Bolivia SA
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Economic Overview:
Bolivia is one of the poorest and least developed countries in Latin America. Following a disastrous economic crisis during the early 1980s, reforms spurred private investment, stimulated economic growth, and cut poverty rates in the 1990s. The period 2003-05 was characterized by political instability, racial tensions, and violent protests against plans - subsequently abandoned - to export Bolivia's newly discovered natural gas reserves to large northern hemisphere markets. In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts to surrender all production to the state energy company. In early 2008, higher earnings for mining and hydrocarbons exports pushed the current account surplus to 9.4% of GDP and the government's higher tax take produced a fiscal surplus after years of large deficits. Private investment as a share of GDP, however, remains among the lowest in Latin America, and inflation remained at double-digit levels in 2008. The decline in commodity prices in late 2008, the lack of foreign investment in the mining and hydrocarbon sectors, and the suspension of trade benefits with the United States will pose challenges for the Bolivian economy in 2009.
— CIA World Factbook
Auto Manufacturers Race for Bolivia’s Lithium Reserves
From Universia Knowledge@ Wharton
Recently, Bolivia has become the nerve center of Latin America, attracting the interest of several multinational companies. The reason: The world's largest reserves of lithium are in this country, in the Salar (Salt Flats) de Uyuni.
Located in the Potosi region in the southeast of the country, 3,500 meters above sea level, the Salar de Uyuni holds five million tons of lithium, a mineral that is required for manufacturing batteries for hybrid and electric cars. The region represents an attractive investment option for global automotive manufacturers who are trying to break their dependence on petroleum and produce more fuel-efficient products.
Aware of the positive effects that the industrialization of lithium would have on the automotive sector and the local economy, Morales has declared his intention to engage in a partnership with some multinational firm. However, given the unusual amount of interest awakened by the mineral at Uyuni, Morales – who has already nationalized the local petroleum and natural gas industries — declared that "the goal of the Bolivian government is to exploit lithium on a grand scale" and that the government "will never lose ownership of its natural resources," according to the daily newspaper El Diario de Bolivia.
Given that fact, John Tilton, a professor in the Catholic University of Chile's mining division, warns that "the actions of the government and its policy for foreign investments in Bolivia will be the determining factors, and they could drive multinationals to invest in Chile or in other countries in Latin America if Bolivia does not offer the appropriate climate for investment."
"There are deposits of lithium in Chile and Argentina, and a promising deposit in Tibet," notes Oji Baba, an executive in Mitsubishi's Base Metals Unit. "But it is clear that the biggest prize is in Bolivia. If we want to lead the next wave of lithium-based automobiles, we have to be in the Salar de Uyuni." >>>>Go to Full Story >>>