Burro Sitting on a Lithium Mine

I came across this story on the BBC when I was clarifying some facts about Bolivia's Salar de Uyuni for a page on the Images section of this website.

It turns out that below the surface of the salar lies about 50% of the world's commercially viable lithium deposits. As anyone who has compared a lithium battery to a normal alkaline battery will be aware, lithium stores energy better than alternative substances. Lithium batteries are the preferred technology for new fully electric and hybrid cars being produced by Toyota, GM and other companies. With demand for lithium set to increase rapidly, auto makers are eager to see its production stepped up.

Ironically, impoverished Bolivia once again has something that the rich world desparately wants.

The BBC article itself is quite a good, well-balanced piece. But the guy who writes the copy doesn't get to do the captions, and I can imagine Damian Kahya not being particularly impressed by the note under a photo of salt mounds on the salar that Bolivia's lithium reserves could bring wealth to the country.

As the article points out, wave after wave of resource extraction certainly has not brought wealth to the altiplano. Bolivia is a classic illustration of the 'resource curse', where a surfeit of natural riches within a country produces only massive inequality, corruption, conflict and environmental damage.

Bolivia's government is not enthusiastic about opening up the salt flats to mining. The BBC reports Minister for Mining Luis Alberto Echazu as saying:

"We will not repeat the historical experience since the fifteenth century: raw materials exported for the industrialisation of the west that has left us poor."

This is fair enough. Bolivia's original experience with mineral riches was the mass enslavement of indigenous workers in the silver and tin mines of Potosi. Times have moved on since the 16th century, but the current simmering conflict over gas revenues demonstrates that turning resource wealth into benefit for all is far from a straightforward proposition.

Of the countries 'cursed' with mineral riches, Chile (copper) and Botswana (diamonds) are the notable exceptions where this wealth has contributed to sustainable development. And even in the best cases the unhealthy dominance of a single product produces economic and social distortions. Chile's military still benefits from a law developed during the Pinochet regime which awards it a guaranteed percentage of the revenue from the national copper mining company, and the military's disproportionate strength continues to cast a shadow over local democracy and the regional balance of power.

Bolivia's government is planning a small-scale lithium mining pilot project which will be under local control. The BBC article suggests impatience from the auto companies that this will not lead to enough production quickly enough to satify their demands.

Although it's good that car companies are now getting over their reluctance about developing electric vehicles, this isn't as progressive as it might look. I'm not all that sympathetic to 'no more growth' environmentalism, but in this case the pattern that environmentalists warn about is all too evident. The problems of peak oil and global warming caused by historical modes of western oil consumption are being 'addressed' by moving on to exploit another finite resource extracted from another environmentally fragile setting.

In essence, the purpose of escalating lithium production would be to allow people in the rich world to swap one addiction for another and carry on driving their cars around in the same way as before. In Bolivia, where functional roads are few and far between, and private cars extremely rare, there's an understandable lack of urgency about this objective.

With its 10,000 square kilometres of shimmering salt, the Salar de Uyuni is one the natural wonders of the world. It's not even economically 'idle', but is a focus of tourism which leaves visitors in awe their surroundings and gives reign to the imagination. It would be a tragedy to see such a unique place despoiled by mining.

Unrest in Bolivia, Latin American Problem

The current unrest and violence in Bolivia is another reminder of just how difficult social and economic reform is in Latin America. In some ways Bolivia is a special case. It is deeply divided, not only socially, but also geographically, between the impoverished, indigenous altiplano of the northwest, and the 'half moon' of mestizo-dominated provinces in the southeastern lowlands which have wealth from gas fields and agribusiness.

Yet, throughout the region the problems of redressing the 500 year-old imbalances of wealth, power and resources continue to to seem intractable.

On the one hand, left-wing governments often seem over-eager to write new constitutions and strengthen presidential power, opening themselves to accusations of authoritarianism. On the other, the reluctance of wealthy elites to support an orderly process of reform (eg, by giving up some land and paying more taxes) give credence to arguments that change can't happen through existing processes and institutions. The frustrated expectations in Brazil and the apparent abandonment of reformist policies in Peru are examples of why more radical approaches start to seem attractive to those who want to address inequality.

This paper from Mark Weisbrot and Jorge Sandoval at the Center of Economic Policy Research is a good summation of the current distribution of land, natural gas resources and revenue in Bolivia. It provides a reasonable case for the need of the central government to push through land reform and gain a greater share of taxes from gas production. Weisbrot and Sandoval point out that in Bolivia a much greater share of these revenues go to the regions than in most parts of the word, and that the 'autonomy' demanded by provincial leaders in Santa Cruz and Tarija would be regressive:

In most developing countries, it is assumed that these valuable resources belong to the nation
as a whole, not to the particular region in which happens to be underground. This is especially important for developing countries, since their development strategy – the means by which they can eliminate extreme poverty and reduce overall poverty – is based on using the rents from their mineral wealth to diversify away from hydrocarbons, as well as investing in economic and social infrastructure.

In the media, much of the international attention has focussed on the expulsion of the US ambassador from Bolivia, and the frankly uncouth 'show of solidarity' from grandstanding Hugo Chavez in also expelling the American ambassador to Venezuela. It's disappointing that there can't be more civility at the highest political levels as an exmaple to people who take their cues from national leaders. However, whether US agencies have had any role in fomenting the current discord in Bolivia is an open question; Weisbrot et al point out that the US government has refused to release information on who it gives funds to in Bolivia.

Reports of 17 deaths have been mixed up with discussion of the overall struggle between the government and the eastern provinces. But in fact the worst violence has been in the backwater region of Pando, which has a total population of 70,000 and is hardly a front line of the struggles over land and gas. Radio interviews claim that a group of peasants intent on marching to the provincial capital of Cobija were intercepted and fired on by a group of 'paramilitaries' with machine guns, who included employees of the provincial government and Brazilian mercenaries. The reports blame Pando governor Leopoldo Fernandez for the 'massacre', and government sources have said he will be arrested.

The ten presidents of the Union of South American Nations are meeting in Santiago on Monday to discuss the situation in Bolivia, and according to Bolivian-based blogger Jim Shultz, it will take some leadership from outside -- perhaps from Brazil and Argentina -- to broker a political solution between Evo Morales government and the oppostion from the 'half moon' provinces of Santa Cruz, Tarija et al. But while there's hope for compromise and a sort-term restoration of stability, the ongoing conflicts over land, power and resources will take more than diplomacy to resolve.