By Aurora Lane | 2024-09-20

LA PAZ, Bolivia -– Civil society representatives have opposed the $970 million contract signed between the Bolivian government and a Russian company for lithium extraction in the Potosí region.

Local leaders and civic organizations accuse the government of betraying regional interests, warning that the agreement will primarily benefit foreign entities, leaving Potosí -- a region rich in natural resources -- trapped in poverty.

On September 11, the state-owned Yacimientos de Litio Bolivianos (YLB) signed a contract with Uranium One Group, a subsidiary of Russian nuclear giant Rosatom.

The agreement involves deploying advanced direct lithium extraction (DLE) technologies in the Salar de Uyuni, one of the world's largest lithium reserves.

Vice Minister of Alternative Energy, Álvaro Arnez, stated that the $970 million investment will be fully funded by the Russian firm.

Lack of transparency

However, Potosí representatives have condemned the contract, criticizing its lack of transparency and arguing that it offers no real benefits to the local population.

"We have officially rejected the contract between Uranium One and YLB, as it was signed behind the backs of the people of Potosí and all Bolivians. Potosí will not be complicit in the personal interests of President Luis Arce's family," Alberto Pérez, president of the Potosí Civic Committee (COMCIPO), told Entorno.

Pérez accused Arce of treating lithium exploitation as a "family business," suggesting that the president’s children are involved in managing the projects without consulting local authorities or ensuring transparency.

"He acted like a common criminal, doing everything in secret. The governor doesn’t know, our parliamentarians don’t know -- nobody knows about this," added the COMCIPO president.

The civic leader voiced concerns over the contract terms, asserting that they fail to ensure fair royalty returns for the department of Potosí.

Bolivia currently lacks a specific tax regime for lithium that sets clear royalties for its extraction.

Efforts have been made to regulate the activity through a Mining Law, which proposes a 3% royalty for the department.

This bill has faced criticism from the people of Potosí, who view the 3% royalty as insufficient compared to the 11% rate applied to the hydrocarbon industry.

"This time, we want a fair share. We don’t want the 3% that the mining sector gives us as alms. We expect Potosí to receive a proportionate share of lithium revenues, potentially exceeding 10%, based on production and sales," said Pérez.

In a similar vein, former COMCIPO president Roxana Graz labeled the agreement a "betrayal" of Potosí’s residents, warning that the government aims to "exploit natural resources to the fullest."

She explained to the media that the 3% royalty rate applies only to raw materials at the "wellhead (raw material)." Once the lithium is processed, such as in the form of lithium carbonate, the royalty rate drops to 1.9%.

She emphasized that this percentage is "miserable" compared to the scale of exploitation expected. She also highlighted the "pollution" and "environmental damage" the region will endure due to the foreign company’s activities.

No experience

Raúl Velásquez, an analyst at the Jubileo Foundation, which advocates for social oversight of government institutions, criticized the lack of transparency and the fact that the contract was awarded to a company primarily involved in uranium extraction, rather than lithium.

"Ideally, this should have been handled through an international public tender -- a process used by the most transparent countries," he told the media on September 11. "In this case, the government had already negotiated the contract and selected the company without any prior review or debate by the Legislative Assembly."

Velásquez emphasized the importance of applying basic criteria, such as selecting a company with substantial technical expertise in lithium extraction and the financial capacity to meet its obligations.

He also stressed the need for prior community consultation and a comprehensive environmental assessment, noting that lithium is a non-renewable resource.