The interview with Juan Carlos Zuleta, starts a series of interviews with leading lithium market and industry experts, who in the era of ubiquitous social media might be as well called “influencers”. Juan Carlos journey with lithium started very early-on, when lithium was much more of the niche than it is today. His ability to put developments on lithium market in historical perspective makes for the extremely interesting reading.


Lithium Today (LT): How have you started following the lithium market? How come, you’ve got interested in this space?

Juan Carlos Zuleta (JCZ): That’s a very long story. It begins well back in the 90’s when I was studying in New York. I was doing a PhD in Economics and I came across the contract that the Government of Bolivia signed at the time with FMC Corporation. I am specifically talking about February 1992 when the Government of Bolivia signed a contract with FMC Corporation to start a project in Salar de Uyuni. This project didn’t materialize because when the contract was submitted to Bolivia’s congress, the congressmen found some difficulties to accept it as it was, because there were some things they did not like. For instance, there was a clause concerning a duration of the contract. This called for 40 years, without any obligation on the part of FMC to exploit one gram of lithium. And also FMC was not willing to accept a change in the percentage of value added tax that had changed from 10% to 13%, right in the middle of the negotiation process. They thought that since they had signed the contract in February and the value added tax changed in May, they should not pay the new taxes. This was also unacceptable for the congressmen at that time so the company was very discouraged and finally abandoned Bolivia in January 1993, and moved instead to Argentina.

LT: But I think looking from perspective the conditions to extract lithium from Bolivia right now, are more onerous than they were before…

JCZ: Yes, that’s correct. Besides, there were many problems with the market back then. Because nobody was sure as to whether we will experience a lithium boom, such as the one we are experiencing now. There were many doubts about that possibility. So I started to analyze the lithium market, and I discovered two reasons, why FMC Corporation was so, I would say, demanding as to the terms of the contract. I had realized that the market conditions were key in this case. I had first a hypothesis that there was going to be a technological lag in the world for at least 20 to 30 years, during which the demand for lithium will be very modest. I advanced this hypothesis on the basis of two factors. One – the decision by General Motors in December of 1992 to postpone its previous programme to launch the first series of EVs. They indicated that they would make this decision because of the financial difficulties they were undergoing at that time. They also said that the economic crisis that US was undergoing was also a part of the problem. That’s one thing. The other factor had to do with a delay in launching the project in France, aimed at producing energy by nuclear fusion. It was already known that nuclear fusion is going to use lots of lithium. I thought these two factors would prevent the world from going into a lithium boom and suggested that the demand for lithium would be very modest for the next 20-30 years. I was found to be correct, in a way, because time passed and demand for lithium was very modest until General Motors, the same company that sort of caused this technological lag, announced in January 2007 that they were going to launch the first plug-in hybrid in 2010, the famous Volt. Then I thought that the technological lag was finished. That we will start to see some interesting things on the lithium market. I was correct on that, as well. As soon as GM announced this project, things started to change on the lithium market and in the lithium space as a whole. We are still having the same kind of delays in nuclear fusion, although I have recently written a very brief note on nuclear fusion, which allows me to think now that this thing is going to change as well in the next years.

LT: So what percentage of lithium demand nuclear applications consists of at the moment?

JCZ: I am not so sure because this data is not clear. One thing I can say is that because nuclear fusion will need isotope 6 of lithium – then you will need much more lithium than in other applications, because isotope 6 is very rare in the world. The isotope that is used in different applications is isotope 7. So we have only about 7.8 percent of all lithium resources that can be characterized as isotope 6 in the world. So it can be presumed that because of this factor, you will need lots of lithium. You will need a kind of lithium that is very scarce.

LT: So do you think that a legislation that exists in certain jurisdictions, treating lithium as a mineral of strategic importance, and complicating the situation with its extraction and trade should be discarded or uphold? In light of what you have just said about nuclear fusion technologies?

