LA PAZ (Reuters) - Bolivia’s partnership with privately owned German company ACI Systems for the industrial use of lithium hit a snag when the decree that created the deal was annulled, the governor of the lithium-rich Potosi region said on Sunday.

Potosi, in southwest Bolivia, has some of Bolivia’s richest lithium deposits. Its governor is Juan Carlos Cejas. Local groups have said the region should get more benefits from the deal.

Potosi authorities reported that the annulment decision was taken on Saturday by the cabinet of ministers of President Evo Morales.

“We have received Supreme Decree 4070 by which the repeal of Supreme Decree 3738 of Dec. 7, 2018 is being arranged,” Cejas said.

Not all the government’s reasons for its decision were immediately reported, beyond a slew of local protests that demanded a 3% to 11% increase in project royalties. The fate of the partnership remained unclear.

“Unfortunately, we have reached this situation. Time will tell who has really acted in the best interests of Potosi,” Cejas added.

Under a joint venture, Bolivian state company YLB planned to team up with ACI Systems to develop its massive Uyuni salt flat and build a lithium hydroxide plant as well as a factory for electric vehicle batteries in Bolivia.

Lithium is used to make batteries. ACI Systems had planned investment of some $1.3 billion in the Potosi deal.

The joint venture is seeking to produce up to 40,000 tonnes per year of lithium hydroxide from 2022, over a period of 70 years.