Bolivia pins hopes on world's lightest metal

Neither Japanese company has committed publicly to making the batteries in Bolivia, and industry analysts are skeptical.

“Some of the most carefully guarded technologies in the world today are lithium-ion and nickel-metal hydride battery technologies,” said Detroit-based metals consultant Jack Lifton. “The Japanese and Koreans do not export these technologies, not even to the United States.”

Battery-making is capital intensive, highly automated, produces few jobs and requires nearly the same precision as the semiconductor industry. Also, auto manufacturers generally want batteries made near their assembly plants.

How soon Bolivia's lithium deposits are developed depends on many factors — the U.S. government's auto industry bailout, whether Chevrolet's Volt sells well at up to US$40,000 a car, and whether U.S. gas prices return to US$3 a gallon or more in an economic recovery, said Bill Moore, editor of the online electric-vehicle journal EVWorld.

Other analysts believe gas prices will need to go even higher if President Barack Obama's goal of 1 million plug-in hybrids vehicles on U.S. roads by 2015 is to be met.

Some demand could be spurred by part of the U.S. stimulus package — US$2.3 billion to develop U.S. battery technologies. In his speech to Congress Tuesday night, Obama complained that many such batteries are now made in South Korea.

For now, predictions of a lithium shortage and a spike in prices appear unfounded. Currently, there is a slight oversupply, and plenty of capacity to meet needs during the economic downturn.

“Everything I've been hearing from the producers and industry consultants indicates there won't be any shortage for the next 10-15 years,” said Brian Jaskula, a U.S. Geological Survey commodity analyst.

Chile's top producer, SQM S.A., says it supplies a third of the global market and says it recently expanded capacity to 40,000 metric tons of lithium carbonate a year, enough to power about 5 million vehicles using current technologies.

It is relatively easy to move and refine Chile's lithium from Andean salt flats to cargo ships for transport to Asia or the United States. Improving the roads and developing other infrastructure in a remote corner of landlocked Bolivia, however, could take years. Marraud said it would take at least two years to identify the deposits and build a processing plant.

Given these difficulties, Bolivians shouldn't ask too much of foreign partners, said Juan Carlos Zuleta, a Bolivia-based metals analyst.

“The people could exaggerate their demands and that could, in the end, lead to the business going elsewhere,” he said.

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