minerais bo china

Bolivias Energy and MineralResources Trade and Investmentswith China: Potential Socioeconomicand Environmental Effects ofLithium Extraction

Valeria Marina Valle and Hctor Cueto Holmes

In recent years, relations between China and Bolivia have increased. On the one hand,China has scaled up positions as a Bolivian trading partner; in particular, the Asian gianthas continued to be one of the major contributors to Bolivian mineral and energy indus-tries. On the other hand, Bolivia has increased its exportations to China by sellingproductsmainly raw materialsincluding minerals such as raw tin ore, tin, silver, zinc,lead, and antimony and hydrocarbons and lithium carbonate, used to produce electricvehicle batteries. The fact that Bolivia is increasing its mineral sales to China could beconsidered good news; Bolivia is rich in natural mineral and energy resources, but it is acountry with poorly distributed wealth, and most of its indigenous and poor populationis located in the Potos region, where lithium is being extracted. This article will shed lighton the potential negative socioeconomic and environmental effects that lithium extractionmay have on these communities.

En los ltimos aos, las relaciones entre China y Bolivia se han incrementado. Por un lado,China ha escalado posiciones como socio comercial de Bolivia; en particular el giganteasitico ha impulsado las industrias energtica y minera de Bolivia. Por otra parte, Boliviaha incrementado sus exportaciones a China, bsicamente como proveedor de materiasprimas, incluyendo minerales, como: mineral de estao crudo, estao, plata, zinc, plomo,antimonio; hidrocarburos y carbonato de litio, utilizado para producir bateras de carroselctricos, entre otros usos. El hecho de que Bolivia est incrementando sus ventas deminerales a China podra considerarse una buena noticia para ese Estado; sin embargo,aunque Bolivia es un pas rico en recursos energticos y mineros, tambin es un pasdesigual. La mayor parte de la poblacin indgena y pobre habita en el Departamentode Potos, de donde se extrae el litio. Por lo tanto, este artculo tiene como objetivo develarlos efectos potencialmente negativos que podra causar la extraccin de litio en lascomunidades locales, tanto a nivel social como ambiental.

Key words: Bolivia, China, energy, minerals, lithium, indigenous people, poverty, inequality, unbal-anced terms of trade

Latin American PolicyVolume 4, Number 1Pages 93122 2013 Policy Studies Organization. Published by Wiley Periodicals, Inc.

. . . President Evo Morales signed an agreement . . . that paves theway for the acquisition of a US$300 million Chinese telecommu-nications satellite, the latest sign of deepening ties between the resource richAndean country and commodity-hungry China (Garca, 2010).

The stark white landscape of the Salar de Uyuni in the Potos department ofBolivia is punctuated only by pink flamingos and salt pyramids being slowlyshoveled and loaded onto llamas by the Quechua Indians. It is an unlikely placeto be at the forefront of the future of the worlds energy supply. Yet this remotesalt flat high in the Andes is at the heart of a global battle which captures nearlyevery modern ideological struggle: north vs. south, east vs. west, socialism vs.capitalism, native vs. foreigner, rich vs. poor. What lies beneath the surface herecould turn Bolivia (one of South Americas poorest countries) into the SaudiArabia of the 21st century (Neumann, 2010).

In a ceremony at the Quemado Government Palace in La Paz, BoliviasPresident Evo Morales on Oct. 15 signed a new Law of Mother Earth andIntegral Development for Living WellMTDIVB, by its Spanish acronymenacting several measures that had long been demanded by the countryspopular movements. The law . . . creates a Defender of Mother Earth office tohear public complaints related to ecological issues . . . But while Moralesspeaks of the rights of Mother Earth and his concept of Buen Vivirgoodlife or living well, portrayed as a fundamental righthis Vice President lvaroGarca Linera employs different rhetoric, speaking of a program of Andeancapitalism and the need for an industrial leap. In comments after the signingof the MTDIVB, he emphasized that it should not slow industrial developmentand resource exploitation: If we have to produce, we have to produce; ifwe have to extract some mineral, we have to extract it, but finding an equilib-rium between the satisfaction of needs and protecting the Mother Earth (WorldWar4 Report, 2012).

In recent years, and especially since China became a member of the WorldTrade Organization (WTO),1 Latin America has emerged as an increasinglyimportant partner2 of the Asian giant. It has also been stated that the growinginflux of Chinese wealth has helped Latin American nations to weather therecent financial crisis and expand their access to global markets (Kelly, 2011).However, in a continent with the most unequal income distribution in theworld, and where, according to UN figures, approximately 34% of the popula-tion (189 million people) still lives on less than US$2 a day (ECLAC, 2009),which does not meet basic needs, such as education, health, housing, and infra-structure, it is important to analyze who these relations with the Chinese affectlocally.

In the case of Bolivia, relations with China have increased over the last decade,especially in the energy and mineral sectors. Whereas in 2000 China was Bolivias18th exporting partner, by 2009 it had reached 11th place, and in 2011 it rose toeighth (CEPAL, 2011; ECLAC, 2012). The purpose of this article is to explore theevolution of trade relations; analyze what the most important traded goods are,especially in the mining and energy sector; and predict the behavior of bilateralinvestment, commercial trends, and terms of trade. This article also aims toexplore to what extent increases in the extraction and trade of minerals andenergy resources sent to China would affect Bolivian indigenous communities. In

94 Latin American Policy

particular, it analyzes socioeconomic and environmental effects linked to theextraction of lithium.

In the first part of the article, a contextual framework identifies the majorcharacteristics of Bolivia as a country rich in natural resources and immersed inpoverty and inequality. This section offers a geopolitical and social panorama ofthe regional division in the country. A theoretical framework is introduced toexplain certain basic features of BoliviaChina relations. Basically, they areframed in terms of relations among nation-states pursuing their national interestin an anarchic system, but they are also featured as unequal and between admin-istrations that, although both contestant of the Washington Consensus, reflectsome differences. The second section analyzes the evolution of trade flowsbetween Bolivia and China from 1998 to 2011 and identifies the main productstraded, especially in the energy and mineral sectors, including lithium. Here,unbalanced terms of trade are evidenced. The third section is devoted to theanalysis of Chinese interest in the extraction of Bolivian lithium and its potentialsocioeconomic and environmental consequences for local communities. Thethird section is divided into subsections, including governmental planning forlithium industrialization and the interests of foreign companies in investmentsand extraction of this mineral. Social and environmental effects are analyzed.Conclusions follow to indicate that, considering that the lithium industry hasrecently started being developed, it is still too soon to establish accurate predic-tions. Current data may be analyzed to predict that there would be certainpositive and many negative socioeconomic and environmental implications oflithium extraction in local communities. At the end of the article, questions forfurther research on the topic are presented.

Contextual Framework: Featuring Bolivia as Both a Poor andRich Country

Bolivia is the poorest country in South America, with approximately 60% of thepopulation of 9.1 million living in poverty (New York Times, 2011). The country isnot only the poorest of its subregion, but also the most unequal. According to datafrom the CIA World Factbook (2012), Bolivia occupies the eighth place in the worldout of 136 countries in the Gini index,3 which measures the distribution of familyincome, with a score of 58.2/100. Table 1 illustrates the 20 least-equal countries inthe world. Latin America and the Caribbean is the least-equal region in the world,and Bolivia is the least-equal country in this region, together with Haiti.

Bolivia is divided geographically in economic and social terms. The fourrichest departments are in the east and south, in a zone called la Media Luna (orHalf Moon). This denomination is due to the shape of these four rich depart-ments: Pando, Beni, Santa Cruz, and Tarija (Figure 1). The elite of Europeandescent and upper classes are based in these lowlands, mainly in the city of SantaCruz.4 In the western part of the country, where the Andes mountain range islocated, the lower classes and indigenous communities have a strong presence. Inthis area, between the departments of Oruro and Potos, the Uyuni salt flat islocated, where lithium is extracted. The Bolivian west is poor but rich in mineralresources. This equation is prone to conflicts where the local indigenous commu-nities are vulnerable.

