The election of centrist President Rodrigo Paz in Bolivia has sparked cautious optimism that a more market-oriented leader could pave the way for international investment in the country's vast lithium reserves, after years of failure under nearly two decades of socialist rule.
Bolivia has the world's largest reserves of the ultra-light metal used in electric vehicle batteries, but the development of the sector has been hampered by political resistance and a law requiring state control over exploitation, which has deterred many foreign investors, Reuters reports.
Lithium deals struck by outgoing President Luis Arce with Chinese and Russian companies have been blocked in parliament. Paz has announced that he will review the contracts for greater transparency - a move that could open up new opportunities but also create uncertainty among investors.
The promise of a moderate approach
Paz's election campaign focused less on lithium and more on maintaining social benefits for the poor, decentralizing government and private-sector-led growth - an attempt not to alienate a segment of voters who previously supported the leftist Evo Morales, founder of the ruling MAS party.
In that spirit, Paz also promised not to "sell" the vast Uyuni salt flats, known for their endless white salt fields - a symbol of Bolivia's national sovereignty and indigenous heritage.
Aside from calling for foreign investment that benefits the local Potosi region, Paz has yet to outline a concrete policy plan for the country's 23 million metric tons of lithium resources.
According to Diego von Vacanjo, a Bolivia expert at Texas A&M University, the new president must present clear details in the first months of his term in order to be taken seriously by the global mining community.
"Otherwise, investors will say, 'Okay, same as before'... and Bolivia may once again look like a country that missed the train," said Von Vacano.
Legal obstacles and technical challenges
Paz faces a decision on whether to change a law that allows only the state to exploit lithium, which has limited interest from domestic and foreign investors. Changing that law would require a constitutional referendum or reform, and Paz and his aides have not yet taken a position.
There are also technical challenges: the extraction technology needs to be adapted to the specific chemical composition of the saline underground solutions that lithium is found in. Previous attempts with traditional evaporation ponds have been ineffective, partly due to the high concentration of magnesium.
State-owned YLB opened its first factory in late 2023 and last year generated revenue of $15,6 million while producing just 2.000 metric tons of lithium - far below commercial levels.
By comparison, Chile, the world's second-largest producer, produced nearly 300.000 tons of lithium last year, while Argentina, the fourth largest, produced 70.000 tons.
Although Bolivia missed the 2022 price peak, it could increase production and take advantage of growing demand in the years to come, in line with the global surge in electric vehicle sales.
The quest for stability
Lithium companies are closely watching Paz's first moves after he takes office on November 8.
His Christian Democrats do not have a majority in parliament, which will now be almost entirely made up of centrist and right-wing groups after the ruling MAS party lost seats. That could help pass more investor-friendly laws, provided inter-party infighting does not prevail, Reuters reminds.
Tig Egan, the CEO of the US company Energy X, whose firm lost an earlier tender for a project in Bolivia, welcomed Paz's friendly policy towards the US, but warned that cancelling the Russian and Chinese contracts could set a bad precedent.
"If he overturns them, I would be very wary of going back to Bolivia again," Egan said.
Russian state nuclear corporation Rosatom, which signed a lithium contract with Bolivia in 2023, defended its project in a statement to Reuters, claiming it was beneficial to the economy and local communities, and announced that it would continue to insist on its implementation.
Chinese battery maker CATL, which also has a significant lithium deal with Bolivia in 2023, did not respond to a request for comment.
The president for South America of US company Lilac Solutions, Felipe de Musi, said he would consider new opportunities if Paz provided stable regulations and transparency.
"With clearer rules and openness to new technologies, Bolivia could unlock its enormous lithium potential," he said.
Centrism as a possible advantage
According to Chilean mining lawyer Pablo Hamilton, who is trying to connect foreign investors with the new government in La Paz, Bolivia could become ideal for smaller companies looking to prove their technology, but also for larger firms willing to take risks.
"While it's not entirely clear what he wants to do, Paz is in a better position to talk to people on both sides of the political spectrum - both the right and the left - and thus bring more stability to investors," Hamilton said.
Analysts see this as a potential boost to American influence, at a time when President Donald Trump is seeking to increase the US presence in critical minerals, including lithium, in response to China's dominance.
US Secretary of State Marco Rubio congratulated Paz and said that the Trump administration is interested in bilateral investments, without specifying specific sectors.
"After two decades of flawed administrations, the election of Rodrigo Paz marks a watershed moment for both nations," Rubio said in a statement.
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