- August 1, 2018
- Mrinmoy Bhattacharjee
Lithium-rich Bolivia is vying for Indian investment for extracting the soft silver metal used to manufacture batteries of solar energy systems and electric vehicles, among other applications. “Lithium is the next oil,” says Sergio Dario Arispe Barrientos, Ambassador of the Plurinational State of Bolivia to India, in a no-holds-barred interview with SEL. He outlines how the South American nation would roll out the red carpet for Indian companies so that they can mine the lithium that India requires for achieving its ambitious energy goals.
How do you hope to attract Indian investment to Bolivia?
I think that this has to do with the rule of the market – demand and supply. The policy creates demand, which in turn creates jobs and markets. India wants to ambitiously adopt electric vehicles and is targeting installing 175 GW of renewable energy by 2022. This creates a huge demand for the basic commodities such as lithium. One of the fundamental issues that India must address is from where will it source the metal. Bolivia has the largest resources of lithium in the world. To me, it is an easy way to attract investment from India. Bolivia has improved its diplomacy and market space. Our nation’s biggest story will be Bolivian lithium.
What is the competitive advantage of Bolivia in the lithium trade vis-à-vis other resource-rich countries in Latin America, China, the US, Australia, and others?
We believe that lithium is the oil of the future. This is what market analysts, both from the west and Bolivia, have also stated. We have a competitive edge vis-à-vis these countries and regions, in the sense that we are at the point where Bolivia is championing a Preferential Trade Agreement (PTA) with India.
Have you set any time frame to conclude such an agreement with India?
These are developing issues. We have recently associated ourselves with ACI Systems GmbH, which is a huge German conglomerate in the energy storage space. I think that this gives us some respectability and criteria of how we should move forward in associating ourselves. Our newly created state-owned lithium company Yacimientos de Litio Bolivianos (YLB) is building a portfolio of companies of Indian origin who are willing to associate with us at our various lithium rich localities. At present, we are at a point where we are getting to know the magnitude of the needs of Indians. As your Honourable Prime Minister Narendra Modi says, India wants to champion electric vehicle manufacturing for its domestic and world market. Therefore, your country must look closely at tying itself with strategic countries like ours that have lithium deposits.
What policies is the Bolivian government willing to formulate to attract Indian investment?
As lithium is a dynamic sector with a huge growth spurt, it will be impractical to say that ‘this’ is the policy for the future. Dynamics have to allow for certain flexibility. Bolivia can show a certain degree of flexibility for India. So, we are talking about differentiated flexibilities which are very different from standardised laws. This obviously comes because we are at the initial phase of exploration and manufacturing of lithium batteries.
What quantum of investment are you eyeing from Indian firms?
I can see that there is a great movement of interest in the lithium battery field. I see that there are big investment possibilities from Mahindra, Suzuki Maruti, and Toshiba. But I also believe that both the private and public sectors are waiting for the outcomes of meetings that will lead to subsidies and incentives, which NITI Aayog will probably set forth in the coming months. I think once those are in place, India will have a clear understanding of how much to invest and where to do its R&D.
What kind of expertise are you expecting the Indian firms to develop?
If India wants to place itself in the manufacturing scheme of the world, it will have to develop its capabilities in R&D for lithium batteries. If it can, then Indian batteries will be the most competitive batteries in the world. I am sure that India will be able to build the capabilities. I have met leaders of many research institutions here that are starting to associate themselves with R&D. ISRO’s lithium-ion battery technology will make these batteries affordable and accessible. Around 60% of the cost of electric vehicles will be battery storage.
In the solar energy domain, India will not take off unless battery storage is addressed. India wants to provide electricity to its rural areas. This will require the building of micro-grids that run on energy storage, which will need lithium. India has taken a giant leap forward in the solar energy space by launching the International Solar Alliance. Now, it should set out its goals for energy storage.
Will Indian firms be allowed to acquire lithium mines or take up equity stakes in Bolivian lithium miners?
