Amid strong geopolitical tensions over the war in Ukraine, speculation is growing in Bolivia that the government of President Luis Arce will favor Russian companies in their award of lithium exploitation contracts. The South American country has the largest reserves of a mineral needed in energy technologies that will replace fossil fuels.

In recent weeks, the state company Yacimientos de Litio Boliviano (YLB) has fired at least three high-level employees and several administrators more specialized in the technical process of exploitation and production of the mineral to replace them with people without experience in the industry with political links to the government, according to three sources with direct knowledge consulted independently. YLB has a central role in the pilot program that began last year in which eight international companies compete to demonstrate that their technologies are the most efficient and clean to exploit lithium and generate energy. The Arce Administration, which is preparing to publish the results this month, has generated great expectations in the markets with this program, assuring that the companies with the best results will be chosen.

However, a photograph in which the president’s son, Luis Marcelo Arce Mosqueira, poses with two executives of the Russian state company Uranium One, one of the eight selected, circulates through chats among members of the sector, fueling rumors that negotiate agreements outside the pilot process.

Although it is not known for sure when or in what context this photograph was taken with Alexander Kochnev and Andrey Shutov, the role of the president’s son has been highly questioned. At the beginning of the year, national media cited documents indicating that Arce Mosqueira worked with the state company Yacimientos Petroliferos Fiscales Bolivianos (YPFB) without having a specific position. As of publication, and according to Bolivian mediathe president of the parastatal confirmed the facts.

Son of the President of Bolivia, Luis Marcelo Arce, in a meeting with Russian lithium executives Alexander Kochnev and Andrey Shutov of Uranium One
Son of the President of Bolivia, Luis Marcelo Arce, in a meeting with Russian lithium executives Alexander Kochnev and Andrey Shutov of Uranium OneRR H.H.

In a text message to EL PAÍS, Arce Mosqueira assured that he “has nothing to do with the hiring,” adding that these “are being carried out in accordance with the law and are being supervised by the competent authority.” When questioned about his meeting with Uranium One and the photograph in question, he did not respond to questions. Calls and messages to President Arce’s communication team, as well as to YLB and the Ministry of Hydrocarbons and Energy, were also not answered.

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That Bolivia has a preference for Russia is no surprise, says Álvaro Ríos, an energy consultant and former Bolivian minister of hydrocarbons and mining. “Very clearly there is a greater alignment with China and its companies and Russia and its companies, than with the Americans, that is a trend that we have seen for a long time,” says the specialist, who is currently an independent consultant. In his first visit to Russia, Foreign Minister Rogelio Mayta met with his counterpart Sergey Lavrov to address agreements on the exploitation of lithium and nuclear energy. The visit was in October, four months before Russia attacked Ukraine.

“There is an unpleasant and tense work environment” within YLB, said an inside source who asked not to be identified for fear of retaliation. “At the higher levels, it was not convenient for a professional to make important decisions on lithium policy at the national level. They have been changing personnel in this final phase to make decisions at their discretion, ”he added.

A source with knowledge of the process said that the minister of hydrocarbons and energy Franklin Molina has shown favoritism for the Russian company Uranium One that is part of the pilot program. The rest of the participating companies are the Chinese Contemporary Amperex Technology, Fusion Enertech, Citic Guoan Group and TBEA Group; Argentina’s Tecpetrol; and the US Lilac Solutions and EnergyX.

On Tuesday, at a press conference, Molina reported that two companies were disqualified and that YLB will present the results of the program “in the coming days.” Molina did not specify which companies were eliminated.

“For the next stage, enough qualified human resources will be needed, assuming that the eight companies that are known continue, a strong Bolivian counterpart will be required, so what they are doing with technicians does not seem correct to me, it is worrying”, said a former YLB official who wishes to remain anonymous. “I understand that it is a matter of political pressure,” he added.

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Bolivia, along with Argentina and Chile, has 56% of the planet’s proven lithium reserves, according to the United States Geological Survey. In Argentina, local governments have the power to allocate resources to private companies in exchange for revenue, while in Chile, the government is seeking to nationalize the mineral. Bolivia has taken its time, keeping tech giants like Tesla, whose cars rely on lithium batteries, waiting. The eyes of the world are on the Andean country and the companies that win could have a global competitive advantage at a time when developed countries are working to replace gasoline-powered vehicles with electric ones, with energy from renewable sources.

The government of Evo Morales, president from 2006 to 2019, had agreed to award a lithium exploitation contract to a German company, which was cut short in 2019 when Morales left the country in the midst of a political crisis after the elections that the former president defined as a “blow against him”. One of his last acts was to suspend said contract and, in a visit to Mexico in 2021, the former president said that the protests that ended up overthrowing him were based on his decision to industrialize lithium. Since then, the future of the coveted mineral has been uncertain.

Regardless of which companies are chosen, the Government still has to resolve the regulatory framework and the social pact with the communities that will be affected by industrial activity, says former Minister Ríos.

“The fundamental problem does not lie in this selection of technology, but in the absence of an agreement with the department of Potosí, which is the department in which the Uyuni salt flat, the main Bolivian salt flat, is located,” says Ríos. “There is no pact or clear law that allows massive investments to be made there.” In a rapprochement with this community, the American company EnergyX has promised to invest 100,000 dollars in education and health in Uyuni.

A source close to the process assures that the Arce government is currently working on a bill that would allow private companies to exploit the resource, since currently only the government is allowed to do so. But, despite the fact that the president’s party, the Movement for Socialism – Political Instrument for the Sovereignty of the Peoples (MAS-IPSP), has a majority, there are internal divisions that do not guarantee that the law will be approved.

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“As long as a social pact is not made with the people, there is a belligerence of the same people whose silver was looted by the Spanish 500 years ago and left misery,” says Ríos. “The same thing is there, a kind of paranoia in the people who are there, who have great hope and want there to be benefits for them.”

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