The small electric car and battery factory of the Bolivian company Quantum, in Cochabamba, could be a modest preview of the dream of Evo Morales and his successor in the presidency, Luis Arce, of creating a national industry taking advantage of the largest lithium deposit in the world. world, 500 kilometers further south, in the immense Salar de Uyuni.
“We are producing on a very low scale – about 500 cars and 2,000 batteries in 2022 – and we have to be realistic; we are not going to be the number one automobile producer in the world”, jokes José Carlos Márquez, the young founder of the company. He is sitting in front of one of the Quantum EVs – a sort of hybrid between a motorcycle taxi, tuk-tuk and a Citroën Ami – that sells for $7,000, a good price for Latin America, where the average salary is less than 300 euros. a month. "It's the beginning; Bolivia could use its lithium as a negotiation tool with large investors to be a regional protagonist in the transition to energy, ”he reflects.
Quantum – a family business that began by making electric forklifts for artisanal mining – has already signed a contract to manufacture the EVs in Mexico City, a plan actively supported by Mexican Foreign Minister Marcelo Ebrard, who, during a visit last year to the Salar de Uyuni, drove a Quantum adorned with colorful indigenous symbols. Other countries, from El Salvador to Paraguay, also want to market or manufacture the little Quantum.
It is a small idealistic story from one of the poorest countries in Latin America, historically dependent on mining and the export of raw materials. But there is a geopolitical problem. After the historic agreement signed in January between the Bolivian state and the world's largest battery manufacturer, the Chinese company CATL, which will invest some 10,000 million euros in the direct extraction of lithium in Uyuni, the Bolivian dream is perceived as a threat in Washington and... in the Pentagon.
In an unprecedented situation between China and the US, which sometimes seems like the preamble to a war, any investment in minerals such as lithium by Chinese companies is considered to be in the US -and to a lesser extent in Europe – a danger to national security.
"The Chinese strategy in the Lithium Triangle (Bolivia, Argentina and Chile), which has 60% of the world's lithium reserves, is very advanced and aggressive," details General Laura Richardson, top commander of the Southern Command of the US military, responsible for Latin America, in testimony before Congress in Washington last week. “I am concerned about the malign activity of our adversaries; (China) is taking resources that these peoples need to build their democracies," specified the five-star general.
CATL –supplier to Tesla and Volkswagen– has signed an initial agreement for the manufacture of lithium carbonate, an essential element for the latest generation of batteries. Using a new extraction technology, it is intended to produce 40,000 tons of carbonate in the year 2025. At current prices, this would mean an income of 3,000 million euros. It is estimated that Bolivia has 21 million tons of lithium reserves, an authentic "white gold" mine, since the ton sells for almost 80,000 dollars.
China already controls 61% of lithium refinement worldwide and Bolivia's agreement with CATL will increase its control over the most important metal for the energy transition that fights climate change. The price of a ton of lithium has risen 800% in the last two years and fear of shortages of this and other critical minerals for the energy transition from coltan to cobalt is growing.
According to a former senior US National Security Council official, quoted in the Financial Times this week, there will be a shortage equivalent to 25% of total lithium demand by 2030. "These crucial minerals are the new oil." , said.
“There is concern in the US and Europe that China could block access to these resources,” says Andy Leyland, a critical minerals expert at consultancy SC Insights in London. The West "is way behind in the lithium area and in the US. There is an idea that the Chinese state can control any Chinese company and thus cut off the supply."
Furthermore, only the Chinese company model, whose priority is to guarantee a long-term lithium supply source, seems compatible with a project in which the Bolivian state maintains ownership of lithium through the state company Yacimientos de Litio. Bolivianos (YLB).
"The sovereignty of the country is a priority in Bolivia and the law is very strong when it comes to defending natural resources as state property," Carlos Ramos, president of YLB, the state company, clarifies to La Vanguardia. "CATL agreed to work with those conditions."
Bolivia approved a mining law in 2014 during the presidency of Evo Morales, which guarantees the state character of natural resources. This contrasts with countries like Peru and – until a new constitution is drafted – Chile, whose constitutions protect the interests of private business.
Although it is intended to involve companies from other countries in the extraction of lithium, no other agreement has been announced for the moment. The companies that have competed to date –among them an American and a Russian one– “have to adapt to accept sovereignty, respect that production is going to be entirely from the State,” he insists.
Hence the geopolitical dilemma for Washington. Several congressional leaders have criticized a lack of patriotism in the investment strategies of US companies in Latin America. "We've been ignorant of our own backyard for far too long," said Romney Jackson, a Texas congressman. China has already replaced the US as the main trading partner and investor in most of the big South American countries. In the area of electromobility, fear begins to be scenic. CATL's dominance of the battery market “has sparked fears in Washington that Detroit (the historic center of the US auto industry) may become obsolete and that Beijing will end up controlling cars in the 21st century, just like oil-producing countries in the 20th century,” commented Keith Bradsher, in The New York Times.
This explains the surprising discourse of the Pentagon that has turned anti-extractivist, although only when it refers to China. The Chinese "create the impression that they are investing when in reality they are extracting," said General Richardson, the greatest exponent of what is beginning to be described as woke militarism (militaristic progressivism), which combines a harsh campaign against the presence of China and Russia in the region, with a supposed defense of the environment and the rights of indigenous people and minorities. In reality, the new extraction system is more environmentally friendly, Leyland says.
The discourse against Chinese extractivism can be a Pentagon resource to build bridges with opponents of the project in Potosí, where the Salar de Uyuni is located. This week, the combative Potosí civic committee – with the support of some Quechua and Aymara communities – has organized blockades of purses to support a new law that would increase the percentage of income from lithium extraction that would be returned to Potosí.
It is a claim that is repeated in Potosí, with a psychology marked by the past of mineral looting embodied in the famous Cerro Rico de Potosí, whose veins of silver were emptied in two centuries of frenetic Spanish extraction. In 2019, the then leader of the San Luis Potosi committee, Marco Pumari, took advantage of the rejection of the lithium extraction plan to align San Luis dissidents with Fernando Camacho, the far-right leader of Santa Cruz, who led the coup against Morales.
This time, the Arce government – which swept the elections in Potosí – seems to be more aware of the danger of a counter-reaction. "I am from San Luis Potosí, I know very well the feeling regarding its raw materials and that curse of natural resources," Ramos said in an interview. "We have to focus the economic prosperity towards development, living conditions in health and education."
With Pumari already imprisoned for his role in the coup against former president Evo Morales, the San Luis movement does not have the same strength as in 2019. Of course, Morales himself has criticized the agreement with the Chinese company.
For now, the project to industrialize Bolivia taking advantage of the new energy transition has been subordinated to the urgency of taking advantage of the prices in the international lithium carbonate market. “We cannot waste this moment; it will not last forever”, warns Ramos. "But this is the beginning," he adds. "With carbonate, the government's vision is to generate the lithium value chain in the country."
Meanwhile, in the small Quantum factory in Cochabamba, about twenty young Bolivian engineers assemble lithium battery packs. The cells used are made by CATL's rival EVE Energy, another Chinese company with global reach, as well as some prototype cells supplied by YBL. “We only assemble, but our battery pack factory is the most modern in Latin America and in a few years we will use Bolivian lithium,” says José Carlos Márquez, before getting into his tiny black Quantum to return home.
