Tuesday, January 29, 2019

Lithium: Germany China and Bolivia

The global battle for control of lithium has been likened to the “Great Game,” the term coined to describe the struggle between Russia and Britain for influence and territory in Central Asia in the 19th Century. 

China has been quietly cornering the global lithium market, making deals in Asia, Chile, and Argentina as it seeks to lock in access to a strategic resource that could power the next energy revolution. China has invested $4.2 billion in South America in the past two years, surpassing the value of similar deals by Japanese and South Korean companies in the same period. Chinese entities now control nearly half of global lithium production and 60 percent of electric battery production capacity. 

Germany signed a deal last month on the 12th Dec. to help Bolivia exploit its huge lithium reserves, took place after two years of intense lobbying to persuade President Evo Morales’ government that a German family-run company was a better bet than its Chinese rival. China, Bolivia’s biggest non-institutional lender and close ideological ally, lost out.

“This partnership secures lithium supplies for us and breaks the Chinese monopoly,” Wolfgang Tiefensee, economy minister of the German state of Thuringia, an automotive manufacturing hub.

German officials championed the bid by ACI Systems GmbH because they saw an opportunity to lower Germany’s reliance on Asian battery makers and help its carmakers catch up with Chinese and U.S. rivals in the race to make electric cars. ACI’s win means Germany now has a foothold in the final frontier of South America’s so-called Lithium Triangle: the Uyuni salt flat in Bolivia, one of the world’s largest untapped deposits. The triangle comprises lithium deposits in an area that includes parts of Chile, Argentina and Bolivia. Uyuni boasts at least 21 million tonnes of lithium.

ACI, a clean tech and machinery supplier, has no experience producing lithium but the company dismisses concerns from some lithium analysts about its ability to deliver, saying its small size gives it more flexibility to bring partners from different fields into the project. The company has preliminary lithium supply deals with major German carmakers, but declined to provide details, citing non-disclosure agreements. ACI has said it expects the lithium hydroxide plant to have an annual production capacity of 35,000-40,000 tonnes by the end of 2022, similar in output to plants operated by the world’s top lithium producers. Eighty percent of that would be exported to Germany.

The Bolivian project includes plans to build a lithium hydroxide plant and a factory for producing electric car batteries in Bolivia. Once completed, the factory will help to fulfill Morales’ ambition to break with Bolivia’s historic role as a mere exporter of raw materials. ACI’s willingness to build a battery plant in Bolivia, helped to seal the deal. The Chinese did not want to build a battery plant in Bolivia because they felt it made no economic sense to ship in materials to make the batteries only to re-import the final product to China. Bolivia’s state-owned lithium producer YLB will own 51 percent of the new joint venture. Control of the project was another key demand of the Bolivians, who have bitter memories of foreign powers meddling in its natural resources. Geopolitics was a factor for Bolivia in deciding which companies to work with. 
“We don’t want a single country to set the rules, we want balance and other world powers must help create that balance,” Juan Carlos Montenegro, the head of YLB, said. “So for Bolivia it’s important to have not just economic partners for markets, but geopolitical strategic partners.” He added, “China-Bolivia relations are still good. China is present in every country in the world and impossible to avoid,” https://uk.reuters.com/article/us-bolivia-lithium-germany/in-the-new-lithium-great-game-germany-edges-out-china-in-bolivia-idUKKCN1PM1LS

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