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Bolivia’s election of centre-right President-elect Rodrigo Paz Pereira could see the country open its vast lithium resources to foreign investors to bolster its faltering economy – a move that could benefit the US after years of hostility toward Washington, analysts say.

Paz, a senator and the son of a former president, won the country’s election earlier this month, ending two decades of left-wing rule, which constrained foreign investment in the South American nation’s mineral wealth.

The change in government may be welcomed by investors in the US, which is seeking to secure access to minerals that are critical for clean technology and military equipment, to counter China’s supply chain dominance, and has previously raised concerns over Chinese investments in the region’s lithium industry.

Lithium is a key material to manufacture rechargeable batteries for electric vehicles and energy storage.

Bolivia makes up less than 1% of global lithium production despite possessing some of the world’s largest reserves, with an estimated 23 million tonnes, or 20% of the global total.

Paz has pledged to seek overseas partnerships to tap these reserves. But he will have to balance engaging the US with maintaining investment from China and Russia initiated by his predecessors.

“Exactly what he does on this issue will determine his relationship with China and Russia,” said Farit Rojas, a professor at the Higher University of San Andrés in La Paz.

At the same time, the political reset could provide Bolivia with a critical opportunity to set clearer and stricter environmental and social standards for developing its burgeoning lithium sector, analysts told Climate Home News.

Bolivia’s lithium dream

Paz’s election comes at a pivotal moment for the country. It is mired in an economic crisis spurred by runaway inflation caused by a foreign currency shortage, leaving people waiting in long lines for fuel and essentials like cooking oil.

Converting lithium reserves into a profitable export industry would bring much needed dollars into the country.

But doing so would require amending Bolivia’s constitution to allow private firms to extract the mineral. That privilege was restricted to Bolivia’s state-owned companies under the 20-year rule of the Movement for Socialism (MAS), the party formerly led by ex-President Evo Morales.

Constitutional restrictions and past rejection of foreign investment mean Bolivia’s lithium resources remain largely untapped compared to neighbouring Argentina and Chile, whose deposits are of higher quality.

A significant share of Bolivia’s deposits also lie beneath the Salar de Uyuni salt flats, a major tourist attraction.

Paz, whose party does not have a legislative majority, has yet to say whether and how he will amend Bolivia’s constitution. But he has pledged not to “sell out” Salar de Uyuni.

US, China and Russia: a balancing act

His first months in office will be watched closely by the Trump administration. Following Paz’s election victory, the US Department of State pledged to work with him on “shared goals of regional and global security, economic prosperity, and growth that will benefit our nations”.

For the US, this could be an opportunity to break China and Russia’s grip on Bolivia’s lithium reserves, said Pablo Hamilton, a Chilean mining lawyer connecting foreign investors with energy opportunities in Bolivia.

In 2024, Bolivia’s state-owned Yacimientos de Litio Bolivianos lithium company signed contracts worth a combined $2 billion with Chinese and Russian firms to extract lithium beneath the Salar de Uyuni salt flats. The year prior, it signed a $1.4 billion deal with Chinese battery manufacturing giant CATL to develop its lithium resources.

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But those contracts – which have yet to be approved by Bolivia’s legislature – have been sharply criticised by scientists, Indigenous peoples and local communities because of a lack of transparency over the consultation process, inconsistencies within the contracts and environmental risks. Paz has pledged to review the contracts.

Cancelling the contracts could cause investors to worry about policy volatility, Hamilton told Climate Home News. But the administration could justify doing so if it can prove allegations of corruption that have swirled around the deals. It could also provide an opportunity to establish stricter mining standards that provide certainty to potential investors.

Investors “don’t know what to expect”

“The rules are not clear enough. It’s very concerning that investors don’t know what to expect,” Hamilton said. “This is a great opportunity to [mandate] a free, prior and informed consultation process and environmental impact assessments – really professional ones, not just to tick the box.”

To attract foreign investment, Paz will likely seek to build public-private partnerships, which will require greater engagement from local actors than in the past, Hamilton said.

In the area surrounding Salar de Uyuni, Indigenous groups have lost trust in the government, citing the shadowy allocation of mining contracts and saying their communities have not benefited from mining.

They also worry that additional extraction would deplete the limited freshwater resources they rely on for farming, said Gonzalo Mondaca of environmental organisation Cedib, which works with communities living in the lithium-rich region.

Efforts to green lithium extraction face scrutiny over water use

The proposed Chinese and Russian extraction plans would use direct lithium extraction (DLE), a group of technologies that proponents say can help extract more lithium with fewer environmental impacts but which still uses large amounts of water.

But existing environmental assessments are not sufficient to understand the impact of the technique on the salt flat’s ecosystem, said Mondaca.

On the campaign trail, Paz also said he would seek to export the magnesium byproducts of lithium extraction to the US and China.

However, that plan requires a high level of technological development and Bolivia currently lacks the necessary infrastructure, said Mondaca.

Even if the new president manages to clear constitutional hurdles to liberalise the country’s lithium sector, “there is still a long way to go,” he added.

The post Bolivia’s shift to the right renews ambition to mine vast lithium reserves appeared first on Climate Home News.

Bolivia’s shift to the right renews ambition to mine vast lithium reserves