Environmental groups and economic analysts have raised fresh alarms about Bolivia's recent lithium extraction agreements with Chinese and Russian firms, highlighting potential risks to national interests and environmental sustainability.

The deals, worth approximately $1.03bn with Hong Kong CBC and $970mn with Russia's Uranium One Group, have sparked controversy due to their seemingly unfavourable terms for Bolivia. While the government touts them as transformative for the nation's lithium industry, critics argue they could repeat historical patterns of resource exploitation that have plagued the country.

Adding to previous concerns, a coalition of five prominent NGOs, including the Jubileo Foundation and Club of Geneva, has now identified significant vulnerabilities in the contracts. Perhaps most alarming is the financial structure, which requires Bolivia to shoulder the investment risks entirely whilst providing generous terms to foreign partners. The state-owned Yacimientos de Litio Bolivianos (YLB) must repay all investments with a 12% interest rate—markedly higher than standard international lending rates.

The project's technical specifications have also drawn scrutiny. The Chinese consortium must achieve 99.5% purity in lithium carbonate production with an 80% recovery rate within three years. Whilst this appears to protect Bolivia's interests, experts question whether these targets are realistic given the unique chemical composition of the Uyuni salt flat.

Environmental safeguards appear particularly inadequate. The contracts lack comprehensive provisions for water management, waste disposal, and environmental protection in the ecologically sensitive Uyuni region. Moreover, the agreements sidestep mandatory indigenous consultation processes, raising both legal and ethical concerns.

Yet the disparity between the two contracts is striking. The Russian project's cost per tonne of lithium carbonate production is 2.4 times higher than the Chinese equivalent, making it all the more unattractive, but no clear justification has been provided for this substantial difference. This inconsistency has fuelled speculation about the deals' transparency and economic viability.

Local communities in Potosí, where the Uyuni salt flat is located, have expressed particular dissatisfaction with the proposed 3% royalty rate, which they consider insufficient given the resource's strategic importance. The contracts' structure makes future increases in these royalties particularly challenging.

These agreements reflect a broader pattern of Chinese and Russian resource acquisition strategies in developing nations. Both countries have been criticised for leveraging their financial capabilities to secure advantageous terms in resource-rich nations, often at the expense of local interests and environmental considerations.

Despite mounting criticism, the Bolivian government maintains that these partnerships will accelerate the nation's lithium industry development, promising that Bolivia will retain 51% of profits. However, financial projections appear to rely on optimistic lithium price forecasts that may not reflect market realities.

The stakes are particularly high given Bolivia's estimated 23mn tonnes of lithium reserves—among the world's largest. As global demand for lithium continues to grow, driven by electric vehicle production and renewable energy storage, the long-term implications of these 30-year contracts could significantly impact the country's economic trajectory.