In late January, Bolivia’s Luis Arce government signed a $1 billion agreement with the Chinese firms CATL, BRUNP, and CMOC (CBC) and the Bolivian state company Yacimientos de Litio Bolivianos (YLB) to explore lithium deposits in the South American nation.

The CBC are Chinese firms with past involvement in lithium extraction, battery recycling, and metal mining, respectively.

Arce and YLB estimate that lithium will be able to be exported by the first trimester of 2025. Arce called for the “era of industrialization of Bolivian lithium” in his announcement speech at Casa Grande del Pueblo in La Paz. Arce rhetorically asked, “how many years had to pass before the country came on the right track to enjoying one of its natural resources, so highly valued in this day and age?”

Arce affirmed that lithium is a high-value commodity, and exploiting it is in alignment with meeting the “energy and climate crisis,” creating the adequate moment to exploit the resource “in the most sustainable way possible.”

Responding to critics in the national and international opposition, Arce also contended that Bolivia had the right technology to exploit the resource and will start building two modern exploitation and transformation facilities in the salt flats of Uyuni (near Potosí) and Coipasa (near Oruro), in the southwest region of the country.

There is currently no plan to build further facilities.

The CBC will be responsible for building the “infrastructure, highways, and necessary conditions to jumpstart the plants.” The Chinese firms will also coordinate extraction activities with YLB, which Arce said would be there during “the entire process.”

YLB and the Ministry of Hydrocarbons expect 25,000 tons of lithium per year to come out of each facility, reaching 99.5 percent purity. The extracted lithium would mostly be used for ion-battery production, and used to manufacture electric cars and various other electronic devices.

It remains unclear whether the extracted and transformed lithium would be exported to China, though China is a leading importer of the resource. Chinese companies manage nearly two-thirds of the global lithium processing and refining.

China gets a large share of its transformed lithium from Chile and Argentina, the two other members of the South American Lithium Triangle. It uses lithium to produce various ion-battery products, including electronic devices and electric vehicle parts.

China is currently looking to on-shore its lithium extraction, given potential supply chain risks. The mainland is home to about 25 percent of the world’s resources.

The Arce government also claims that lithium recovery from the salt brines will stand at a minimum of 80 percent and use less water than previously suggested technologies, a crucial resource in the region.

Bolivian Energy Minister Franklin Molina stated publicly that the deal represented “sovereign alternatives to the privatization models for lithium exploitation.” His comment alludes to the view of the MAS, the ruling socialist party in Bolivia, that internationalizing the lithium extraction process is not a surrender of Bolivia’s sovereignty.

The MAS asserts that it will retain full control over the extraction, transformation, and commercialization processes.

The Bolivian opposition has contested this claim. In an article for Los Tiempos, Carlos Arze of the Center for Studies on Labor and Agricultural Development in La Paz argues that the agreement violates YLB’s foundational laws, Law 535 and Law 928.

The laws, according to Arze, make clear that no foreign firm can participate in the extraction of lithium, only in its processing.

Arze and other leading figures in the opposition have called for the full terms of the agreement to be made public. They argue that the agreement could mean the “denationalization of lithium” in Bolivia.

Some opposition comes from the mining regions themselves, with Civic Committee of Potosí (COMCIPO) Spokesperson Crisólogo Alemán criticizing the move. Alemán stated “we have asked a thousand times for transparency, but there has been no answer.”

In another article for Los Tiempos, Alemán added that Potosí has “rejected this agreement as there is no legal basis for it nor for a contract.”

The COMCIPO has historically been opposed to the internationalization of Bolivia’s lithium and has issued a statement expressing its opposition to the CBC contract.

In 2018, Marco Antonio Pumari, a former leader of COMCIPO, was the principal voice of opposition against a proposed lithium extraction deal with German company ACISA.

The group’s former president, Juan Carlos Manuel Huallpa, who had criticized the CBC deal, was subsequently charged with terrorism by the Arce government. While attempting to hide from the federal police, Huallpa died last week in unconfirmed circumstances. The COMCIPO alleges that he was killed extrajudicially by the government.

Pumari is now in jail on charges of terrorism, and COMCIPO has called for his release.

Juan Carlos Zuleta, Bolivian mining and energy expert and briefly the former head of YLB, also expressed reservations about the lithium extraction process, stating “something I don’t know is whether this is something that is going to benefit the country.”

Still, Carlos Ramos, president of YLB, issued a statement arguing that the company did not sign any agreement with a foreign state, but rather with a specific corporate consortium and that Bolivia maintains sovereignty over its natural resource commercialization processes. Ramos added that “this is the result of a careful and transparent selection process.”

Arce retorted that “there is no more time to lose” in exploiting the resource, arguing that the outcome will help develop Bolivia’s economy and boost Bolivians’ standards of living.

The deal was the result of a months-long bidding process, which started in the fall of 2022. American, Russian, and Argentine companies were also involved.

EnergyX, an American company based in Austin, Texas, deployed pilot plants with the Ministry of Hydrocarbons in December, to showcase its direct lithium extraction (DLE) technology. The plants would have been based in the Salar de Uyuni, the largest salt flat in the world.

Ramos previously stated that the winning bid would be chosen based on a “respect for the laws and maximum benefit for the Bolivian people.”

Contrary to Argentina and Chile, the two other members of the prized Lithium Triangle, Bolivia had struggled to exploit its lithium resources, partly due to its geography, colonial history, political and economic tensions, and the lack of appropriate DLE technology.

The price of lithium currently stands at $47,250 per ton, though it peaked at $74,475 per ton in October last year.

Opposition politicians and activists like Humberto Vacaflor Ganam had also raised concerns about a previous potential extraction deal with Russia, which they said would have ramifications for Bolivia’s democracy, indigenous rights, and environmental security.

While most governors in Congress support the deal, some politicians and activists have protested the move, mostly concentrated in Potosí, Santa Cruz, and La Paz.

The deal also comes after weeks of violent protests in those areas and has provided some political oxygen for Arce’s government, which is already preparing for the general election in 2025.