📚The TL;DR📝

1. Bolivia: 12.6 million people, GDP: $122.2 billion, world’s largest lithium reserves. These reserves remain mostly untapped. President-elect Rodrigo Paz assumes office on November 8th.

2. Bolivia has a long and complicated history with foreign investment. Beginning with Spanish colonialists, foreign nations and companies have extracted billions in mineral wealth from Bolivia. Early efforts to develop Lithium were met with backlash.

3. Evo Morales, elected in 2005, and his MAS party attempted to nationalize Bolivian mineral wealth, but were unable to develop these resources despite attempts to partner with China.

4. Rodrigo Paz’s victory in 2025 marks a turning point. He plans to open Bolivia’s economy to foreign investment and seek mutually beneficial partnerships with both the United States and China.

5. Bolivia’s lithium could further cement Chinese dominance in renewable energy or allow the United States to challenge China’s dominance of global lithium supply.

📌Can Bolivia Become a Lithium Superpower?📌

The Movement for Socialism (MAS) — the left-wing party that defined Bolivia’s politics for two decades — failed to qualify for the presidential runoff on Aug. 17, ending their 19-year dominance. Instead, centrist dark horse Rodrigo Paz of the Christian Democratic party captured 32.06% of the vote in the first round before winning the presidency with 55.96% of the vote. Paz campaigned as an outsider with experience as the Mayor of Tarija and the son of former President Jaime Paz Zamora. Across Bolivia, Paz’s victory and MAS’s collapse sparked celebration among opposition supporters and disbelief among government loyalists.

Paz’s win has implications beyond politics. Bolivia’s 2025 election is a pivotal moment that could reshape global clean energy. Bolivia sits on roughly 25% of the world’s lithium— essential for electric vehicle batteries and renewable energy storage. The country’s choices will affect the security and the cost of critical lithium supplies for the U.S. economy. China and Bolivia deepened their strategic partnership during MAS’s rule, aligning on regional cooperation initiatives, while Chinese companies began investing in Bolivian lithium. With the recent reexamination of Bolivia’s ties to China, Paz’s administration appears to be turning away from MAS’s close partnership with China and emphasizing market-oriented policies to overcome years of stalled development. As Bolivia seeks new foreign partners, American companies may gain long-sought access, challenging China’s dominance in the global lithium supply chain. 

Blood Metals

Bolivia’s relationship with foreign resource extraction is marked by centuries of exploitation. Spanish colonizers built an empire in the modern department of Potosí (Southern Bolivia), where forced indigenous labor under the mita system extracted silver to finance Spain’s trade and army. Eight million workers died in Potosi’s mines during colonial times, with mercury poisoning and extreme altitude sickness ailing the overworked miners. After independence, foreign companies dominated tin extraction during the 19th and 20th centuries, shipping ore abroad while Bolivia remained economically and technologically dependent. These experiences fostered mistrust of foreign investment, creating a political legacy in which resource sovereignty became part of the nation’s dignity. 

Early exploration in the 1970s laid the foundation for Bolivia’s lithium industry. In 1977, a U.S. Geological Survey report confirmed lithium reserves in Salar de Uyuni in Potosí. The government hesitated as Uyuni’s deposit had a high magnesium-to-lithium ratio, demanding advanced technology and additional capital that Bolivia lacked. In 1986, President Víctor Paz Estenssoro declared the deposit a Fiscal Reserve, acknowledging its strategic value and the reality that development required foreign expertise.

When President Jaime Paz Zamora took office in 1989, Bolivia faced crushing debt and harsh IMF-mandated austerity measures. Under these circumstances, the Lithium Corporation of America (LITCHO) made a compelling offer: an experienced firm that controlled roughly 50% of the global lithium market and possessed brine-processing expertise could tackle Uyuni’s complexities. The economic necessity and technical reality culminated in the contentious 1992 LITCHO contract with President Jaime Paz Zamora.