Bolivias Energy and Mineral Resources Trade and Investments with China 95

Historically, the white elite dominated the executive power, until December2005, when Bolivians elected Movement Toward Socialism (MAS) leader EvoMorales as president with a wide margin. Morales is of Aymara descent and wasthe first indigenous Bolivian president. He intended to empower the poor, indig-enous majority, but tensions between social classes have not disappeared. On thecontrary, they have been exacerbated between the Amerindian populations of theAndean west and the nonindigenous communities of the eastern lowlands (CIAWorld Factbook, 2012). In 2006, Morales nationalized the hydrocarbon industry,and since then, the state has reinforced control of its strategic resources.

On January 25, 2009, Bolivians voted in a referendum to change the constitu-tion. President Morales won a clear victory. The yes corresponded to 61.4% ofthe vote, versus 38.6% for the no. The results brought a no victory in the fourdepartments of the Half Moon. The yes won the fewest number of votes in Beni(32.4%) and Santa Cruz (34.7%), the two departments whose prefects have mostopposed the new constitution. The prefect of Santa Cruz threatened to ignore thenew constitution and launch a campaign of civil disobedience if the presidentrefused to negotiate how the new provisions would be applied in the eastern partof the country. The prefects of Beni and Tarija have also supported this position(Crabtree, 2012).

This opposition to Morales from the eastern lands is not new. In 2008, Boliviansheld a recall referendum in which they had to vote yes or no to the continu-

Table 1. Least-Equal Countries in the World (Gini Index)

Rank CountryDistribution offamily income

Date ofinformation

1 Namibia 70.7 20032 South Africa 65 20053 Lesotho 63.2 19954 Botswana 63 19935 Sierra Leone 62.9 19896 Central African Republic 61.3 19937 Haiti 59.2 20018 Bolivia 58.2 20099 Honduras 57.7 2007

10 Colombia 56 201011 Guatemala 55.1 200712 Thailand 53.6 200913 Hong Kong 53.3 200714 Paraguay 53.2 200915 Chile 52.1 200916 Brazil 51.9 201217 Panama 51.9 2010 est.18 Mexico 51.7 200819 Papua New Guinea 50.9 199620 Zambia 50.8 2004

Source. Based on data from CIA World Factbook (2012).


ation of the president, vice president, and local prefects in power.5 Table 2 illus-trates that, in the Media Luna, Morales had less support than in the westerndepartments.

Table 2 shows that, with the exception of the department of Chuquisaca,support for Morales increased in all departments and at the national level from2005 to 2008. The president has a higher percentage of acceptance in the westernhighlands, where indigenous communities are located.

Because of the majority of support that the president enjoys, in February 2009,the new constitution was passed, giving more power to indigenous communities.

Figure 1. Political Map of BoliviaSource. Elaborated by Abraham Martnez Rocha, based on Maps of World (2012a).


Article 30 states that nations, peasants, and indigenous communities have a seriesof enumerated rights; one of them, expressed in Article 30, number 15, is To beconsulted through pertinent procedures and in particular through their institu-tions, each time prospective legislative or administrative measures may affectthem. In this sense the right of mandatory and previous consultation will berespected and guaranteed, by the State, in good faith and in a concerted way,in regard to the exploitation of nonrenewable natural resources in the territorythey inhabit. (Bolivia, Constitucin Poltica del Estado, 2009, p. 3). Chapter 4 of thenew constitution is dedicated to Mining and Metallurgy, in which Article 369indicates that

I. the state would be responsible for the mineral earths riches placed at theBolivian soil and subsoil, whichever its origin, and their application will be regu-lated by law. Productive actors recognized here are the state mineral industry,the private mining industry and cooperative societies; II. Non-metallic naturalresources at salt flats . . . are strategic for the country; III. The direction of miningand metallurgic policy, as well as promotion and control of mining activities, willbe a responsibility of the State and IV. The state will control and acquire all theproductive mining chain developed by titleholders, mining contracts or pre-constituted rights. (Bolivia, Constitucin Poltica del Estado, 2009, p. 30)

The 10 most important changes to the constitution in 2009 were (a) power toindigenous communities, (b) autonomy, (c) land, (d) rights, (e) plural state, (f)resources, (g) religion, (h) reelection, (i) the coca leaf, and (j) access to the sea (BBCMundo, 2009).

Empowerment to indigenous communities could be considered one of themost important aspects of the constitutional reform. Figure 2 illustrates thatAymaras are concentrated in the departments of Oruro and La Paz, the ones thatgave the most support to the president in 2008.

Since its independence in 1825, Bolivia has been a country endowed with richresources and a multiplicity of ethnic groups. This is reflected in the flag, com-posed of three equal horizontal bands of red (at the top), yellow, and green, withthe coat of arms centered on the yellow band. Red stands for bravery and the

Table 2. Evo Morales Victories: A Comparison

Depart. (% of Pop.) 2005 2008 % change

National Results 54% 65% +11%La Paz (28%) 67% 82% +15%Santa Cruz (25%) 33% 38% +5%Cochabamba (18%) 65% 69% +4%Potos (8%) 58% 74% +16%Chuquisaca (6%) 54% 48% -6%Tarija (5%) 32% 50% +18%Oruro (5%) 63% 81% +17%Beni (4%) 16% 41% +25%Pando (1%) 21% 53% +32%

Source. Democracy Center (2008).


blood of national heroes, yellow for the nations mineral resources, and green forthe fertility of the land (Figure 3). In 2009, Morales incorporated a presidentialdecree making it mandatory that a wiphala, a square, multicolored flag represent-ing the countrys indigenous peoples, be used alongside the traditional flag (CIAWorld Factbook, 2012).

There are 35 indigenous communities in Bolivia. In the 2001 national census,most Bolivians identified themselves as indigenous or native30% asQuechua, 25% as Aymara, and 5% as members of other indigenous communities.Thirty-five percent identified themselves as mestizo and 5% as white (Tsolakis,2008). Figure 2 shows placement of indigenous communities on the map of

Uru

Machineri

Cavineo

Cayubaba

YuracarYuqui Paiconeca

Yaminahua

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Yuqui

BOLIVIA

Pacahuara

Ese Ejja

Araona

Chacobo

Tonalla

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Movima

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Moseten

Guarayo

Paiconeca

Chiquitano

Moxeo

Yuracar

Aymara

Ayoreo

Quechua

Guarani

Tlaplete

Weenhayek

Placement- Map

Uru

Chimani

Yaminahua

Pacahuara

Ese Ejja

Araona

Mor

Movima

Quechua

Atroboliviano

Aymara

Guarayo

Chiquitano

Ayoreo

Guarani

Tlaplete

QuechuaQuechua

Weenhayek

Moxeo

Sirion

Leco

Joaquiniano

Canichana

Tonalla

BaureTacana

Chacobo

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Pacahuara

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Moxeo

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Leco

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Canichana

Tonalla

BaureTacana

Chacobo

Moseten

Canichana

Baure

Figure 2. MapPlacement of Bolivias Indigenous CommunitiesSource. Elaborated by Abraham Martnez Rocha based on Culture Potion (2010).


