January 23, 2020 / 11:34 AM / in 2 months

Germany to urge next Bolivian leaders to revive lithium deal

BERLIN (Reuters) - Germany will seek talks with Bolivia’s next government to revive a deal to exploit jointly huge lithium reserves in the Andean country, as it works to secure supplies for production of electric cars in Europe’s largest economy, officials said.

FILE PHOTO: A view of a portion of an industrial plant for potassium chloride, a product that is extracted from brine under a programme developed by Bolivia to produce lithium, before its inauguration in Llipi on the salt lake of Uyuni, Potosi, Bolivia, October 7, 2018, REUTERS/David Mercado/File Photo

Bolivia and Germany signed a lithium joint venture in 2018 following three years of intense lobbying from Berlin, which said a small family-run company from Germany was a better bet than its Chinese rivals.

But the partnership between Bolivia’s state-owned lithium company YLB and Germany’s privately-owned ACI Systems hit a snag when a governor annulled the decree in November amid political turmoil.

The new head of YLB, Juan Carlos Zuleta, told Reuters last week the joint venture, struck under former socialist leader Evo Morales, would not be revived.

But the final word will go to the winner of Bolivia’s next presidential elections due in May, German government officials and ACI Systems CEO Wolfgang Schmutz told Reuters.

“We assume that under the new government, Mr. Zuleta will either remain head of YLB or be replaced by another competent expert,” Schmutz said. “As soon as the new government is in office, we’ll quickly seek talks with them.”

Schmutz said ACI Systems remained committed to the project and was working on it from the headquarters in Baden-Wuerttemberg, southern Germany.

The German economy ministry said it was in talks with the embassy in La Paz and the companies to discuss how to proceed.

“It is also the ministry’s assessment that the next elected Bolivian government will ultimately have to decide how to proceed with the lithium project,” the ministry said.

Bolivia’s decision to annul the joint venture fueled speculation that rivals, including China and Chile, used their influence to torpedo the project.

But Schmutz said he had not been given any “official information” from Bolivia.

The economy ministry said that even without Bolivia, Berlin’s plans to boost electric car production would be on track and the government would continue to support company efforts to shore up supplies.

“The federal government’s plans and goals for the ramp-up of electric mobility in Germany remain unchanged,” the ministry said, adding e-cars were crucial to Germany’s climate goals in the transport sector.

Germany’s biggest car maker Volkswagen (VOWG_p.DE), which plans to invest almost 1 billion euros ($1.11 billion) in battery cell production at a facility in Germany, said it was not itself purchasing lithium and the group’s suppliers did not get their lithium from Bolivia.

Experts have repeatedly voiced doubts about the quality of lithium from Bolivia compared with that from neighboring Chile, partly because of rainfall that slows the evaporation process used to produce the metal.

Slideshow (2 Images)

Germany imported nearly 6,000 tonnes of lithium carbonate in 2018, with 70% of it coming from Chile, according to Germany’s Raw Material Agency (DERA).

The plans to ramp up production of e-cars will boost German demand for lithium by up to 20,000 tonnes by 2025, DERA lithium expert Michael Schmidt told Reuters.

“Until 2025, the supply will probably be able to meet demand by 2025. An additional surge in demand is expected after 2025. A massive expansion of supply capacities is therefore necessary,” Schmidt said.

Reporting by Michael Nienaber; Additional reporting by Jan Schwartz; editing by Barbara Lewis

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