Beating China Germany wins access to world’s biggest lithium deposit

A small German company won the right to develop the world’s biggest lithium reserve, in Bolivia. VW, BMW and Mercedes need it to power their electric cars.
Quelle: Reuters
The new oil: Lithium brine.

A salt lake in the Bolivian Andes could help German carmakers to realize their ambitious electric-car plans. The Salar de Uyuni salt flat, in south-west Bolivia, is home to the largest global reservoir of lithium. The soft, silver-white alkaline mineral is crucial to make car batteries.

A small German company, ACI (which stands for Advanced Clean Innovations), formed a joint venture with a Bolivian state-owned company, YLB, to mine the lithium. It beat more than a dozen of firms from Australia, Canada, China and other countries. ACI, which has an annual revenue of €25 million, could join the major league of lithium producers, including Albemarle and Livent from the US, Tianqi of China and SQM of Chile.

The German company greeted the news as the first time in decades that the country has secured direct access to important, non-domestic raw materials. The ACI founder and boss, Wolfgang Schmutz, told news agency DPA, "this is important especially for the German auto industry.”

VW, BMW and Mercedes-maker Daimler are all pumping billions of euros into the development and production of electric cars. VW alone hopes to sell 2 to 3 million electric cars per year by 2025.

Access to lithium, which is also used in the batteries of mobile phones and e-bikes, will help German carmakers reach those goals. That's vital for them to survive in the long run, as consumers switch to electric vehicles. Many Chinese battery makers have already secured long-term supply deals for the precious metal, whose price has doubled since 2016.

The ACI joint venture, majority-controlled by YLB, will initially invest €300 million to produce 35,000 to 40,000 metric tons of lithium hydroxide by 2022, enough to build batteries for up to 800,000 electric cars with a range of more than 300 kilometers (186 miles). The aim is to exploit the lithium reserves for 70 years by pumping it with water and treating the lithium brine.

ACI, which counts VW, BMW, Bosch, lens-maker Zeiss and chip machine maker ASML among its customers, will have to stump up half of the €300 million. Schmutz, the boss, said he expected to bring in partners to raise the money. German salt technology specialist K-UTEC will design extraction equipment to filter the lithium from the brine. The project is challenging, because the salt lake is also a major tourist destination at an elevation of 3,656 meters (11,995 feet) where water and energy are scarce.

His company won the mandate with YLB thanks to intensive lobbying in Bolivia, Schmutz said. It helped that one of his closest employees, Stefan Kosel, is married with a Bolivian and has an excellent network in the Latin American country. It didn’t hurt either that Juan Carlos Montenegro, the political director of Bolivia’s lithium program, studied mineralogy at the University of Heidelberg. The director and German Economics Minister Peter Altmaier were both present in Berlin on Wednesday, where ACI and YLB signed the joint-venture contract.

Whether this particular deal will directly benefit German carmakers is unclear. At present, they don't produce the batteries themselves, meaning they rely on other companies to process the commodity. Most makers of e-car batteries are found in China, Japan or South-Korea and carmakers make deals with them: BMW agreed a €4-billion supply deal with Chinese firm CATL in June, while Daimler announced supply contracts worth €20 billion on Tuesday. VW may opt for a partnership with Korea’s SK Innovation.

This reliance on Asian suppliers could change if a German consortium were to produce batteries. Economics Minister Peter Altmaier plans to provide up to €1 billion to promote battery production in Germany. That would need lithium, which could be mined in Uyinu. ACI said in a press release that in the next few years, it plans to set up another joint venture, to manufacture cathode material and battery systems in Bolivia and Germany.

Alexander Busch is Handelsblatt's South America correspondent. Martin-Werner Buchenau reports from Stuttgart as Handelsblatt's Baden-Württemberg correspondent. Gilbert Kreijger is an editor with Handelsblatt Today. Lisa Pausch, a freelance editor with Handelsblatt's publication Orange, contributed to this article. To contact the authors: [email protected], [email protected], [email protected]