Bolivia says lithium plant on track for 2014

LA PAZ, Oct 31 (Reuters) - Bolivia is optimistic it will develop a large-scale lithium industry at the Uyuni salt lake single-handedly by 2014, even though the country has never produced lithium, its mining minister said.

Bolivia, one of the poorest countries in Latin America, recently said it would invest up to $500 million to build a plant to produce lithium carbonate at Uyuni, believed to be one of the world’s largest lithium deposits.

Bolivia has around 50 percent of the world’s lithium, about 5.4 million tonnes, but it does not mine the metal -- unlike neighboring Chile and Argentina, which also hold big reserves.

After negotiating with companies including France's Bollore BOLL.PA, South Korea's LG 051910.KS, and Japan's Sumitomo 4005.T and Mitsubishi Corp 8058.T, Bolivia's leftist government decided to develop a lithium industry in Uyuni by itself because the firms did not offer to manufacture lithium batteries in the landlocked South American country.

“We know there are obstacles ... (but) we’re optimistic we’ll have a large lithium plant on target (by 2014),” Mining Minister Luis Alberto Echazu told reporters late on Friday after a summit of lithium experts in La Paz.

Lithium carbonate is the main component of the rechargeable batteries that power portable electronic devices. Demand for the metal could soar if car makers raise production of hybrid cars or start large-scale manufacturing of electric vehicles.

According to the government, the plant will produce up to 30,000 tonnes of lithium carbonate a year, which represents around 30 percent of the current global supply.

Speaking at the same lithium summit in La Paz, the government’s mining director, Freddy Beltran, told Reuters the government also will need to invest up to $500 million in the area to build roads, a natural gas pipeline and water and power infrastructure.

He said companies like Japan’s Sumitomo and Mitsubishi, and South Korea’s state-run Kores, are helping the government find the best way to extract lithium from Uyuni “free of charge,” but will be the preferential buyers of Bolivia’s lithium carbonate.

Although Uyuni, in the central Potosi region, may hold the largest reserves of lithium in the world, analysts have questioned the quality of the deposit and have said the high degree of magnesium in the brine of the salt lake could make lithium recovery expensive.

Moreover, the lake floods every year, which may lower the efficiency of solar evaporation ponds from which lithium is extracted.

Leftist President Evo Morales has nationalized energy and mining companies and has long said that the Andean country’s natural resources should be controlled by the state and not foreign companies.

His policies to tighten control over the economy are very popular among the majority poor, who blame foreign investors for ransacking the country’s mineral and energy riches.

Additional reporting by Diego Ore; Writing by Eduardo Garcia; Editing by Will Dunham