TOPSHOT – Aerial view of brine ponds and processing areas of the lithium mine of the Chilean company SQM (Sociedad Quimica Minera) in the Atacama Desert, Calama, Chile, on September 12, 2022. – The turquoise glimmer of open-air pools meets the dazzling white of a seemingly endless salt desert where hope and disillusionment collide in Latin America’s “lithium triangle.” A key component of batteries used in electric cars, demand has exploded for the “white gold” found in Argentina, Bolivia and Chile in quantities larger than anywhere else in the world. (Photo by Martin BERNETTI / AFP) (Photo by MARTIN BERNETTI/AFP via Getty Images)
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Bolivia, the small landlocked South American country with the world’s largest proven lithium reserves, broke with twenty years of leftist political alignment on Sunday, August 24. While no candidate received enough votes to be elected president, the election resulted in a runoff between the far-right candidate, Jorge “Tuto” Quiroga, and a more moderate senator, Rodrigo Paz. (Source).
Mr. Paz was the surprise leader after the first night, indicating that Bolivia is not ready to shift entirely back to the right, but the one thing that was clear is that it was repudiating the left. The leftist candidate, Eduardo del Castillo of the MAS party (Movement for Socialism), received only 3.2% of the vote, and an insurgent campaign by longtime President Evo Morales to have people cast invalid ballots to delegitimize the process fell flat.
Mr. Morales, the first indigenous President who shifted the country sharply to the left beginning in 2006 and has held power or played a major role ever since, now finds himself on the outside looking in. This is a dramatic shift resulting from a substantial drop in living standards over the last few years, a drop that was not cushioned by the nation’s vast lithium reserves.
In 2023, Mr. Morales’s successor, Luis Arce, gave Chinese interests the rights to develop Bolivia’s lithium reserves, located in the southwest of the country high up in the Andes Mountains. That did not stop the economic slide, however, which wiped out years of living standard improvements that had accompanied Mr. Morales’s rule and in which he had poured immense resources into populist programs.
The runoff to determine who will become the next President of Bolivia will take place in October. One key question will be what does this all mean for the development of the lithium resources. As lithium is a key ingredient in batteries and is, thus,essential to store and transmit renewable power, Bolivia has the potential to be the Saudi Arabia of the 21st century. That promise is unfulfilled as yet, however, as little money has reached the lower economic sectors of Bolivia’s population to date.
This is partly because the MAS recently has been so fractured that it has not been able to approve development proposals for the lithium. (Source). For his part, Quiroga has floated the idea that, should he be elected, he will scrap the lithium development deals previously entered into with Russia and China. (Source). This would be a massive geopolitical shift that likely will be little reported in the West, but could have profound significance to the world’s economy, not to mention that of Bolivia specifically.
Internally, whoever becomes Bolivia’s new president will face large and critical issues. Among them, lithium mining is a dirty process, and the new president will need to safeguard the environment in the host areas once such mining earnestly gets underway. Once the lithium is being developed, the money will need to go to the State coffers and cannot be siphoned off by the typical corruption that has long bedeviled the country.
To summarize: done properly, the lithium resource could help make Bolivia a true economic power and fuel the advancement of its people. Done poorly, and it could relegate the nation back into the traditional spiral of corruption and massive wealth inequality so common almost everywhere in South America, and elsewhere around the globe.