JCZ: I think you refer to Chile, as a matter of fact I was a part of the National Lithium Commission of Chile. It is a bit funny because I am a Bolivian. In May of 2014, I received a call from the Ministry of Mining from Chile and they asked me if I would be willing to collaborate with them on preparing a report for the President of Chile. So I accepted that and worked with a very selected group of lithium experts in Chile for about 4 months until we delivered an interesting report to the President. So I am very familiar with this matter. There was a connection with a use of lithium for military purposes rather than nuclear fusion. I mean, yeah they thought that nuclear fusion was also part of that but as you probably know, the atomic bomb for instance uses the nuclear fission, that’s based on Uranium. Whereas the hydrogen bomb which was developed later is based on nuclear fusion where lithium is utilized because basically lithium helps the formation of tritium in a nuclear reactor. Tritium is an isotope of hydrogen; it has to be obtained by using lithium in a nuclear reactor. So in Chile they were already aware of these applications, but they were fully interested in a military part of the equation rather than the civil part because at the time it wasn’t clear that we will find use of nuclear fusion to generate electricity, for instance, such as we can do now. Chile was aware of that and they thought that would be a main application of lithium in years to come. And that’s why in the end of 70s they decided to call lithium a strategic resource. So not only a hydrogen bomb can be obtained, regarding military applications of lithium, also there are some nuclear missiles that may use it. Toward the end of the so-called “Cold War”, they started to be prohibited and discarded. If the cold war wouldn’t have ended then these military applications of lithium would have been in place as well right now.

LT: I think most of our readers are aware of your expertise in the context of Bolivia’s lithium industry but if I would ask you to shortly describe the situation there right now, in context of its lithium ambitions. What do you think was done well so far and what are the biggest challenges to fully exploit this resource?

JCZ: Last thing we know is that the Government of Bolivia has signed a contract with a German firm called ACI Systems to start industrializing lithium in Bolivia. When I say start industrializing I am talking about producing lithium-ion batteries in Bolivia. I have some problems with that way of approaching the situation in Bolivia. I have been as a matter of fact very critical of the way the Government has been handling this situation. But let me give you some thoughts on that. First of all, I think the project is ill-conceived because the government decided to engage in this contract with an inexperienced firm with no technical or financial capacity. ACI Systems is a German firm known for producing different kinds of solar systems based on photovoltaic panels which of course use batteries, but they don’t produce these batteries. These systems that they use for their panels are of course outsourced from somewhere else, because they are not a battery company. So it is very strange that the Government has accepted a company like that. They are arguing they have very high capacity to handle this kind of complex projects and if they don’t have a technology they could buy a technology. That’s the last thing I have heard from the government in response to my questions about the validity of this kind of association. Again, I have also advanced some other critique about one or two months ago on the plans of the company in charge of lithium in Bolivia, a state company. They said they were going to install a battery plant with 8 GWh capacity that would be able to produce 400,000 batteries. If you do an extrapolation which I did a few weeks ago, you would find out they were talking about batteries with a capacity of 20 kWh. But, these batteries are being displaced from market, because these batteries are ok for very small cars for runs not greater than 150 kms.

LT: So could you speculate, why they have chosen this partner over more experienced potential partners from South East Asia?