Bolivia. According to data from Minority Rights Group International, indigenouscommunities represent more than 60% of Bolivian population (Minority RightsGroup International, 2012). The World Bank documented that indigenous peoplerepresent a majority of Bolivias population (62%, ~3.9 million people). In ruralareas, 72% of the population speaks indigenous languages, compared with 36%in urban areas. There are 17% indigenous and 83% nonindigenous people inthe lowlands, 67% and 60%, respectively, in the highlands and valleys. BoliviasQuechuas and Aymaras predominantly reside in the highlands and valleys.Between 1997 and 2002, poverty rates decreased slightly, from 75% to 74% forindigenous people and from 57% to 53% for nonindigenous people. Since 2002,rural and urban poverty rates have been much higher among the indigenous thanthe nonindigenous population (86% vs. 74% in rural areas, and 59% vs. 47% inurban areas). Extreme poverty rates also decreased between 1997 and 2002 fornonindigenous people, from 31% to 27%, but remained constant for indigenouspeople at approximately 52%. In rural areas, extreme poverty increased for indig-enous people (from 65% to 72%) but decreased slightly for nonindigenous people(from 53% to 52%). In urban areas, poverty fell slightly for both groups (WorldBank, 2012).

The report from the World Bank, Indigenous Peoples, Poverty and Human Devel-opment in Latin America: 19942004, indicates that the richest 10% of Boliviansconsume 22 times more than the poorest 10%. Almost two thirds of the indig-enous population is among the poorest 50% of the population. The reportstresses, If gains were perfectly distributed, Bolivias indigenous populationwould require about twice as much income per person as the non-indigenouspopulation to escape poverty (World Bank, 2012). These data clearly illustratewhy Bolivia is one of the least-equal countries in the world, but there is evenmore evidence to illustrate this fact. The World Bank Report evidences that onethird of employed indigenous people receive no pay for their work, comparedwith 13% of nonindigenous people. Women do most of the unpaid work. More-over, nonindigenous employed people earn 1,127 Bolivian pesos6 per month,whereas indigenous employed people earn 513 Bolivian pesos per month. Dif-ferences between the rich and the poor are clear if we look at data that showaccess to education. The indigenous population has 3.7 fewer years of schooling(5.9 years) than the nonindigenous population (9.6 years), according to the World

Figure 3. Bolivian flag and wiphala


Bank report. Illiteracy is particularly concentrated among the female indigenouspopulation, affecting one of every four women over the age of 35. In2002, 18% of the nonindigenous population aged 15 or older was in school,compared with 8% of the indigenous population. Dropouts are common, espe-cially among the indigenous population. Consequently, the incidence of childlabor is higher in these communitiesnearly four times as high in indigenousas nonindigenous children. In 2002, 31% of indigenous children aged 9 to 11worked, compared with 8% of nonindigenous children. Health is another aspectthat shows inequality in Bolivia. Approximately 30% of indigenous womendeliver children in hospitals, compared with 55% of nonindigenous women(World Bank, 2012).

Until now, we have focused on the wiphala colors, analyzing the Bolivianpluri-cultural essence and the importance that a president of indigenous descentgives to historically displaced indigenous communities. Below we will focus onwhat the yellow on the traditional flag represents: mineral resources.

Bolivia, a Country Rich in Energy and Mineral ResourcesBolivia is endowed with large reserves of hydrocarbons. Estimations from

January 1, 2012, indicate that Bolivia has 209.8 million barrels of provenreserves of crude oil, occupying position number 59 in the world ranking. Asfor natural gas, it is the 37th world producer and has proven reserves that reach281.5 billion m3, occupying position number 42 in the world ranking (CIAWorld Factbook, 2012). Moreover, Bolivia is considered one of the regionalpowers in energy, with the second-largest natural gas reserves in SouthAmerica. This endowment of gas has historically provoked conflicts over theexploitation and export of the resource. Indigenous groups have traditionallyadvocated for state control of the reserves, which they consider to be Boliviasonly remaining natural resource. Before Morales took office, the politicalfallout from the issue had helped to topple two presidents and had led to callsfor regional autonomy, including the prosperous oil-producing Santa Cruz(BBC News, 2012). A clash of interests could also develop between indigenouscommunities and the actors who will extract lithium at the Uyuni salt flat, aswe will address later in this article.

Most of Bolivias mineral resources are found in regions where most indig-enous communities reside. Figure 4 illustrates where these mineral resources arelocated, and Figure 2 above shows the location of communities.

Figure 4 illustrates that, in Potos department, where lithium is located, otherminerals are also being extracted, such as lead, silver, and tin. As shown inFigure 2, the community that could be most affected by the extraction of theseminerals is the Quechua, who are aware of the lithium potential. FranciscoQuisbert, the 64-year-old leader of Fructas, a kind of trade union of salt gatherersand quinoa farmers on the edge of the Uyuni salt flat notes that, We know thatBolivia can become the Saudi Arabia of lithium. We are poor, but we are notstupid peasants. The lithium may be Bolivias, but it is also our property(Neumann, 2010). This quote appears to show that Quechuas are conscious ofhow lithium could bring monetary resources to the community, but it is not clearhow these resources would be administered or to whom they would belong: the


Bolivian state or the local community. Also, foreign investors, mainly Japanese,South Koreans, and Chinese, could profit from it once they invest together withthe national company that would start operations in 2014. We will attempt toanswer these questions, but first, we will frame ChinaBolivian relations bypresenting different theoretical perspectives.

Theoretical Framework of SinoBolivian RelationsRelations between Bolivia and China are interstate. Political realism is a useful

theory that explains that nation-states are the most important actors in the inter-

Figure 4. Mineral Map of BoliviaSource. Elaborated by Abraham Martnez Rocha, based on Maps of World (2012b).

References: Ag: Silver; Mn: Manganese; Pb: Lead; Sn: Tin; Zn: Zinc.


national system. The concepts of balance of power, anarchy, and national interest,taken from political realismthrough the work of Hans Morgenthau in1948can be considered to analyze competition between China, South Korea,and Japan in Bolivia. Classical realism states that the international system isanarchic because there is not a supranational authority that creates internationalrules that are binding for all nation-states. Every state pursues its own nationalinterest in terms of power (Morgenthau, 1948). Structural realismespeciallyaccording to the book written by Kenneth Waltz in 1979explains that, whenthere is a change in a states endowment of resources, it provokes a change in theinternational balance of power. In the case of China, its rapid economic growthhas been transforming the Asian giant into a superpower, especially since itbecame a member of the WTO. In realistic terms, China is pursuing its nationalinterest, ensuring the provision of raw materials to fuel its vertiginous growth.

Classical and structural realism offer a useful tool to analyze Chinas increas-ing world presence but do not explain that relations between nations can beunequal. To analyze this feature, other theoretical perspectives should be takeninto consideration. Ral Prebisch and other proponents of economic structural-ism7 help to enlighten unbalanced terms of trade. The former director of theEconomic Community for Latin America and the Caribbean (ECLAC), believesthat, in Latin America, the schema of the international division of labor, where thespecific task of the region, as part of the periphery of the world economic system,was to produce raw materials for the great industrial centers, has been provenwrong. Facts show that

the enormous benefits that derive from increased productivity have not reachedthe periphery in a measure comparable to that obtained by the peoples of the greatindustrial countries. Hence, the outstanding differences between the standards ofliving of the masses of the former and the latter and the manifest discrepanciesbetween their respective abilities to accumulate capital . . . Thus there exists anobvious disequilibrium, a fact which, whatever its explanation or justification,destroys the basic premise underlying the schema of the International division oflabor. (Prebisch, 1950, p. 1)

In the case study analyzed here, Bolivia exports energy and mineral rawmaterials to China and imports manufactured goods, as will be explained indetail below. This situation brings about a clear consequence; Bolivia suffersunbalanced terms of trade, which could be even deeper in the coming years asthe level of SinoBolivian exchange increases. Moreover, Bolivia is one of theleast-equal countries in the world, so the benefits of growing exchanges withChina may not be allocated to poor indigenous communities, especially to thosethat live where energy and mineral resources lie.