Under the proposed 1992 contract, the government granted sweeping concessions, providing the company exclusive rights to approximately one-fifth of the Uyuni Salt Flat’s estimated reserves for 40 years or until extraction reached 400,000 tons of lithium. The contract outlined three operational phases—exploration and development, design and construction, and exploitation and commercialization—requiring LITCHO to invest $5.485 million upfront for a feasibility study and an additional $40 million for plant construction. Bolivia would collect 30% of net profits and 2.5% of net sales, while exempting LITHCO from paying royalties on operational profits for 11 years. Critics, particularly indigenous and peasant organizations, condemned the contract as reminiscent of the old, unfavorable resource agreements imposed by outsiders and their legacy of marginalization and inequality. 

In Potosí, citizens instantly erupted in outrage, viewing the contract as a betrayal of their land and rights and a re-run of past Spanish exploitation. The Paz Zamora administration’s closed-door negotiations with LITHCO bypassed local communities and leaders, fanning resentment over undemocratic deal-making. Protesters warned that a four-decade agreement would strip control over vital resources for generations. The pressure forced President Paz Zamora to renegotiate, increasing Bolivian profit and oversight. These amendments, along with the difficulty of extracting and transporting lithium from the remote region, convinced LITHCO to abandon Bolivia’s lithium. The failed negotiations became a cautionary tale for Bolivia's lithium policy for decades, deepening domestic skepticism toward foreign investment while making international companies reluctant to navigate Bolivia's volatile political landscape.

The Rise of Resource Nationalism

Years of economic exclusion and unrest paved the way for a new political actor who captured the anger of Bolivia’s marginalized rural majority. Evo Morales rose from the cocalero movement, where rural populations defended their cultivation of coca in response to the Clinton Administration’s anti-narcotic policies. Coca is most famously used to produce cocaine but also as a remedy for altitude sickness, a source of nutrients, and the primary source of income for many rural farmers.  Morales’ movement, MAS, emerged outside Bolivia’s political establishment. This establishment was dominated by urban elites and excluded the poor, rural indigenous majority who made up 66% of the population. In the 1980s and 1990s, ruling elites implemented neoliberal reforms, privatizing state enterprises and opening resources to foreign investment, driving urban economic growth but leaving rural, highland communities impoverished.

Amid growing frustration in the countryside, Morales’s populism drew strength from indigenous and anti-establishment activism. He portrayed himself as the voice of the marginalized majority and won decisively with 53.74% of the vote, becoming Bolivia’s first indigenous president. Morales channeled this momentum into an attempt to reclaim control over Bolivia’s resources, framing sovereignty as a political and moral duty for a country tired of foreign exploitation.

Morales’ vow to “industrialize with dignity and sovereignty” marked a turning point away from earlier extraction attempts, such as LITHCO in the early 1990s. Bolivia nationalized its lithium supply, aiming to build a domestic mining and refining supply chain. Despite this ambition, lithium was not an immediate priority for Morales, as he focused on gas nationalization and poverty reduction, with lithium efforts only gaining momentum in the latter part of his presidency. His administration created Yascimientos de Litio Bolivianos (YLB), a state-owned lithium enterprise, in 2017, asserting control over extraction and processing. However, state control did not eliminate controversy. When YLB partnered with German firm ACI Systems Alemania (ACISA) in 2018 to develop lithium infrastructure, widespread local protests erupted. The protestors feared YLB would continue the same trend of foreign extraction without benefits for Bolivians.

Morales’s government also sought to incentivize domestic industrialization, supporting local production of batteries for the electric vehicle company Quantum Motors in 2019. The initiative never got off the ground. Bolivia lacked both the capital and technical expertise to manufacture the batteries. President Luis Arce, who succeeded Morales in 2020, pledged to preserve the nationalist model. Nevertheless, chronic underfunding, technical shortcomings, and the harsh conditions of the Uyuni deposit limited YLB’s progress toward large‑scale industrialization. Lacking sufficient capital and expertise at home, Arce sought foreign partnerships while maintaining state control. In 2023, Arce signed a $1 billion deal with a Chinese consortium, CBC, to build lithium plants, solidifying the partnership. The contract immediately drew criticism. Experts identified inaccuracies and inconsistencies in the documentation, and the opacity reignited indigenous community resistance, showing that despite MAS’s rhetoric, poor transparency and inadequate local consultation continue to drive the same tensions that decades ago derailed foreign investment.

