LatAm in Focus: Can Rodrigo Paz Unearth Bolivia’s Lithium Potential?
LatAm in Focus: Can Rodrigo Paz Unearth Bolivia’s Lithium Potential?
Texas A&M’s Diego von Vacano traces a history of political and economic obstacles stifling the sector and outlines the path ahead for the new president.
“Why are there people, families, with nothing to eat today if we were so rich with gas and lithium?” Bolivia’s new President Rodrigo Paz posed the weighty question in his November 8 inaugural speech. Before national legislators and international dignitaries, he questioned his two immediate predecessors: “Where is the lithium, Evo? Where is the lithium, Arce?”
Trapped beneath the Salar de Uyuni, a salt desert in Bolivia’s southwest Potosí department, lies what is thought to be the world’s largest lithium reserve. Estimates indicate Bolivia is home to more than a fifth of global reserves, meaning some 23 million tons of a critical mineral that could fuel the world’s energy transition. For decades, it has been touted as the landlocked country’s ticket to economic prosperity. Still, the vast majority remains underground.
As Bolivia weathers a turbulent period in which dwindling natural gas revenue has diminished foreign exchange reserves and, in turn, led to shortages of food and fuel, can the new government finally leverage lithium to energize the country’s sluggish economy?
Paz won over disillusioned voters in the October runoff but faces a challenging economic scenario when he takes the reins in November.
"I think that's important for Rodrigo Paz to say, ‘look, we'll invite anybody, but they'll have to show the results and also see whether they can build a supply chain that will help Bolivia integrate itself with the rest of the world’,” says Dr. Diego von Vacano, a political science professor at Texas A&M University who advised former President Luis Arce on lithium. His forthcoming book, Power over Energy, covers the domestic and international political dynamics shaping the lithium sector in Bolivia and Latin America.
In a conversation with AS/COA Online’s Carin Zissis, von Vacano unpacks Bolivia’s decades-long struggle with developing its lithium industry. He points to a lack of private investment—hampered by the constitutionally-mandated state control of lithium exploitation—and pushback from local indigenous communities seeking to preserve the cultural and environmental landscape of the salt desert.
Meanwhile, von Vacano notes, neighboring Chile and Argentina, which with Bolivia form what is known as the “lithium triangle,” have managed to attract significant foreign investment and together represent about 30 percent of global lithium supply. “If Bolivia doesn't adjust its policy, it's going be completely left behind. So I think it has to develop, in a way, its own approach,” he said, highlighting that the distinct chemical composition of Bolivia’s lithium requires innovative extraction techniques.
Presidents Gabriel Boric and Javier Milei both attended Paz’s inauguration, and each briefly met with him following the ceremony. From Milei, he requested a follow-up visit to formulate “a shared agenda,” and, in reference to the end of almost two decades of governments of the Movement Towards Socialism party (MAS) led by Evo Morales and Arce, added, “It’s a new phase, and cooperation with the five countries with which we share borders will be essential.”
Also in attendance? U.S. Deputy Secretary of State Christopher Landau. “Given the political changes in the world, I think the United States is an inevitable partner for Bolivia,” says von Vacano. After years of frosty relations between the two countries, Paz visited the United States as both a candidate and president-elect to meet with government officials, the private sector, and multilateral lenders and gain support for his economic agenda. Already, Paz has secured agreements with the Inter-American Development Bank and CAF - Development Bank of Latin America and the Caribbean, and is said to be working on a deal with the International Monetary Fund in coming months.
Nevertheless, Paz has expressed caution about pinning all of Bolivia's economic hopes on lithium. Under the slogan “Capitalism for all,” he has instead emphasized reducing state expenditure, boosting natural gas revenues, and cutting back on longstanding fuel subsidies—all without neglecting social spending. His inaugural speech signaled his vision of a liberalized economy as he declared: “Never again an isolated Bolivia subjected to failed ideologies, and by no means a Bolivia that gives its back to the world.”
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