Llistar Bosch deepens the analysis of Structuralists and points out that, forthis school of thought, exogenous factors condition the underdevelopment ofperipheral countries. In particular, he mentions the effects of internationaltrade, the international financial system, and the international productivesystem, but also political relations such as the alliance between the interna-tional capital of northern countries and the elites of the countries of the south.In the case of China, its position seems to be contradictory. On the one hand,the country presents itself and is seen through the eyes of the world as a risingsuperpower.8 On the other hand, China is considered a country from the south,


or as an emerging economy. Its membership in the group of countries of Brazil,Russia, India, and China (BRICS)9 is an example of this. China is involved inmany southsouth cooperation agreements.10 It approaches Bolivia presentingitself as a complementary southern partner interested in building horizontalrelations. For example, during the visit of President Morales to China in August2011, Chinese president Hu Jintao affirmed, China is ready to work withBolivia to carry out comprehensive and mutually beneficial cooperation so as tobring benefit to the people of both countries (China, Ministry of ForeignAffairs, 2011). These words reveal that the Chinese president is promoting abilateral relationship between equal partners whose populations would bothbenefit from bilateral relations.

Although the ideal situation derived from SinoBolivian relations would be amutual benefit for both, we argue that, at a discourse level, the elites may reachagreements that may not necessarily benefit local communities. Llistar Bosch, inhis book Anticooperacin, explains one of the causes of anticooperation practicesbetween northern and southern countries. Northern countries need to guaranteeaccess to resources and capacities (Llistar Bosch, 2009, p. 13). He mentions 15categories to describe what the north wants of the south: (a) oil, gas, and coal; (b)strategic minerals; (c) fertile land; (d) wood, fisheries, exotic animals, and otherresources; (e) industrial services related to energy and water springs; (f)biodiversity and ecosystem services; (g) spaces to expatriate waste materials; (h)tourist resorts; (i) cheap and intensive labor; (j) cheap local services; (k) emigrantqualified labor; (l) access to new consumers; (m) access to new acquisitions; (n)tax havens; and (o) territory (Llistar Bosch, 2009, p. 66). Bolivia falls into thesecond category. China is mainly interested in a strategic resource, lithium, as wewill explain in detail below. According to Llistar Bosch, strategic minerals arebasic for a wide range of technologies and productive processes in differentfields, including transportation. Controlling them is a synonym of power. Mul-tinational corporations create a geopolitical northsouth game design to guaran-tee access to these strategic resources. Multinational corporations need vastquantities of materials and energy; although they cannot use military force, theyuse their economic power. Consequently, they seek state protection in countrieshighly penetrated by these companies. Once these companies detect externalresources and their location, they penetrate producing countries, they abandonwastes or provoke negative environmental side effects, and they expatriateresources (Llistar Bosch, 2009, pp. 69, 77).

Finally, in the context of SinoBolivian relations, it is worth noting that bothcountries have something in common, especially since Morales took power. Bothare against the Western way of life. Although this can be found especially at adiscourse level, the fact is that both have a common rival: the United States.Before becoming president, Morales was a trade union leader in the Cochabambaregion, where the coca leaf is produced. The United States has conditionedinternational cooperation with Bolivia on the eradication of coca plantations.This situation provoked a clash between the Morales administration and thehegemonic power. Tensions peaked in 2008, when Morales expelled DrugEnforcement Administration (DEA) agents and the U.S. ambassador, PhilipGoldberg, arguing that they were conspiring against his governmentchargesthat the United States has denied (BBC News, 2011).


The Bolivian and Andean concept of living well11 opposes the Westerncapitalist individualistic logic. It is an indigenous proposal that refers to theplenitude of life and to social, economic, and political well-being. It is based onreciprocity, cooperation, and complementarities. It yearns for a harmonic lifebetween human beings and nature. This Andean philosophy resists the idea ofliving better because it implies that one group or individual lives better at theexpense of another (Llistar Bosch, 2009, pp. 4546).

As Fernndez Jiliberto and Hogenboom explain,

Although the trends of rising China and new south-south relations have comeabout in the context of neoliberal globalization and involve developing economiesthat have been profoundly liberalized, these trends imply important criticism ofthe dominant neoliberal development model . . . China never aimed at a freemarket and a small state and economic liberalization has been as central to Chinasmiraculous growth as has been the strong state and its active role. This differencehas been crucial as shown by the wide gap between the GDP growth of China andany developing country or transition economy that reformed its state andeconomy according to the lines of the Washington Consensus. (Fernndez Jiliberto& Hogenboom, 2012, p. 26)

Although Bolivia and China share the fact that their economic philosophies arecurrently different from the precepts of the Washington Consensus, BolivianChinese trade relations have grown faster than BolivianU.S. trade relations, butthe United States is still a more-important trading partner for Bolivia than China.The next section will illustrate this, but first, we need to put the evolution ofChineseBolivian relations into context to provide some insight into Chinasgrowing interest in Bolivias mineral resources.

Evolution of ChinaBolivia Relations: From Insignificance toBuilding a Potential Strategic Partnership

Diplomatic ties between the two countries began in 1985,12 with relationsestablished mainly in economic and cultural areas. Over time, relations expandedto other aspects, such as military, transport, infrastructure, raw materials, andeducation (China, Ministry of Foreign Affairs, 2012).

During the last decade, trade relations have increased, but China is still not oneof Bolivias most-important trading partners, although this situation may bereversed in the near future. Bolivia at is not currently the most important Chinesepartner in the subregion. There are other countries where Chinese relations havebeen stronger, as will be shown below.

Bolivias relevance to China has been growing because of some key aspects ofthe bilateral relationship. In the area of trade, relations are still unbalanced andare established, as Garca notes, between the resource-rich Andean country andcommodity-hungry China (2010). China is interested not only in building rela-tions with Bolivia in terms of an exchange of raw materials for final goods, butalso in establishing financial relations, offering loans to Bolivia. For example,Bolivia received a loan for US$67 million from China to upgrade infrastructure inthe Oruro region and a transportation equipment loan worth US$2.6 million forthe Bolivian armed forces. Moreover, the Bolivian government was planning touse a loan for US$60 million from China to purchase natural gas drilling rigs


(Garca, 2010). These loans focus mainly on sectors where the Chinese have adirect interest, basically in building infrastructure to extract strategic mineral andenergy resources.

BolivianChinese Trade RelationsBolivia has not been as important a trading partner for China as other Latin

American and Andean countries, especially Peru, as will be explained below indetail. Nevertheless, SinoBolivian trade has been increasing exponentially sinceChina entered the WTO. Trade is expected to grow in the near future, mainlybecause of Chinese interest in Bolivian energy and mineral resources, basicallylithium. Tables 3 and 4 and Figures 5 and 6 compare of Bolivian trading partners,where China has been playing an increasing role.

Table 3 illustrates that Bolivia has been steadily increasing its trade with China,from no exports in 1998 to US$168 million worth in 2010. Nevertheless, Boliviahas had other major trading partners such as the Southern Common Market(MERCOSUR), the European Union, the Andean Community, and to a lesserextent, Japan. Figure 5 illustrates that China still receives a small portion ofBolivias exports.

Table 4 shows that China has been increasing its trade with Bolivia over thelast 12 years. These figures are similar to those shown in Table 3, but Chinahas surpassed Japan in the volume exported to Bolivia. Figure 6 illustrates thatBolivia has other suppliers that are more important than China, mainlyMERCOSUR countries. The countrys main import partners are Brazil, Argen-tina, the United States, Peru, and China.

Tables 3 and 4 and Figures 5 and 6 show that China has not positioned itself asBolivias most important trading partner. Nevertheless, commercial relations areexpected to grow between these two countries. ECLAC statistics show that Chinahas moved up in the ranking of Bolivias trading partners (CEPAL, 2011, p. 19;ECLAC, 2012, p. 31). The Andean country is not the only case. Table 5 shows thatChina has been moving up in the ranking of many Latin American countries,especially in imports. Brazil, Costa Rica, Peru, Panama, and Venezuela are par-ticularly striking. China represented the 18th most important country for Boliv-ias exports; in 2009, China moved up to reach position number 11, and two yearslater, it occupied eighth position. As for Bolivias imports, in 2000 China repre-sented its seventh partner, in 2009 the fourth, and in 2011 the third. These figureshelp us to predict that China will keep increasing participation in Latin Americastrade, and Bolivia will not be the exception to the rule.

