Many believe the recent ousting of Bolivian President Evo Morales is a consequence of his tight controls over the country’s lithium resources.
Living in exile in Mexico, former Bolivian president Evo Morales was recently asked in a televised interview about the reasons behind his ousting and the first thing he pointed out was lithium and the projects he pursued in an attempt to position Bolivia at the top of global energy transition.
Bolivia is home to the world’s largest lithium reserves. The soft metal is an essential component for the production of electric cars, smartphones and laptop batteries. While big Western businesses have been eyeing Bolivia’s lithium mines for over a decade, the Morales-led government made sure that the so-called ‘white gold’ reserves remained out of bounds to outsiders and an exclusive property of the state. Two years after coming to power, he introduced strong licencing controls, making it difficult for big businesses to extract raw lithium at throwaway prices.
“When Morales came to power in 2006, Frutcas, a peasants union from Potosi, presented the government a project to declare lithium a strategic resource allowing only state controlled exploitation,” said Federico Nacif, a senior sociologist who coordinates a team at the National University of Quilmes in Buenos Aires, conducting research on lithium in Argentina, Chile and Bolivia.
“Morales founded YLB [Bolivia’s national lithium firm] in 2008, developed and controlled every and any mining site. Lithium was declared a strategic resource and Bolivia started to pave a slow but sovereign process to enter the world market, not only as a resource provider, but as a producer of final stage products.
“It’s the global energy transition taking place in front of our eyes. And if we were to compare lithium with oil, Bolivia would be the new Saudi Arabia. But it’s not.”
The tight government regulations prevented major transnational mining firms such as France’s Eramet, America’s FMC and South Korea’s Posco from entering Bolivia’s lithium market. They failed to negotiate with the Morales government, which refused to budge on its demand — that for the development of lithium, both national mining company Comibol and YLB have to be equal partners. Many mining firms eventually moved to Argentina.
Morales managed to keep Bolivia’s business elite and mining oligarchs at bay, thanks to the growing size of the country’s economy. The Financial Times wrote in 2014 that Morales’ mining policy has helped the country earn some economic dividends. “Proof of the success of Morales’s economic model is that since coming to power he has tripled the size of the economy while ramping up record foreign reserves.”
But Morales always walked a tightrope. Local media criticised the president for being slow in “jumping onto the white gold rush”. With the nationalisation of mining assets, Comcipo, a civic body in the country’s mining hub Potosi, began mobilising against Morales as early as the state lithium projects began in 2008, by demanding royalties. By 2010, royalties in liberated mining markets such as Argentina and Chile had already started flushing into the coffers of civic bodies. But the delay in Bolivia due to government controls began to cause disappointment among many local businessmen and middle class professionals.
Comcipo’s main advisor on lithium is Juan Carlos Zuleta, an economist with strong ties to the global lithium industry. He is also an advisor of the mining hedge fund Seeking Alpha and the Lithium Council of Chile. Zuleta has been a bitter critic of Morales. In the spring of 2019, a few months prior to Morales’ ousting, Zuleta took aim at the embattled president when Bolivia signed a lithium deal with Germany’s ACI Systems, a private company which develops lithium for industrial use. He said Morales was giving up Bolivia’s resources to Germany.
Nacif, the sociologist, says Zuleta’s criticism was out of step with reality. “Morales conducted hard negotiations with the Germans in order to develop a sovereign and strategic industry that would potentially play a major role in the global market,” Nacif said.
“No one gives up and transfers technology easily, it’s the hardest thing to achieve and develop. Bolivia’s lithium policy has been divergent, instead of convergent policy towards global powers and the role that’s been designated to South American countries as merely raw material providers.”
Bolivia’s deal with ACI Systems hit the snag as the people of the lithium-rich Potosi region took to the streets, demanding an increase in royalties from three percent to 11 percent.
By early October, as the country prepared for the presidential election, the protests in Potosi began to threaten Morales’ political standing. Marco Antonio Pumari, Comcipo’s leader, announced a civic strike and blockade of Potosi demanding the annulment of the agreement with ACL Systems.
The strike turned violent with the police opening fire on protesters, killing at least five people in the first few days. The demonstrations eclipsed the presidential elections and continued for several days after their completion. The demand for new elections began gained momentum on the streets even though Morales had emerged as the winner with a staggering 48 percent of the vote share in Potosi alone.
On November 2, the Morales-led government gave in to the public pressure, revoking the agreement with ACI System. They offered ‘open negotiations’ to Comcipo, hoping that the move would stop the strike and pacify protesters.
Pumari, the civic body leader, demanded the resignation of Morales, setting it as a condition to discontinue the strike.
By then, the coup had begun to unfold. On November 11, the head of Bolivia’s military, General Williams Kaliman, called on Evo Morales to resign from the presidency. A few hours later, Morales did just that. That night, far-right leader Luis Fernando Camacho, a leading force in anti-Morales agitation, entered the presidential palace along with Comcipo head Pumari.
Escorted by the police, they took down the Whipala flag, which symbolises the Andean natives, and photographed themselves placing a bible over Bolivia’s national flag.
A few hours later, Morales announced his resignation with a video streamed from the city of Cochabamba.
After the coup, the stock value of America’s automotive and electric car manufacturer Tesla rose astronomically. Tesla’s production line is massively dependent on lithium.
Almost a week after Morales resigned and fled to Mexico, Uruguay’s ex-president Jose Mujica hinted at Bolivia’s energy reserves, while sharing his views on the president’s departure.
“Bolivia is very rich, it harbours an estimated 70 percent of the raw material needed to make new batteries,” Mujica said. “We all know that there is a global energy shift: I am not accusing anyone, because I have no proof, but I am just suspicious in light of history.”