The Indian firms will have to associate themselves with our state company YLB. I think that is how Bolivia has championed its model of marketing its lithium. Of course, we can address a variety of issues such as commercial rights, manufacturing, etc. As a country, we do want to have an added value manufacturing in our country. We are at that phase where we believe that lithium will be the commodity that will diversify our portfolio, and provide us more leverage to develop Bolivia. I want to appeal to Indian investors to come and associate with us. I am sure that we will find an agreeable way to satisfy their requirements. This can be done through a public-private partnership (PPP), which will provide a stable legal framework for investment. With a PTA between India and Bolivia, Indian companies will have even greater stability. Once the PTA is inked, our country will have provided the groundwork for companies to come, invest and feel secure with their investments.
But, in the past, some big corporations have reportedly been upset by the interventionist policy of the present Bolivian government. A Swiss company had said that it would begin arbitration against Bolivia over the nationalisation of some assets. A Korean company with the right expertise had turned down the opportunity to operate in your country. How can you assure that such situations will not arise with Indian investors?
We have nationalised our oil companies, but these actions have paid off. We found conciliation in 100% of these circumstances. Our President Evo Morales has provided the stability in the last four years of governance, something that the country has never seen in its history. This has provided us with the leverage to grow and attain the fastest growth in Latin America in the last three years. Now, we are calling upon the international community to come back again to Bolivia with greater institutional capacities that will provide better stability for companies to come and invest in our country. A liberal type of economy doesn’t work for our country. We have seen that we need to create a different model to build stability.
And we have success stories to cite as well. Among MNCs, Samsung has built its petrochemical plant in Bolivia. Mitsubishi has one of the largest open-pit mines in our country. We have Indian businesses too. If I could bring the positives, I am sure that the negatives will fall behind. Western analysts have indicated that Bolivia’s economic outlook is stable and it is the fastest growing economy in South America. These indicators state stability. You are dealing with a commodity that will have the state’s support. This shows our seriousness to move forward. If we were not serious, why would the German conglomerate have partnered with Bolivia?
Besides, the world is moving towards alternative energy metrics and soon there will be no combustion engine vehicles. Lithium is going to be required for electric vehicles and energy storage for solar energy. It is the next oil. The sooner Bolivia and India advance in consolidating the groundwork and build a legal framework of partnership, better will it be for India that has ambitious energy goals. India is growing at 7-8% and it may grow even faster in the next 50 years. How will India achieve such growth? It can grow by making investments, taking risks, initiating dialogue, placing itself in the region where its presence is not deep enough yet. Bolivia and India need to see each other as necessities.
As for arbitrations, they happen not only in our country but in many other countries as well, including western countries. There are so many arbitrations that Europeans have with other countries in the rest of the world. Many Indian investments have faced difficult issues in some western countries. When a foreign company tries to invest in a country, it sometimes faces difficulty, be it Bolivia or any other country.
Bolivia is home to earth’s largest salt flat Salar de Uyuni, which is said to contain the planet’s largest lithium reserve. It covers an area of 10,582 sq km and is located at 3,656 meters above the mean sea level near the crest of Andes Mountains. It is also a tourism hotspot. Many in your country and outside have raised concerns about the possible consequences for environment and tourism in the wake of your government’s nod for lithium mining in the region. In light of this, will Indian companies not worry about their investments?
Hopefully, lithium mining will not lead to another unsustainable pattern of consumption that the world has witnessed in oil exploration. The issue of lithium mining at Salar de Uyuni should be looked into by our country. We have started to address it. Salar is a very special area for us. It brings a lot of tourists to our country. We are looking to partner with associates that would like to harness our lithium in the smaller deposits, which is still large, around the area. This approach could keep the Salar area untouched to a large extent.
How do you see the India-Bolivia relationship evolving?
Bolivia looks at India as the future economy. India has become the world’s sixth largest economy by surpassing France. It will probably be the third largest in the next decade. But it does not have an embassy in Bolivia yet, while we have one in New Delhi. I hope that there is reciprocity from your country in having an embassy in Bolivia, as there is no better way than to have an embassy in a country to understand its working. I am sure that when India becomes the third largest economy in the world, it will have its embassies in every part of the world.