By Damian Kahya

BBC News, Salar de Uyuni, Bolivia

Bolivia's lithium reserves could bring wealth to the country High in the Andes, in a remote corner of Bolivia, lies more than half the world's reserves of a mineral that could radically reduce our reliance on dwindling fossil fuels. Lithium carries a great promise. It could help power the fuel efficient electric or petrol-electric hybrid vehicles of the future. But, as is the case with fossil fuels, it is a limited resource. Lithium carbonate is already in the batteries of laptop computers and mobile phones. It is used because it allows more energy to be stored in a lighter, smaller space than most alternatives. And as the auto industry rushes to produce new fuel efficient and electric cars, it too is turning to lithium batteries as its first choice to boost the power of their new models. GM has one in its new hybrid Volt, Toyota is testing one in its next generation hybrid Prius. Mercedes is testing an electric version of its Smart, while BMW is doing the same with its Mini. And Nissan-Renault, Mitsubishi and VW are all rushing to buy or produce enough of the batteries to power their future models. The best of the pure electric cars can reach ranges of more than 150 kilometres per charge. More is needed But there is a problem. This isn't a magic solution

Luis Alberto Echazu, Bolivian minister for mining

Morales defends Bolivia changes Mitsubishi, which plans to release its own electric car soon, estimates that the demand for lithium will outstrip supply in less than 10 years unless new sources are found. And they have ended up in Bolivia. "The demand for lithium won't double but increase by five times," according to Eichi Maeyama Mitsubishi's general manager in La Paz. "We will need more lithium sources - and 50% of the world's reserves of lithium exist in Bolivia, in the Salar de Uyuni," he adds, pointing out that without new production, the price of lithium will rise prohibitively. Valuable resource Lithium is found in rocks and sea water. Locals fear the benefits will not be passed on But almost all the commercially exploitable reserves are found in the brine under salt flats. The world's largest reserves lie in Bolivia at the Salar de Uyuni - in the remote southern Andean plane. But Bolivia is not a country known to be friendly to foreign industry. Its socialist president, Evo Morales, is keen to expand state control over its natural resources, a task carried out by Bolivia's minister for mining, Luis Alberto Echazu. "We want to send a message to the industrialized countries and their companies," Mr Echazu says. "We will not repeat the historical experience since the fifteenth century: raw materials exported for the industrialisation of the west that has left us poor." Modest ambitions Gold, silver, tin, oil and gas have all been found and exported from here whilst the country remains the poorest in the region. They probably don't have a lot of experience of doing this sort of thing themselves so they'll have to bring in expertise and technology

Charles Kernot, mining analyst, Evolution Securities For President Morales' supporters, that is reason enough not to allow in foreign mining companies to extract the lithium. Across the flats, freelance miners work to break up the surface salt selling it to passing trucks for just a few dollars. Indigenous and poor, they are core supporters of the president. A grizzled old miner, giving his name only as Alfredo, says he does not believe that lithium will ever be extracted. "We don't want to see foreign companies here," he says. "It would be very bad, as the government says." Alfredo's hopes for the future are modest. "I just want to work until I die" he says, a smile across his face. It is not an uncommon sentiment here. Sharing the benefits In spite of the grinding poverty here, attempts in the 1980's and 1990's by foreign companies to extract the lithium met with resistance from the community. Bolivia is concerned about damage to the environment They say the money would go elsewhere. Francisco Quisbert is a local activist with President Morales' party who took part in the resistance. Now he is working with the president to hammer out a new plan for a state-owned pilot plant on the flats. "We don't want international involvement," he says. "This plan has raised the hopes of the region. "Before our grandparents lived on the salt. They arrived from the valleys in caravans of llamas, but the market forced them to leave. "We want to return to live on the salar [and] improve our living conditions and to participate in the project." To begin with the pilot plant will produce no more than 1.2 kilotonnes a year. If an industrial plant is then built it may increase to around 30 kilotonnes by 2012, - thats just under a third of current production. But most lithium now goes to small batteries for electronic goods. Car batteries are far larger and Mitsubishi estimates the world will need 500 kilotonnes a year just to service a niche market. For electric cars to become the norm, it could need far more. Mitsubishi predicts that there will be a supply shortage by 2015. Pollution nevertheless Analysts suspect that Bolivia's government can produce this much. "Governments in South America have had a very successful history of mining," explains Charles Kernot, a mining analyst at Evolution Securities. But the question is how fast. "They probably don't have a lot of experience of doing this sort of thing themselves so they'll have to bring in expertise and technology," Mr Kernot adds. "That whole process may take a lot longer than people are anticipating." Consequently, he continues, "the car manufacturers will have to strike a balance between how quickly they manufacture with the supply of metal because they don't want to drive the price up to such an extent that the cars get priced out of the market". Long-term, Bolivia's government is wary of the environmental damage mass extraction could cause. The mining minister, Mr Eschazu, has a stark message for Western firms. "The capitalist leaders have to change," he says. "If all the world had consumers like North America, everyone with a car, it would grind to a halt. "It is also going to generate pollution, not just from fossil fuels but also from lithium plants, which produce sulphur dioxide. This isn't a magic solution." It is not a view likely to go down well in the offices of Toyota and General Motors.



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