Capitalism for Everyone?

President-elect Rodrigo Paz’s victory in Bolivia’s presidential runoff against right-wing former president Jorge Quiroga reflects voters’ demand for reforms to address the deepening economic crisis. Bolivia faces soaring inflation, capital shortages, and fractured political leadership. Although Paz represents a dramatically different style of governance compared to the MAS, he was the more pragmatic candidate in the race. Paz campaigned to overcome Bolivia’s economic crisis without harsh austerity, but his ambiguous platform offered few specifics about the country’s most valuable untapped asset: lithium. Paz now inherits a fractured legislature, making coalition-building essential to advance his agenda. However, Tuto Quiroga, who ran against Paz in the second-round presidential runoff, pledged support “without conditions” to facilitate governance in the legislature. This gesture demonstrated cross-party recognition of the need for reform. 

Paz’s victory set clear expectations for economic reform, increased investor confidence, and more balanced foreign relations. Paz has a reputation for meticulous, cautious governance, and indicated he would review the CBC deal made by the prior administration. He pledged to review these contracts for transparency, acknowledging the need for local inclusion. His stance raises key questions about Bolivia's lithium future.

The stakes extend beyond ideology. Improved political stability under Paz could finally enable Bolivia to achieve the dignified industrialization Morales failed to deliver. Paz plans to modernize the lithium sector without privatizing, attracting foreign capital through tax incentives while involving local communities in negotiations. For the U.S., these changes in administration have renewed diplomatic relations after 17 years of tension.

Indigenous and social movements remain skeptical. They fear he will fail to offer transparency on the resource management and benefits for locals, the same concerns that derailed previous attempts to work with foreign entities. Paz’s ability to deliver economic growth while respecting community voices will determine whether Bolivia's lithium becomes a catalyst for development or remains an unfulfilled promise.

🌎Why It Matters🌎

Bolivia’s lithium dilemma demonstrates how resource-rich nations can shape the ability of developing economies to progress, as control over critical minerals like lithium directly affects whether countries can continue advancing technologies or remain vulnerable to supply disruptions and geopolitical pressures. Paz’s foreign investment choices will either accelerate supply chain diversification or deepen Chinese control, with direct consequences for American consumers and manufacturers. 

If Paz strengthens Bolivia’s Chinese partnership, it reinforces Beijing's dominance over battery supply chains, even as China weaponizes that control. Recent Chinese export restrictions on battery-cathode technology and lithium-battery materials demonstrate how concentrated supply creates vulnerabilities. The majority of a battery's cost comes from the cathode, where most of the lithium is stored. When lithium prices spiked 400% between 2020 and 2022, vehicle costs surged, slowing electric vehicle adoption. 

Conversely, Paz's plans to open Bolivia’s economy to Western investment could stabilize global supply chains and give the United States a new potential source of lithium. Still, success ultimately depends on Bolivia overcoming the technical, financial, and social barriers that have stalled previous attempts. If Bolivia achieves competitive production, it will reduce pressure on alternative sources like Australia, potentially lowering lithium-ion battery prices and driving more production.

The implications extend beyond vehicles. Lithium has become indispensable to the infrastructure of modern life, enabling grid-scale energy storage that makes renewable energy viable, powering computers and smartphones, and providing the foundation for infrastructure that will employ millions over the coming decades. Paz's lithium policy does not just affect Bolivian development; it also shapes the economic feasibility of the global energy transition and determines the balance of power in vital mineral supply chains.