The Bolivian government has chosen a Chinese consortium led by battery giant Contemporary Amperex Technology to invest upward of $1 billion to develop untapped lithium deposits, with the ambitious goal of producing lithium batteries in the country by 2025.

Bolivia has the largest lithium reserves in the world but little local means to develop them. The state-owned Bolivian Lithium Deposits (Yacimientos de Litio Bolivianos), known as YLB, has signed agreements with the consortium, CBC, to jointly exploit, refine, process and market lithium resources, the country’s Ministry of Hydrocarbons and Energy said on Jan. 20.

At a contract signing ceremony in La Paz, Bolivian President Luis Arce said that the country aimed to realize the commercial operation and export lithium batteries in the first quarter of 2025.

“Today begins the era of industrialization of Bolivian lithium,” Arce stated, according to a Reuters report.

Arce said the company will use direct lithium extraction technology, but did not give details of how it plans to achieve such a quick turnaround from extraction to production.

CBC, which is 66% controlled by CATL, with the remaining share held by two affiliated energy companies — CMOC Group and Guangdong Bangpu Cycle Technology — beat bids from more than 20 companies, including a unit of Russia’s state nuclear group. The $1 billion is described as the first phase of investment and is earmarked for construction of roads, base installation and infrastructure, and power supply.

Bolivia has the richest known lithium deposits in the world, with an estimated 21 million tonnes, or 23.6% of the total in 2021, according to the U.S. Geological Survey. The survey also noted that Bolivia produced 543 tonnes of lithium carbonate, a tiny fraction of top producer Australia’s 550,000 tonnes. This is a big opportunity for battery manufacturers like CATL, which need large quantities of lithium, given that the price of the battery-grade lithium carbonate has ballooned more than sixfold from the first half of 2021 to the end of 2022, according to Caixin data.

The rare earth, nicknamed the new “white gold,” is a key to the green energy transition and primarily sought after for use in batteries.

Chemical company Albemarle increased its forecast of global lithium carbonate consumption to 1.8 million tonnes in 2025, according to an update issued Monday. YLB estimated in October that Bolivia will be able to produce 40,000 tonnes of lithium carbonate annually by 2025.

Bidding for the project started in 2021, when Bolivia welcomed companies to pitch for the opportunity to tap lithium deposits in the country’s three major salt flats.

According to YLB, more than 20 companies entered the bidding. Six companies were shortlisted in June 2022 for the bidding phase: Russia’s Uranium One, Lilac Solutions from the U.S. and four Chinese companies, including CATL.

The project could face challenges from local residents. Bolivia’s Mining Law and Law for the Creation of Bolivian Lithium Deposits protects the country’s right to develop lithium resources, but not everyone supports that development and past efforts have faced fierce resistance.

An industry expert told Caixin that there is strong anti-mining sentiment in the country, with activists arguing that mining projects could destroy people’s traditional way of life. In 2018, a similar development project, which involved a German company, was halted within a year due to protests from residents of the Potosi area.

That project had attracted interest from many companies, especially those from China, Bo Shaochuan, independent board director of energy company Zijin Mining Group and Sinomine Resource Group, told Caixin. But successful cases of foreign companies developing local mineral resources are rare, he said.

People familiar with the Bolivia project told Caixin that in addition to CBC, other companies are promising to sign strategic partnerships with Bolivia, including CITIC Guoan Information Industry and Uranium One. And YLB is discussing details such as the proportion and price of raw materials sold after mining and refining.