A new deal signed by the Bolivian government with the Chinese consortium CBC is expected to upgrade joint extraction and development of the South American nation's lithium reserves.

The latest pact, valued at around $90 million, adds to a previous agreement signed last year. It will see the Chinese group invest further in Bolivia's lithium sector.]

"An acceleration of lithium extraction is expected, which could clearly benefit Bolivia's economy today as it seeks to diversify beyond hydrocarbon exports — a main income source that has been declining in recent years," Juan Subirana, an energy analyst and business consultant in the Bolivian city of Santa Cruz de la Sierra, said.

"Bolivia is betting lithium can replace that lost revenue and foreign currency."

Bolivia has one of the largest lithium reserves in the world. Lithium is a key mineral used in lithium-ion batteries, which power electric vehicles and electronic devices. Production under the new deal is slated to begin in 2025.

With the price of lithium rising to almost $85,000 a metric ton, a more than tenfold jump since 2020, the Bolivian government has been eager to exploit its mineral wealth.

The CBC consortium is led by Contemporary Amperex Technology, or CATL, which is based in Fujian province. As of last year, CATL holds around 37 percent share of the global lithium battery manufacturing market.

Pilot projects

The deal will facilitate pilot projects and studies for a proposed lithium carbonate industrial complex to be run by Bolivia's state-owned Yacimientos de Litio Bolivianos, or YLB, in partnership with CBC.

The newly announced deal brings together multiple agreements. Last January, CBC agreed to invest over $1 billion to build two industrial direct lithium extraction plants that would facilitate lithium processing in Bolivia.

The deal was completed after years of negotiations between Bolivia and China. The Chinese consortium will oversee lithium mining in Bolivia.

"If things are smooth sailing, the lithium industry could generate state revenues through taxes, of $4-5 billion, annually, and — more important than anything else — employment opportunities for the Bolivian population," Juan Pablo Suarez, an analyst and socioeconomic consultant, said.

Bolivian President Luis Arce agreed that deals like the agreement are critical steps for the country. "All the companies wanting to come to our country must focus on industrialization," he said.

"Both China and Bolivia are committed to improving global governance, combating climate change and taking good care of Mother Earth on which humanity depends … to leave clean waters and green mountains for generations to come," China's Ambassador to Bolivia Wang Liang wrote in an op-ed in Bolivian newspaper Ahora El Pueblo.

The writers are freelance journalists for China Daily.