Source: "The white gold rush"
Lithium is a coveted commodity. Lithium-ion batteries store energy that powers mobile phones, electric cars and electricity grids (when attached to wind turbines and photovoltaic cells). Joe Lowry, an expert on the lightest metal, expects demand to nearly triple by 2025. Supply is lagging, which has pushed up the price. Annual contract prices for lithium carbonate and lithium hydroxide doubled in 2017, according to Industrial Minerals, a journal. That is attracting investors to the “lithium triangle” that overlays Argentina, Bolivia and Chile (see map). The region holds 54% of the world’s “lithium resources”, an initial indication of potential supply before assessing proven reserves.
The three countries have not been equally eager to seize the opportunity. Market-friendly Chile has a big head start. Argentina is hastening to make up lost ground, as the activity on the Olaroz salt flat suggests. Bolivia, whose resources are as large as Argentina’s, has barely begun to exploit them. Those differences suggest much about how the South American trio treat enterprise and investment more generally.
Chile dominated the world lithium markets for decades. The Atacama salt flat has the largest and highest-quality proven reserves. The desert’s blazing sun, scarce rainfall and mineral-rich brines make Chile’s production costs the world’s lowest. Allied to this is the region’s most benign investment climate. Chile is far ahead in rankings of ease of doing business, levels of corruption, and the quality of its bureaucracy and courts.
The 16th-century escutcheon of Potosí, a city on the high Andean plain in southern Bolivia, declared it the “treasure of the world, king of all mountains and envy of kings”. Its silver mines bankrolled Spain’s empire. Today’s prospectors are eager to exploit the area’s lithium deposits, but Bolivia’s democratic government is less welcoming than the imperial one.
The country’s investment regime suffers from “lack of legal security, weak rule of law, corruption and murky international arbitration measures”, according to the American State Department. Under the left-wing government led by President Evo Morales since 2006, Bolivia has pulled out of numerous bilateral investment treaties, denying investors access to international arbitration. His government has nationalised parts of the oil and gas industries, along with the biggest telecoms company and most of the electricity sector.