According to the Instituto Boliviano de Comercio Exterior (IBCE), Boliviaexported US$333 million to China in 2011 and US$209 million in 2010, whichmeans Bolivia increased its sales to China during this period. Bolivias importsfrom China reached US$946 million in 2011, whereas the previous year, Boliviasimports from China were only US$653 million (IBCE, 2012a). We can predict thattotal trade between Bolivia and China will increase in 20122013. Nevertheless,the increase in Bolivian raw materials to China will be subject to internationalprices, mainly for minerals such as silver, tin, zinc, and lead. Prices of commodi-ties are volatile, so it is not easy to predict whether the price level will continuefor a long period of time.


Tab

le3.

Bol

ivia

sE

xpor

tsto

Mai

nT

rad

ing

Par

tner

s(m

illi

ond

olla

rs)

Des

tin

atio

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9920

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

10

Tota

lint

ra-C

AN

*31

930

131

536

839

243

850

730

225

929

650

750

764

4C

olom

bia

8713

519

619

213

915

812

017

410

713

020

822

328

3E

cuad

or80

716

103

145

24

815

1013

Peru

140

7561

6874

9013

811

212

315

828

427

434

8V

enez

uela

311

1952

9817

517

624

413

2527

5869

80C

hile

3429

3130

3344

5134

5352

5758

75M

ER

CO

SUR

224

200

299

381

368

566

864

1,24

81,

768

1,82

83,

046

1,63

02,

503

Arg

enti

na14

279

6167

2857

131

245

293

201

135

193

246

Bra

zil

3041

166

300

337

504

714

990

1,44

81,

601

2,85

81,

417

2,23

3Pa

ragu

ay2

22

53

418

1325

2551

1822

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guay

5078

699

11

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747

336

821

622

026

439

933

042

650

260

560

082

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77

208

613

2043

101

7281

139

Uni

ted

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345

835

418

819

223

735

928

034

334

347

847

562

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87

820

2127

3039

5955

4557

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opea

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311

288

252

140

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316

315

016

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037

830

339

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174

264

226

192

262

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640

551

657

764

466

368

537

546

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325

1,40

51,

475

1,35

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375

1,68

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254

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3,48

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751

5,45

37,

036

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Tab

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Bol

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sIm

por

tsfr

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ain

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din

gP

artn

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(in

mil

lion

dol

lars

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0420

0520

0620

0720

0820

0920

10

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lint

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*17

415

717

417

915

816

920

826

129

433

452

446

459

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olom

bia

4640

4848

4348

6157

6472

112

9912

6E

cuad

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78

67

710

1210

1524

1215

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9589

102

108

9510

512

715

221

024

738

835

344

8V

enez

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324

2115

1714

910

399

1110

92

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142

132

170

145

126

125

111

162

315

330

461

316

363

ME

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753

563

361

172

365

380

593

31,

219

1,49

71,

971

1,69

12,

139

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enti

na23

424

831

730

830

928

429

539

141

851

066

763

881

0B

razi

l25

327

428

427

639

234

848

751

476

393

61,

249

1,00

91,

279

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guay

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372

356

352

311

392

301

374

585

555

697

Can

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2816

1520

138

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2516

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627

678

454

314

310

310

261

324

237

305

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558

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3845

4838

3335

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3953

112

6887

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233

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161

153

144

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224

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301

388

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7086

9687

108

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6410

619

614

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490

156

106

5810

184

105

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4470

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294

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298

276

277

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462

2,10

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91,

831

1,69

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887

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544

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55,

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2006

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not

incl

ude

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ce.B

ased

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(201

2).


Figure 7 shows the increase in total Bolivian trade relations with China in the20102011 period.

According to Zona Franca, during 2011, Bolivias trade increased with China.The latter sold US$385 million and bought US$275 million, mainly from themineral sector. Chinas exports to Bolivia grew 45.6% (Zona Franca, 2012). Datafrom IBCE show that, during the third quarter of 2012, the five most importantBolivian export destinations were Brazil (33% of total Bolivian exports), Argen-tina (17%), the United States (14%), Peru (5%), and Japan (4%); together, these fiveaccounted for 71% of Bolivian exports. The five most important Bolivian importpartners in September 2012 were Brazil (18%), Argentina (14%), China (13%), theUnited States (10%), and Peru (7%), representing 62% of Bolivian imports. InSeptember 2012, Bolivia had a commercial surplus with three of its partners:Brazil (US$1.517 billion), Argentina (US$661 million), and the United States(US$543 million). It had deficit with China (US$524 million), Mexico (US$131million), and Venezuela (US$127 million) (IBCE, 2012b). Bolivia had a surpluswith the United States and a deficit with China. We can predict that this trend willcontinue in the near future; Morales will continue strengthening ties with theAsian giant and will keep diminishing imports from the United States.

It is worth exploring what products are most traded between Bolivia andChina to draw conclusions about the bilateral commercial relationship. In 2011,

Figure 5. Bolivias Exports to Selected Trading Partners (19982010)(in million dollars)

Source. Own elaboration, based on data from CEI (2012).


Figure 6. Bolivias Imports from Selected Trading Partners (19982010)(in million dollars)

Source. Own elaboration, based on data from CEI (2012).

Table 5. Countries of Latin America: Chinas Rank as a Trading Partner,2000, 2009, and 2011

Exports Imports

2000 2009 2011 2000 2009 2011

Argentina 6 4 2 4 3 2Bolivia 18 11 8 7 4 3Brazil 12 1 1 11 2 2Chile 5 1 1 4 2 2Colombia 36 6 4 9 2 2Costa Rica 30 2 13 15 3 2Ecuador 18 16 16 10 3 2El Salvador 49 36 44 23 4 4Guatemala 43 25 28 19 3 3Honduras 54 11 11 21 6 5Mexico 19 7 3 7 2 2Nicaragua 35 27 20 20 4 3Panama 31 36 31 25 2 1Paraguay 15 15 23 3 1 1Peru 4 2 1 9 2 2Uruguay 4 4 2 7 3 3Venezuela 35 2 2 18 3 2

Source. Based on CEPAL (2011, p. 19); ECLAC (2012, p. 31).


Bolivia exported 66 products to China, of which more than 90% were minerals,with a total of US$333 million (IBCE, 2012b). During 2009, Bolivia started to showrecord figures in its exportations to China by selling products, mainly raw mate-rials, such as raw tin (US$33 million), mineral tin (US$26 million), silver (US$21million), zinc (US$19 million), lead (US$9 million), and antimony (US$2 million)(IBCE, 2010). During the last semester of 2010, Bolivian exports reached theirpinnacle, with a record US$208 million thanks to hydrocarbon and mineralexports, which together make up 87% of traditional and nontraditional sales inthe country (INE, 2011). According to IBCE, in 2012, the 10 main productsexported from Bolivia to China were commodities: silver ore and concentrates(30.7%), tin (20.3%), tin ore (17.9%), zinc ore (11.2%), lead ore (6.9%), crust leader(2.4%), serrated wood (1.4%), waste copper (1.3%), natural borates concentrates(1.0%), and other products (5.2%). Bolivias top 10 import goods were airplanesand aircraft (4.5%), automated data processing machines (3.6%), piston-enginemotorbikes (3.2%), transmission equipment (2.2%), drilling machines (1.9%),base station (1.4%), polyester synthetic fibers (1.3%), insecticides (1.3%), herbi-cides (1.1%), and automobiles (1.7%) (2012b). This shows that Bolivia had a tradedeficit with China of US$444 million in 2010 and US$613 million in 2011. It alsoreveals that terms of trade between the two countries are unbalanced, withBolivia exporting basically raw materials and China, manufactured goods.

