UYUNI, Bolivia—The Salar de Uyuni salt flat is the pride of Bolivia, spanning nearly 7,000 square miles and drawing thousands of tourists to its surreal bright-white landscape. It also lies atop a stockpile of lithium, a mineral crucial to the clean energy transition that’s long given hope to the country’s faltering economy.
Bolivia is home to roughly 20 percent of the world’s lithium deposits, mostly beneath Salar de Uyuni, but it produces less than 1 percent of global lithium. President Rodrigo Paz, who took office last year pledging measures to revive the economy, will be judged in part based on whether that number increases.
At Paz’s inauguration, he reiterated his campaign slogan of “capitalism for all” as the country moves away from two decades of left-wing rule. While prices have fallen from their peak in 2022, the metal is crucial to clean energy technology such as electric vehicle batteries and solar panels.
But any efforts to expand production will face fierce opposition from environmental advocates and Indigenous groups worried that further extraction will damage their livelihoods. In the towns scattered around Salar de Uyuni, people raise llamas and alpacas and grow quinoa, and they fear the lithium rush could contaminate the region’s groundwater and deplete its aquifers. Many migrated to Uyuni, the area’s largest town, to work in tourism. They worry lithium extraction will hurt that industry, too.
“We are the ones who are going to feel the impact,” said Edson Muraña, a tour operator who comes from a family of farmers. “We want this culture to exist. We don’t want it to disappear.”
Paz has promised not to “sell out” Salar de Uyuni and has spoken more of its tourism appeal than its vast lithium deposits. He did not emphasize lithium on the campaign trail or in his initial meetings with U.S. officials and the International Monetary Fund.
The center-right candidate won election in an October runoff over right-wing opponent Jorge Quiroga by picking up votes from disaffected supporters of the left-wing Movement for Socialism (MAS) party, which includes supporters in Indigenous regions opposed to lithium extraction. Evo Morales, the charismatic ex-president and former leader of MAS, promised to enrich Bolivia by asserting state control over its resources and claimed that he was removed from power in a U.S.-backed “coup” to seize the country’s lithium after a power struggle that tore apart the party, which did not advance a candidate to last year’s general election.
But Paz has struggled to solve the economic crisis. A foreign currency shortage driven by plummeting exports led to Bolivia’s highest rate of inflation in three decades, with inflation running at 19.6 percent at the start of the year, although now down to around 5 percent. People are waiting in long lines for petrol and basic ingredients like cooking oil, and money changers buy dollars and euros at inflated “blue market” rates. The summer has seen massive protests by farmers against the government’s agribusiness and mining deals.
At present, Bolivian law introduced during the MAS era prevents foreign companies from extracting natural resources such as lithium, forcing them to work with the state-owned Yacimientos de Litio Bolivianos (YLB). Altering that law—a prerequisite for many investors—will require changing the country’s constitution, and Paz will likely attempt to do so while he has legislative support from the parties of Quiroga and of Samuel Doria Medina, a businessman who lost in the first round of Bolivia’s election and supported Paz.
“He’s got a lot of political capital now,” said Diego von Vacano, a political science professor and Bolivia expert at Texas A&M University. Changing the constitution “shouldn’t be that difficult,” he said, but “it’s something that has to be done very quickly. If he doesn’t do that, investors will not go into Bolivia.”
The country’s current constitution was introduced in 2009, and changing it would require two-thirds support within the Legislative Assembly.
Paz will also have to act on contracts that YLB signed with Chinese and Russian companies to extract lithium in Salar de Uyuni, which have not yet been approved by Bolivia’s legislature. The contracts with Russia’s state-owned Uranium One and China’s CBC, a subsidiary of the lithium-ion battery giant CATL, are sharply controversial in Bolivia due to a lack of transparency and terms seen as unfavorable to Bolivia’s government.
The projects have not conducted environmental impact assessments, a requirement under Bolivian law, leaving scientists unsure where the freshwater needed to operate them will come from. This omission, along with an absence of community consultations ahead of their approval, is particularly alarming, said Gonzalo Mondaca of the environmental organization CEDIB, which works with communities living around Salar de Uyuni.
Aside from the impact on farmers, Bolivia’s salt flats are surrounded by wetlands that are important natural environments for species including vicuñas and flamingoes. Mondaca worries that not enough research has been done on the effect that lithium extraction, and its copious use of freshwater, will have on the area’s biodiversity.
Paz will thus have to win over a large Indigenous population that has felt neglected by efforts to extract lithium. “The Bolivian government, for many years, tried to ignore Indigenous organizations and only [consult with] farmers organizations,” Mondaca said.
It’s a sentiment echoed in Uyuni, where residents say the Uranium One and CBC contracts have eroded their trust in the government.
“We are very upset,” said Jose David Valda Belen, who operates tours of the salt flats through his company Quechua Connection 4WD. “They never say, like, we are doing this. They just make the contracts, and that’s it.”
Canceling the contracts, however, could scare off investors worried it will set a harmful precedent. “That could undermine trust in contract stability and raise broader sovereign risk concerns,” said Teague Egan, the CEO of EnergyX, a lithium extraction company.
The Paz government is more likely to try renegotiating the contracts, possibly creating more transparency in the process, as the original deals have raised allegations of corruption. Paz’s popular running mate, Vice President Edmand Lara, boosted their campaign with viral TikToks railing against corruption, and he’ll be pressed to deliver as a result, von Vacano said.
“I think he’ll have the support to amend these agreements,” he said. “If the Chinese and Russians don’t want to do that, that’s fine, because there’s other major companies who may be interested in trying to work in Bolivia.”
There has been concern in the past that Bolivia’s lithium deposits may not be as profitable as those in neighboring Chile and Argentina, as they are higher in magnesium, which must be removed from lithium-rich brine during the refining process. But advances in direct lithium extraction, which selectively extracts lithium from brines, could negate this issue, said Egan, whose company recently launched a pilot in Uyuni and “achieved a 94 percent recovery rate over five months.” The proposed Chinese and Russian projects would use direct extraction, which is increasingly being deployed throughout South America but still faces concerns over its freshwater use.
“Bolivia’s lithium resource quality is on par with Chile and Argentina, but the country is still a complex place to operate compared with its neighbors,” Egan said. “There’s tremendous upside if political challenges and reform can be tackled.”
If Paz does manage to change the constitution, his best course is to institute clear environmental and land use standards that give more certainty to Bolivians and foreign investors alike, von Vacano said, along with developing domestic processing capabilities or a small battery industry. “Paz can look for some lessons to learn from the Chilean model,” he added, emphasizing that its balance of public and private involvement applies more favorably to Bolivia’s political culture than the highly decentralized model of Argentina.
Still, it’s clear that the government has a long way to go to get people on board, and past conflicts over lithium have transcended political allegiances. The MAS remains in power in Uyuni, but people who once believed in the promises made by Morales were angered by decades of broken promises.
“We don’t see how much money we’re getting from this,” Valda Belen said. “They talk about money, like thousands of millions of dollars, but we have nothing. It’s still the same, the area is getting drier, and people are thinking about where they can get water.”
Valda Belen grew up raising llamas and sheep with his family; now, his father still grows quinoa, but rainfalls have become sparser every year. During the pandemic, workers in Uyuni’s tourism sector returned to the farms, exposing them to the frailty of the two industries that power this part of Bolivia. Since tourists have returned, they frequently ask about it.
“Everyone knows there is lithium here,” he said. “They always ask, what are you going to do if the salt flats are not here anymore?”