Lithium and the End of the Technological Lag

EV WORLD **

1998-2019

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Lithium Economics

 Oct 09, 2007 (Original publication date)

Lithium and the End of the Technological Lag

Juan Carlos Zuleta Calderón*

Translated from La Razón (www.la-razon.com), first published on September 18, 2007

Between 1989 and 1993, the debate around a concession of the lithium reserves of the salt lake of Uyuni to FMC Corporation occupied the first pages of Bolivian newspapers. Many politicians were extremely upset when on January 15, 1993 FMC decided to withdraw from Bolivia and choose instead much smaller deposits in Argentina. The supposed “lithium failure” has since been used as a bad example of negotiation with foreign investors in the country.  

However, in a long article and interviews published in the main newspapers at the time, a few days before the American transnational communicated its determination, the author of this article argued that the causes of FMC´s decision had to do more with the intricacies of the lithium market than with the contradictions and errors in the process of negotiation with FMC.  

In this context, the downward trend of lithium for the following years would have been primarily related to General Motors`decision in December 1992 to postpone its initial strategic plans to introduce the first line of mass production electric vehicles into the market by mid-1990s mainly due to budget limitations and restructuring derived from the economic recession that the US was facing at the time.  This would have generated a “technological lag” that could last 20 or 30 years.

With the recent announcement of the General Motors, reported by The Economist on June 16, 2007, to use lithium-ion batteries to activate its next Chevy Volt, a plug-in hybrid with a maximum range in all-electric mode, to be launched at the market in 2010, it all indicates that the world would be near the end of the technological lag forecast by this author more than 14 years ago.  

Likewise, in accordance with another forecast made at the beginning of 1993, there is evidence that between 1990 and 2006 lithium production rose only moderately.  However, following the prestigious Meridian International Research of France, this could be definitely reversed; the global automotive industry would be just about to face the greatest challenge of its history: the transition towards electric propulsion. 

Two demands of the world would have influenced in this decision: (1) that the demand for oil should be reduced significantly in the next 10 years following a diminution of supply; and (2) that CO₂ emissions should be reduced to avoid global warming.  

In recent years, lithium-ion battery technology has appeared as an important alternative to the rest of the advanced batteries that have been in the market during the last two decades.  At present, that technology constitutes the only option for a viable activation of the electric vehicles in the United States.  In addition, research carried out in the rest of the world is focused almost completely on lithium-ion.  One advantage of lithium over oil and other sources of energy is, of course, that this metal is recyclable.  

As is well known, electric cars are no longer a story of science fiction and have begun to circulate both in the highways of US and Europe captivating people´s imagination and taste.  In the current conditions of the available supply, the increase in the demand for lithium in the world could produce a significant rise in the price of the strategic material, making feasible the exploitation of the reserves of the Salt Lake of Uyuni in Potosí, Bolivia.  

At lithium prices corresponding to 1998 (i.e. $us 95,44 the kilogram of metallic content), last available data in the US Geological Service, the 5,4 million metric tons of metallic content of existing reserves in the highest "salt sea" of the planet would amount to more than US$ 515 billion. 

Finally, according to the above cited source of information, this would convert Bolivia into the new Saudi Arabia of the world that could play a leading role in power relations with enormous geopolitical implications for the country and the region.

*Juan Carlos Zuleta C.
Economist, M.Sc. in Agricultural and Applied Economics, University of Minnesota and Ph.D. studies in Economics at the New School for Social Research

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