Bolivias Emerging Lithium IndustryLithium has slowly but steadily gained importance as an industrial mineral.

The lithium industry has experienced substantial change, with worldwidedemand doubling in the last decade. The production of lithium-based products isconcentrated in four countries that make up approximately 94% of global lithiumproduction: Argentina (13%), Australia (25%), Chile (44%), and China (12%)

Figure 7. Bolivian Exports and Imports with China (20102011)(in million dollars)

Source. Own elaboration, based on data from IBCE (2012).


(Colnot, 2010, p. 12). Increase in the demand for this mineral translates into abigger effort to extract as much as possible to sustain market stability. The largestlithium reserves can be found in Latin America in the Lithium Triangle (the saltflats of Atacama in northern Chile, Hombre Muerto in Argentina, and Uyuni inBolivia), where 85% of global reserves are concentrated (Cochilco, 2009, cited inColnot, 2010, p. 1).

The importance of the Uyuni salt flat in Bolivia has increased more than theother two, thanks to recent studies that show it possesses an estimated9,000,000 tons of lithium, approximately 43% to 45% of the worlds reserves(Jaskula, 2012, p. 94). These numbers, along with the fact that Bolivia juststarted its national project for the extraction and industrialization of lithium in2012, have managed to draw attention from some of the biggest producers oflithium-based products in the world, such as China (Brown, 2010). Neverthe-less, the Bolivian government should be conscious that it would compete withother countries for lithium extraction and production, especially with Argentinaand Chile. Those two nations are geopolitically better endowed than Bolivia,which does not have access to the sea. Bolivia has historically claimed access tothe Pacific Ocean since the War of the Pacific in the late 19th century, whenChile won those territories. The two countries have not had diplomatic rela-tions since this conflict. Chile, which has a vast coast on the Pacific Ocean, hasalready signed a Free Trade Agreement with China so it could be more attrac-tive to the Chinese. Argentina has exponentially increased its trade withBolivia, as shown in Table 5. This table illustrates that, in terms of exports,China was Bolivias eighth partner in 2011, Argentinas second, and Chiles first.In terms of imports, China is Bolivias third partner and is the second partnerfor Argentina and Chile. The largest lithium-producing company in the worldis the Chilean Sociedad Qumica y Minera SA (SQM) (Sociedad Qumica yMinera, 2012), which has strong links with China and would undoubtedly beone Bolivias biggest competitors.

Lithium is an alkaline metal that has multiple uses; it is employed directly inthe glass and ceramic industries, as cathodes and electrolytes in secondary bat-teries, for the construction of airplanes as aluminum alloys, and in the pharma-ceutical sector for treating depression. Lithium also has the lightest weight,highest voltage, and greatest energy density of all metals (Van Shcalkwijk &Scrosati, 2002), characteristics that give it a renowned place in the technologicalenergy sector in batteries. Currently, because of the increasing demand for por-table technology that requires efficient battery life, battery production hasbecome the second-most-important use for the metal (RodiniaLithium, 2009).

Lithium-ion batteries are mainly used in portable electronics (e.g., laptops,cameras, smartphones, MP3 players) but are also used in the growing electricand hybrid vehicle industry, which could grow to 2,870,000 units worldwide in2017 (Addison, 2012) and where countries such as China and South Korea excelas producers.

With the world changing to more-efficient and more-ecofriendly energysources, investment in the production of technology such as lithium-ion batteriescan be seen as a promising venture for practically any country, but not everycountry has the technical ability or resources to tackle this endeavor. Chinapossesses the technology. In the next section, we will explore how the Asian giant


is entering the industrialization project of lithium in Bolivia and analyze potentialconsequences for Bolivia in the short and long run.

Government of Bolivias Lithium PlanThe national strategy monitored and implemented by Bolivia for the proper

construction of a lithium industry consists of three phases being executed undernational management: economic exploitation, industrialization, and commercial-ization. The first step was set into motion in August 2012, when President EvoMorales announced the inauguration of a semi-industrial plant for the produc-tion of potassium chloride in the Uyuni salt flat (HoyBolivia.com, 2012). The lasttwo steps are set to be focused on the formal production of items such as batteriesand could be available for joint ventures with foreign companies.

Once the initial phases are settled, Bolivia plans to search for minority partnersthat would be able to provide technology for the processing of the mineral tomanufacture products with aggregate value such as batteries, alloys, and poly-mers (HoyBolivia.com, 2012).

During the planning stages of the industrialization of lithium, PresidentMorales affirmed that any investment agreement and cooperation with anyforeign company or government would be pursuable only if they were willing towork under the demands of the Bolivian state. Not only would the Boliviangovernment seek to use its own means to exploit lithium, but also, in the longrun, it would support the national development of lithium ion batteries and,eventually, automobiles (Wright, 2010, cited in Strbele-Gregor, 2012, p. 30). Webelieve that, at present, the Bolivian government does not have sufficient admin-istrative, financial, and technological resources to efficiently exploit the resourcesfound in the Uyuni salt flat. Still, the Bolivian government has made someprogress by officially initiating the industrialization project in August 2012. TheBolivian government has implemented the first two phasesextraction andtransformation of carbonatewith its own financial resources (HoyBolivia.com,2012).

In October 2010, the Morales administration announced it would investUS$902 million for this project as a whole. For the industrialization of lithiumcarbonate and its derivatives, the sum of US$485 million has been earmarked(Comibol, 2010/La Razn, 2010, cited in Strbele-Gregor, 2012, p. 31). We can inferthat the final objective of said industrialization is to generate income for theBolivian state. According to calculations from the government, the lithium car-bonate that results from the industrialization announced by president Morales in2010 would generate income of US$2.6 trillion (Carvajal, 2012, p. 11). We can inferthat this would be a positive aspect derived from the lithium extraction inBolivia, but it is too soon to predict whether these profits would be for theBolivian national government or the local communities in the Potos department,where lithium would be extracted.

Bolivia also seeks to enter the lithium market by exporting the mineral and itsbase products, such as batteries, by 2016, with an initial offer of 5,000 annual tonsof lithium carbonate and a similar quantity for ion-lithium cathodes (Quiroga,2012). By the end of the decade, lithium carbonate production in the Uyuni saltflat could reach 30,000 tons; the export of that quantity at current market pricescould translate into an estimated income of US$140 million for the Bolivian state


(Quiroga, 2012). If the Bolivian lithium industry succeeds as the governmentintends, this could mean a major boost in the quality of life of Bolivians ingeneral; with more resources, it would be easier to address the problems of animpoverished and unequal country. It may also be able to create new jobs indifferent technological and industrial sectors in the long run, and it could meanan increase in Bolivian companies in foreign lands. We could expect the rise of awork force that could benefit from the offshore demand for products such asion-lithium batteries. In other words, if the lithium industrialization project ofBolivia is successful, it could be possible for Bolivia not only to export products,but also to share the expertise of the manufacturing process with other countries.

For this to be possible, the industry first needs to be started. Considering theBolivian context, it is probable that the task of industrializing lithium will not bea reality without foreign help. Cooperation agreements with foreign companiescan be established for the production phase as long as they follow the will of theBolivian state and could bring the technology, capital, and infrastructure neces-sary for such an endeavor. In the next section, we will present some of thecountries that compete with China and are interested in developing Boliviaslithium industry.

