cars and cell phones, the first concrete step the sector.

ACI Systems will work with state-owned Bolivian Lithium Deposits (YLB) on installing four lithium plants in Salar de Uyuni salt flats, which holds the world's second-largest lithium deposit.

The joint venture also plans to build a factory for electric vehicle batteries in the country.

While more than 80% of the lithium extracted will be exported to Germany, the company is said to be in talks with other European companies.

The partners expect to produce up to 40,000 tonnes of lithium hydroxide per year, beginning in 2022,  over a period of 70 years.

President Evo Morales sees a prosperous future for the impoverished nation, pinning his hopes on the rapid rise in the global price of the so-called white petroleum.

Bolivia holds millions of tonnes of untapped lithium reserves. The Salar de Uyuni salt flats alone contains nine million tonnes of lithium, or around 25% of the world's known reserves.

Salt flats in the highlands of Bolivia are thought to hold millions of tonnes of untapped lithium reserves. According to the US Geological Survey, the Salar de Uyuni salt flats alone contain nine million tonnes of lithium, or around 25% of the world's known reserves.

The country also holds other lithium deposits, which makes experts believe that Bolivia has about half of the world's lithium.

But the South American nation needs  to overcome an array of challenges before being able to develop a lithium industry.

Morales administration — South America’s longest-standing populist regime — doesn't want Bolivia to be a mere exporter of raw material, but rather wants to transform it into a hub where the entire chain of value-added activities involving lithium takes place.

Another issue is the purity of Bolivia’s lithium, which has higher levels of magnesium than in the metal found in other countries such as Chile and Argentina.  It salt flats are also subject to seasonal flooding, resulting in a lower evaporation rate that makes it more expensive and difficult to refine.

Lack of infrastructure and investors’ confidence in the Bolivian government are other issues negatively affecting Morale’s hopes for a full-grown lithium industry.

And then there is ACI Systems Alemania GmbH’mining experience, which is nil.

Lithium and other battery metals such as cobalt have seen demand soar in recent years as more people shift away from cars powered by fossil fuels.

Experts expect the need for the commodity from battery makers alone to jump 650% by 2027, while overall demand is forecast to rise more than threefold in the next nine years.

Some, however, expect prices to drop in the early 2020s as a result of an ever-rising number of projects expected to come online from that year onwards. This, despite increasing demand from EV batteries makers.

According to Moody’s Investor Services, there will be a major structural shift in the industry over the next decade. The sector, the report says, will move from a few majors producing battery grade lithium from low cost brine in Chile and Argentina, as well as low cost ore from the Greenbushes rock mine in Australia, to a more diverse industry.

Such sector would include new rock-based entrants mining ore in Australia and selling spodumene to Chinese converters, as well as new rock and brine-based suppliers in Brazil, Canada and the US, Moody's says.

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