JCZ: It’s a long story, it starts in August 2015, ok? Actually the project in Bolivia started in Bolivia in May 2008, this is when Bolivia announced they will start to develop a lithium project in Salar de Uyuni. From 2008 to August 2015 the advances were very small and I would even say irrelevant. Very, very marginal, because they decided to go on their own in terms of the first two phases of the project as they were conceived at the time. The first phase was a pilot phase. The second phase was production on industrial scale phase. And the third was an industrialization phase, where they were planning to produce batteries. Now by August 2015 they didn’t manage to produce much lithium during the pilot phase and experienced many difficulties to produce anything, because the process of production was not completely elaborated. So they were experiencing much pressure from the public, much political pressure from the highest spheres of government itself. So they decided to hire a German firm to help them to elaborate a final design of the industrial plant of lithium carbonate. So they chose a firm called K-UTEC from Germany which is another company with experience in production of different salts. But nothing fancy, not a cutting-edge company or anything of that sort. So the Germans started their contract that supposed to last for 10 months, but they took more than 24 months. I commented during that time that they would probably start from scratch. It was exactly the case, they started from scratch. Finally, by the end of last year, they delivered their products. But it seems, and that’s still of course a hypothesis on my part, during these 24 months they were probably in touch with this other German firm ACI Systems and it’s funny because ACI Systems started to compete with other companies beginning May 2017 in the call that was launched by the Government for the construction of the industrial plant of lithium carbonate. So there was hard pressure from government and the public so they were forced to set up a call, inviting different companies for the construction of the industrial plant of lithium carbonate. That started actually towards the end of 2016, it was suspended in April 2017 and started over again in May 2017.
So ACI Systems was part of the competition. In June, 10 companies were selected, ACI Systems was a part of them, but nobody knew ACI Systems have other things in mind, not only completing a construction of lithium carbonate plant, for what they were competing at the time with other companies but they were of course aiming at some other more ambitious projects, which was industrialization of lithium in Bolivia. It seems like K-UTEC and ACI Systems founded sort of consortium, I would say, where they had started to work together at this task. So at last, in April 2017, ACI Systems didn’t get the contract for the construction of an industrial scale plant of lithium carbonate which was awarded to a Chinese company, instead. But a few days later the Government announced that ACI Systems would be in charge of industrialization of lithium and would be a strategic partner of Bolivia in a new association where the Government of Bolivia would be sharing 51% of a partnership, ACI Systems would get another 49% of the new company. But again, as I said, ACI Systems didn’t and doesn’t have an expertise to face this task.

LT: This preference for German companies in general and smaller companies, whereas they have a possibility to work with larger one and very experienced is somehow peculiar…

JCZ: Last thing the government said – they are probably not the most experienced company, but they can handle this kind of project, they are a very serious company in Germany – ACI Systems will do the job – because ACI system is a “German firm”. You know… I don’t take that.

LT: It seems a little bit naive…

JCZ: Yes, it is a very naive answer from the government.

LT: Right, but they managed somehow to get a potassium chloride plant off the ground and they touted it as a success of industrialization in Bolivia.

JCZ: You see, the government of Bolivia chose the most difficult way to get the lithium. Because they decided to use solar ponds, to evaporate the brine and obtain lithium out of that. But they did not consider we don’t have the highest evaporation rates in the world or the lowest precipitation rates in the world. So I think it was a wrong decision, they should have looked for alternative ways of producing lithium that would eliminate a use of solar ponds, not only because of the climate problems, but also because of the cost. Last thing I know is that the Government spend almost 1 billion dollars in developing this project. My presumption is that most of this money was spent on construction of those solar ponds. Which are composed of two main parts. One, the structure itself and, two, the membranes that are used, the geotextile membranes which are waterproof. I suggested in 2010 that they should move into other technologies. For instance, one possibility was a technology invented in Korea. I don’t know if you are familiar with those new technologies, they are basically chemical technologies that avoid using any kind of solar evaporation and use different chemicals to extract lithium directly from the brine. The nice thing about these processes is they do not require much time. In Bolivia you require between 2,5 years and 3 years to evaporate the brines. So that’s a very long cycle.

LT: What’s a political climate right now in Bolivia, I mean you are a vocal critique of those government policies. Can you do that with no consequences? Because you hear different things about Morales administration, so I am wondering what’s the freedom of the press and possibility to express those critical thoughts?

JCZ: (Chuckles) That’s a very good question because in the last year or so, I have been experiencing many difficulties to publish my articles in major newspapers in Bolivia. So although there are still some places where I can publish my work, most of the major newspapers and so-called most respected newspapers are taken by the Government. So it is very difficult for me to publish my work, and the government is taking advantage of that. Besides, whenever I am interviewed my ideas and my suggestions are distorted or biased, in favor of the Government. So, I can’t speak of the freedom of press now in Bolivia. These things happen all the time, of course they are targeted at certain people, critiques of the government, who want to tell the truth of what’s going on in Bolivia on different subjects. And I don’t think this is going to change for the coming months because we are already in the middle of pre-election time, the elections are scheduled for October next year and Evo Morales is not supposed to participate in these elections, but they have managed to get him accepted as a candidate. So the political climate is very complex right now in Bolivia. It all indicates it is not going to improve in the months to come.

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