Bolivia - The Next Saudi Arabia?

Hybrids have been all the rage in the last few years, and extended-range and pure electric vehicles are about to be introduced by several major manufacturers. Secretary of Energy Steven Chu has expressed strong support for electric vehicles, beyond ethanol, hydrogen, or several other alternative fuels.

For electrics and advanced hybrids to become a mainstream reality, it's going to take large quantities of lithium, one of the primary components in advanced batteries. Cell phones, laptops, and just about every other portable electronic device uses lithium batteries.

But cars will require much larger batteries than portable electronic gizmos. The one nation poised to benefit the most from this significant shift in automotive technology is currently one of the most impoverished nations in South America, Bolivia. Unlike Brazil, with its significant industrial base, or Chile, with a healthy trade relationship with the U.S., Bolivia is a landlocked, high-altitude backwater with little industry or development. However, it is considered by many to be the "Saudi Arabia" of lithium.
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Unfortunately, it's also home to Evo Morales, its left-leaning leader, friend of Venezuelan strongman Hugo Chavez, and known and demonstrated advocate of state control of natural resources. Shortly after his 2005 election, Morales sent troops to occupy the country's oil and natural gas refineries, and subsequently strong-armed the foreign owners of the refineries (primarily Petrobras, Brazil's majority state-owned energy company) into giving majority control to the Bolivian government.

There's little reason to think Morales wouldn't do likewise to the country's lithium assets. While the more idealistic among us would like to think this potential windfall would be shared among the citizens in the form of improved infrastructure, new schools, dividend checks and other such altruistic expressions, the more common example in previously impoverished nations that find themselves suddenly wealthy is a concentration of wealth among the political elite, and continued impoverishment of the masses.

It would truly be a shame if in the developed world's enlightened rush to rid itself of dependence on hydrocarbon fuels, that it results in economic inequity and disenfranchisement elsewhere. Likewise, companies eager to exploit Bolivia's reportedly vast resources of lithium should exercise caution in dealing with such an openly socialist regime, as outright state control of the precious resource isn't out of the question.

What do you think? Will Bolivia's lithium reserves catapult the country to new heights of success and economic progress? Or simply enrich the socialist party elites?

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