Companies and Countries Interested in theBolivian Lithium Industry

Different countries have offered cooperation agreements and investments tothe Bolivian government, but only China, Japan, and South Korea have signedproduction treaties China and Bolivia have increased diplomatic and trade rela-tions, especially from 2010 to 2011. During 2011, Bolivia signed an agreementwith the China Trust Investment Corporation, in which the latter declared itwould form part of the investigation team that the Bolivian government hascreated to boost industrialization of the resources found at the Uyuni salt flats(Zona Franca, 2012). China has also shown interest in other Bolivian sectors. In2011, Bolivia bought six light combat planes for training and airspace control andfor use against drug trafficking. In the telecommunications arena, Boliviaacquired its first satellite, called Tpac Katari,13 through a US$251 million credit.The Chinese company Great Wall Industry Corporation is making the satellitethat will be launched into orbit by the end of 2013 (Nacif, 2012). By March 2013,the Bolivian government, with the help of the Bolivian Space Agency (ABE),intends to send 74 elite professionals to China to be trained in space science, withthe objective of implementing the knowledge gained in the administration of thesatellite, which would be used mainly to bring communication services to 3.3million Bolivians living in rural areas (ABE, 2012) and to support educational andmedical initiatives. Once the satellite is launched, it will have an important effecton Bolivian society, which could look on the Chinese with a benevolent attitude.

On April 12, 2012, the head of the Mining Corporation of Bolivia (Comibol),Alberto Echaz, announced the acquisition of an experimental plant for theproduction of ion-lithium from the Chinese company Linyi Gelon New BatteryMaterials. The plant was bought for US$2.7 million and would be fully opera-tional on the Uyuni salt flats in 2013. The contract signed between Linyi Gelonand the Bolivian government includes the provision of a laboratory and training


of Bolivian technicians by the Chinese (Xinhua, 2012). The fact that Chinese staffwould be responsible for training Bolivian technicians could mean a sort ofdependence on China, not only related to technology surrounding the exploita-tion of lithium and the manufacture of products, but also in terms of know-how.

China faces competition from other Asian countries, especially Japan andSouth Korea. On March 27, 2012, the Korean consortium Kores-Posco signed anagreement with Comibol to study the possibility of installing a lithium cathodeplant to produce ion-lithium batteries by mid-2013 (Xinhua, 2012). Bolivianshave received the Koreans more openly because of their expertise in the pro-duction of hybrid and electric vehicles and ion-lithium batteries. LuckyGoldStar Chemical, the largest Korean chemical company, is considered theglobal leader in terms of production of ion-lithium batteries. According to PikeResearch, this leadership is because the company has a diversified customerbase of international automotive original equipment manufacturers that isexpected to be among the most successful sellers of hybrid and plug-in vehicles(Gartner & Ghon, 2012, p. 3).

The construction of such a plant has been pursued under the joint venturemodality and would require an investment of US$1.5 million (Xinhua, 2012).According to the agreement, Comibol would provide the joint venture with rawmaterials and direct the construction of the site, and Kores-Posco would be incharge of obtaining precursors and sufficient economic backup for the supply ofraw materials. The Bolivian state, through Comibol, and South Korea, throughKores-Posco, would each make an initial investment of US$750,000 (Xinhua,2012).

Other foreigner entities interested in Bolivias lithium industry are the Japa-nese consortium Mitsubishi-Sumitomo (mainly interested in battery production);the French group Bollor-Eramet, which, like the Koreans, is inclined to batteryand even vehicle production; and the Russian, Iranian, and Brazilian govern-ments (Strbele-Gregor, 2012, p. 36). Only Japan and South Korea currentlyrepresent real competition to Chinas stand over the yet-to-be Bolivian lithiumindustry because both countries have been considered to be leaders in the lithiumbattery markets. It could be foreseen that any future agreement would tilt moretoward the benefit of Japanese and Korean companies, but China does not lacktechnological efficiency and appears to be building a stronger diplomatic rela-tionship with the Bolivian government than any other Asian country. Theincreasing interest of these three countries could lead to fierce competition in thefuture over mineral resources in Bolivia, considering the potential that they have,especially in the automotive industry. This potential would also lead to negativeeffects for Bolivia, as we will analyze in the next section.

Possible Social and Environmental Consequences of LithiumExtraction in Bolivia

The Uyuni Regional Peasant Federation was one of the groups that initiallyproposed the industrial lithium-mining project. Most of southwest Potoss indig-enous communities have backed the new lithium industry, considering it aunique opportunity to increase workers incomes and boost the regions devel-opment. At the same time, these indigenous communities near the Uyuni salt flats


are concerned about environmental problems that may arise. They fear, in par-ticular, the potential of a serious water crisis as a result of mining in an areaalready short of this resource for traditional agriculture and herding (MinorityRights Group International, 2012).

It would seem that the Bolivian governments main reason behind the indus-trialization of lithium is to transform Bolivia into a wealthier, more-industrialized country that is able to combat poverty and inequality through themaximum possible benefit of a natural resource that could be launched at peakglobal markets, but Bolivia has a long way to go and faces many technical,socioeconomic, and environmental obstacles that may prevent it from achievingthis goal.

By trying to provide foreign countries with more ecofriendly vehicles thatwould work with ion-lithium batteries, the Uyunis ecosystem could be greatlyaffected. One of the main negative effects that lithium processing could have is agreater water shortage. According to data from 2010, the region faced a droughtthat affected quinoa producers, llama breeding, tourism, and sources of potablewater (Hollender & Shultz, 2010, p. 47). Moreover, data from 2012 indicate thatquinoa production alone has been reduced to 50% as a consequence of thedrought and bad weather in the region (Infoquinua.com, 2012). The possibility ofa heightened water shortage in the region, provoked by the new lithium process-ing plants, could be disastrous for this type of agricultural activity.

Water, air, and ground pollution are other major concerns. Huge quantities oftoxic chemicals would be required to process the estimated 30,000 to 40,000 tonsof lithium per year that the project seeks to extract (Hollender & Shultz, 2010,p. 48). The leakage of such chemicals through leaching, spilling, or atmosphericemissions could put the ecosystem in danger and in turn damage ecotourismsites that help sustain the region economically.

Quinoa producers and tourism operators have expressed doubts about theapparent benefits that the Bolivian government has promised through lithiumextraction. Both groups have argued that such benefits might prove irrelevant forlocal needs and could damage the agriculture and tourism industries of theregion. Moreover, the laws that guarantee participation of local communities inthe planning of the lithium project are as feeble as the environmental ones(Hollender & Shultz, 2010, p. 48).

According to Bolivian environmentalists, environmental evaluations con-ducted by the government are considered to be unreliable in their scientificfundamentals and scrutiny because the government performs them only as aformality to attain a green light on their projects (Lpez, 2010, cited in Hollender& Shultz, 2010, p. 48; Ribera, 2010, cited in Hollender & Shultz, 2010, p. 49),making it all seem like a process to speed the already late industrialization.

Another problem is the fact that indigenous communities have not been givena proper explanation of the possible consequences of industrialization. Accordingto international conventions such as Agreement 169 of the International LaborOrganization, the UN Convention of indigenous towns, and even the BolivianConstitution, indigenous populations have the right to be consulted wheneverany type of project is to take place in their territory (Kngerskov, 2011). Guaran-teeing this type of social consensus is vital to allowing indigenous communitiesto have control over their own lands.


According to this consultation right, indigenous communities must be wellinformed in advance on the projects scope (e.g., how it would be pursued, whatis needed to achieve it, how it could benefit the community). One central concernregarding the industrialization project in Bolivia is that members of the commu-nities living near the Uyuni area have said that they have not been told aboutthe environmental consequences of the project and thus have not been able tomake an informed decision about lithium factories being built in the salt flat(Kngerskov, 2011). Believing that the social uproar could escalate, the Boliviangovernment announced to environmentalists and the indigenous community ofthe Uyuni salt flats at the end of 2011 that it would allocate US$30 million forlithium waste management and other measures to reduce the environmentaldamages that the processing plants could cause (Minority Rights GroupInternational, 2012). The governments prompt response toward these concernsseems to be the right approach to quell any future social discomfort, but giventhat the industrialization project is in its beginning stage, we would still have towait a few years to evaluate the effectiveness of this countermeasure. What wecan do at this stage is to ponder positive and negative aspects that could bederived from lithium extraction in Bolivia.

