Bolivia plans to announce a selection of foreign partners to develop its lithium reserves shortly. It was previously assumed that the decision would become known on June 15, however, it was postponed for the second time. The attention of interested observers remains riveted on this topic: the demand for lithium is growing rapidly, and the reserves in this country are among the largest on the planet.
Bolivia is part of the so-called lithium triangle on the border between Bolivia, Chile and Argentina. Recall that mining in South America is carried out from underground brines containing lithium. But if the last two countries produce about a third of the global consumption of lithium, then in Bolivia, the production volumes are still symbolic. This is partly due to the previous unsuccessful attempt to develop their own production, relying only on their own strength. In part, this is due to the fact that Bolivian brines containing lithium contain a high proportion of magnesium, which makes it difficult to extract lithium itself.
Nevertheless, optimists are already calling Bolivia the new “lithium Saudi Arabia”. However, in view of the above, it would be more correct to call Bolivia “lithium Venezuela”, given that the extraction of lithium is difficult here, as is the case with the extraction of high-viscosity oil in Venezuela, although the volumes of such oil are very large.
It is curious: if you look at the data of the BP statistical collection, then we will not see Bolivia at all in the countries with the largest reserves of lithium, although, for example, Portugal is singled out separately with reserves of only 0.3 percent of the world. Of course, a certain subjectivity in the assessments in this collection was also encountered earlier, but it is possible that such an approach is associated precisely with the difficulties in lithium mining. Ironically, the oil of Venezuela is fully reflected in these statistics – as a result, the reserves of black gold in this country, according to BP, turn out to be greater than in Saudi Arabia, although it is very likely that, unlike the reserves of the kingdom, they will never be fully mined.
But back to lithium and Bolivia. The issue of admitting foreign companies has several dimensions. Several factors are important here: the environment, the economy, and politics, as local residents react sharply to which companies and under what conditions will participate in the project. Equally important, firms must submit their own efficient, unconventional methods for lithium recovery.
What companies apply for participation in mining? Initially, there were eight on the list. Two participants have already been excluded, this is the Argentine Tecpetrol, as well as the American startup EnergyX, The New York Times devoted a lot of material to its struggle for the right to mine Bolivian lithium back in December. But it didn’t work out.
In total, six companies are currently applying for development, none of which has previously participated in the production of lithium in industrial, rather than experimental, volumes. This is another American startup Lilac Solution (by the way, BMW and Bill Gates’ Breakthrough Energy Ventures invested in it ), a major Chinese battery manufacturer CATL and three other Chinese companies. And also – which is the main thing for us – the company Uranium One, owned by Rosatom. As long as the intrigue persists.
As can be seen even from the above, the range of companies interested in lithium mining is very diverse. By the way, while the lithium market looks like an oligopoly – five companies account for three-quarters of the world’s lithium production. These are the American Albermarle and Livent (although they mine lithium in other countries), the Chilean SQM, the Chinese Ganfeng and Tianqi.
Nevertheless, trends can be identified. Initially, lithium mining was often carried out by companies mainly from the mining and production of various chemical compounds, where lithium occupied and occupies its share. Now there are companies investing exclusively in lithium mining. Moreover, Livent is the lithium segment of chemical FMC that has detached into a separate company.
In addition, lithium-related companies are becoming interested in vertical integration, that is, participation in the entire chain. And not only on the part of lithium miners, but also on the part of consumers, which is due to the high prices for this product. And the largest consumer here are manufacturers of electric vehicles. As a result, there is every reason to believe that at least some manufacturers of electric vehicles and (or) batteries are gradually planning to enter the lithium market and create vertically integrated holdings on the principle of “mining and processing of lithium – production of batteries – direct production of electric vehicles.” This is logical, because if in a traditional car, competencies are also in the field of a complex mechanical part, then in an electric car everything is much simpler, since it is powered by an electric motor. But at the same time, the battery is a significant part of the cost. The above example of CATL’s interest in Bolivian production is one illustration.
And the Chinese automaker BYD, with a focus on the development of the electric vehicle sector, is considering buying lithium deposits in Africa. At the same time, the company had already received a contract for the extraction of lithium in Chile.
Another Chinese EV maker, Nio, has announced it is building its own battery packs to increase profitability and compete with other companies.
Recall that now huge batteries for electric vehicles consist of a set of small blocks, often of the 18650 type. Familiar to fans of powerful LED lights, which are usually equipped with one or two of these batteries. Similar batteries are also found in many laptops and other household devices.
Meanwhile, EV manufacturers can simply buy batteries from the market, much like Tesla buys batteries from Panasonic. In addition, the two companies have a joint venture in the US to manufacture lithium-ion storage devices. Now there are other sizes of the original small batteries, but the essence remains the same. And in April, Elon Musk also admitted that Tesla itself would have to start mining lithium.
Accordingly, Rosatom also finds itself in the same trend as we described above: vertical integration is being created – from lithium mining to battery production. After all, Rosatom plans to build its own gigafactory for the production of lithium-ion batteries: by 2024, a production facility with a capacity of 4 GWh per year should open in the Kaliningrad region. This is a fairly decent amount by world standards, at the level of 0.5 percent of the global production of batteries expected by that time. Not so little, given that the battery sector for our country is not a key one in the entire energy sector.
Regardless of the decision in Bolivia, Russia also has backup options for production at home. Firstly, Rosatom and Norilsk Nickel plan to jointly mine lithium from ores in the Murmansk region, and preliminary estimates of capital costs have already been made at SPIEF – 90 billion rubles. Secondly, there are projects using associated water brines containing lithium in oil and gas production, such options are being discussed for production in the Irkutsk region with Gazprom and the Irkutsk Oil Company.
Now our country imports lithium compounds, and itself is engaged in bringing this imported raw material to the purity required for batteries. Recall that lithium prices have increased tenfold in a couple of years. It is believed that they will decrease somewhat, but will not return to their previous values. A sustained increase in global prices will support Russian mining projects, even if costs are slightly higher than in other lithium mining countries.