ConclusionsThe goal of this article is to feature Bolivia as a double-fold country,

rich in terms of its endowment of energy and mineral resources and sociallypoor and unequal. Geographically, the country is divided. The white eliteis concentrated in the eastern lowlands, and indigenous communities arenumerous in the western part of the country. The Uyuni salt flats, rich inlithium, are located in the west, in Potos department, where the Quechua com-munity lives. Although indigenous peoples are protected under a new consti-tution, reformed in 2009, which states that local communities should beinformed in advance of possible effects of extractive operations, those popula-tions may suffer environmental and socioeconomic consequences of lithiumindustrialization.

Data shown in this article reveal that, although Bolivia is not Chinas mostimportant trading partner in South America, commercial bilateral relations havebeen increasing in recent years and are estimated to continue growing in the nearfuture. Chinese investments in Bolivia may also continue to grow, especially interms of lithium extraction and transference of knowledge. These investmentswould face competition from those of other nations interested in Bolivian lithiumsuch as Japan and South Korea. As for Bolivia, the country would also competewith others as a lithium supplier, mainly with top world producers such asArgentina and Chile. In commercial terms, there is an unbalanced trade situationthat may deepen Bolivias dependency on China. Bolivia basically exports rawmaterials, which have volatile prices on the international market and do notcontain value added, and it imports technology, services, know-how, and indus-trial goods.

Bolivians and Chinese share the national interest of extracting lithium from theUyuni salt flats. Although President Morales stated that it is in the interest of


Bolivia to develop a national industry, it is still not clear how it would extractresources and how international companies, including Chinese ones, would par-ticipate in the lithium business.

Lithium extraction is still in its planning stages, so it is too soon to establishaccurate predictions, but once it is implemented, it would undoubtedly haveeffects on local communities, both positive and negative. Among the positiveones, we could predict that jobs would be created, and the selling of lithiumcarbonate and eventually lithium batteries would mean revenues for the Boliviangovernment, revenues that could be allocated to local communities. In the longrun, if the national lithium industry is successful, Bolivia could transfer expertiseto other countries, mainly Argentina and Chile, which also have considerablelithium reserves under their soil.

There may be many negative effects of lithium extraction on local communi-ties, so the Morales administration and those that follow should take measures toavoid them. Water shortages are a predictable environmental consequence oflithium extraction, because the mining and metallurgic industries require largeamounts of water. Moreover, toxic chemicals may pollute the water, air, andground. Water is a particularly scarce resource in the Uyuni salt flats, affectinghuman consumption and also agriculture and herding. Llama breeders, quinoaproducers, and tourist operators would be affected.

For all of these reasons, the Bolivian government should be aware of thesenegative externalities of lithium extraction. It also needs to be aware of Article 30of the new constitution, which states that local communities should be informedabout prospective negative effects of resource extraction on their lands. If thenational administration fails to do so, it could face social discontent, provoking adecrease in the level of support the president has reached in recent years fromindigenous communities.

This article has provided some insight into potential consequences of lithiumextraction in Bolivia, but the subject is definitely not closed. We would like tosuggest a series of research questions that derive from our investigation, whichcould be the basis for future writing. How would Bolivia extract its lithium?Would the country allow a certain percentage of foreign participation in thisindustry? How big would that percentage be? Which entity would administer therevenues from lithium extraction? Would it be a national or a local one, based inthe Potos department? Would Bolivia be able to develop a national industry thatcould compete at an international level? What kind of financial resources andinfrastructure would be necessary to develop such an industry and who wouldprovide capital? How would the Bolivian government prevent environmentaland socioeconomic negative consequences of lithium extraction? What interna-tional, national, and subnational actors would benefit from this new industry?Would Bolivia transcend its dependent relations with China? Could Bolivia turninto the Saudi Arabia of the 21st century?

Would Mother Earth really be safe?

About the AuthorsValeria Marina Valle holds a PhD in Political and Social Sciences from the

National Autonomous University of Mexico (UNAM). She works as a full-time


researcher at Center for Research on North America, UNAM. She is a Level 1National Researcher of the Mexican National System of Researchers, CONACYT.

Hctor Cueto Holmes holds a BA in Journalism and Media Studies fromTecnolgico de Monterrey. He has been editorial counselor of the internationalsection of Reforma newspaper and works as a freelance journalist specializing ininternational and technology issues.

Notes1China became a member of WTO on December 11, 2001 (WTO, 2012).2China presents itself to Latin America as a partner, for example under the umbrella of southsouth

cooperation. Nevertheless, there are unequal terms in bilateral relations. Latin America and Carib-bean trade relations with China are unbalanced and depend on exports of raw materials and importsof final goods.

3This index measures the degree of inequality in the distribution of family income in a country. Theindex of a country with perfect equality would be 0; if income were distributed with perfect inequal-ity, the index would be 100.

4Santa Cruz is Bolivias business capital. Tarija is where the main gas fields are located. Beni andPando are sparsely populated (Economist, 2008).

5The no won in La Paz and Cochabamba, where two of Morales opponents were ruling. Afterthe referendum, they were ousted and were replaced with presidential appointees, but Morales wasnot the only winner; the four eastern prefects won a higher share of the vote than when they wereoriginally elected. Rubn Costas, the governor of Santa Cruz, almost equaled the president, winning64% of the vote there.

6The U.S. dollar was valued at 6.94 Bolivian pesos during 2011 (Banco Central de Bolivia,2012).

7The two countries celebrated the 25th anniversary of diplomatic ties in Beijing on July 9,2010.

8Structuralists emphasized internal and external disequilibria provoked by the productive struc-ture and its interactions with dependent relations developing countries established with the devel-oped world. Declining terms of trade of developing countries and the Prebisch hypothesis areexamples of Structuralist thought (Palma, 1987, pp. 527531).

9An example that illustrates that the world believes China is growing and will reach a superpowerstatus is the survey from Germanys Bertelsmann Foundation, entitled World Powers in the 21stCentury, conducted by Gallup. The results show that the United States will lose its position as theworlds undisputed leading power over the next decade and a half, with China emerging as aformidable rival. Based on interviews of 10,250 people worldwide, 57% of respondents believed theUnited States would be a world power in 2020, and 55% saw China in that role; 81% currently see theUnited States as a world power, and 45% believe China has already attained that status (China Daily,2006).

10BRIC is an acronym that stands for Brazil, India, China, and Russia. Jim ONeill, a chief economistof Goldman Sachs coined it in 2001, in a paper entitled Building Better Global Economic BRICs,which analyzed the four largest emerging economies that would play an increasing role in the globaleconomy. The acronym later expanded to include South Africa, transforming it into BRICS. Accordingto The BRICS Report issued in New Delhi in 2012, Together the BRICS account for more than 40% ofthe global population, nearly 30% of the land mass, and a share in world GDP (in PPP terms) thatincreased from 16% in 2000 to nearly 25% in 2010 and is expected to rise significantly in the nearfuture (G8/G20, 2012).

11According to a UNDP report, As of 2009, China had signed south-south cooperation agreementswith 45 African countries, and its cumulative investment in Africa totaled US$11 billion as of 2010.Through the China-Africa Development Fund, China had earmarked US$700 million for over 30projects in Africa, including agriculture, manufacturing, construction, and mining. Chinese exports tothe BRIC countries increased fourfold between 2006 and 2010. In the same period, imports doubled.The China-ASEAN free trade area is now the largest in the world, with trade between the two regionstopping US$350 billion. The target for bilateral trade is US$500 billion by 2015 (United Nations, 2012,p. 9).

12Buen vivir in Spanish, suma qamaa in Aymara, and sumak kawsay in Quechua.13The launch of Tpac Katari will take place not in Bolivia but in China, at the Satellite Launch

Center of Xichang, located in the western province of Sichuan (ABE, 2012 and (Infoespacial.com,2012).


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