A court in Bolivia is pushing back against Russia and China’s efforts to exploit the country’s lithium reserves. The Russian agreement would have resulted in an approximate $1 billion loss to Bolivia while Russian investors received all the financial benefits and control over this critical mineral. As a direct result of the Center for International Private Enterprise’s (CIPE) work, its partner Fundación Milenio’s initial study, and an effective advocacy campaign by multiple Bolivian civil society groups, the “contract” with Russia’s state-owned Uranium One Group (UOG) has not received legislative approval. Additionally, due to increased public and media attention on this agreement and another involving a Chinese firm, a judge has ordered the suspension of the contract until a proper environmental impact assessment is conducted.
Russia and China have made significant inroads and investments into critical mineral supply chains across the globe. As nations become increasingly reliant on these minerals to power everyday life, these authoritarian regimes have outsized leverage to exploit their political and economic influence over mineral-rich countries. When Russia and China dominate these supply chains, they often effectively trap mineral-rich countries into cycles of debt and underdevelopment and provide authoritarian regimes with the power to shape the global economy.
The “Lithium Triangle” (Argentina, Bolivia, and Chile) offers a stark example of how Russia and China have already exerted their influence to secure critical minerals deals that heavily favor their development at the expense of other countries. The Lithium Triangle holds approximately half of the world’s known lithium reserves. As global demand for this critical mineral surges, the region has attracted foreign investment. But when such capital investments are corrosive and predatory, they unfairly burden these mineral-rich countries. CIPE works to provide an alternative to exploitative foreign influence with access to “constructive capital” that genuinely benefits local economies and democratic institutions.
For Bolivia, developing its lithium reserves offers a potential pathway to economic growth and improved living standards. In 2024, the government pushed to get a major agreement signed with UOG. But concerns have arisen over the deal’s fairness and long-term consequences.
The reality of Bolivia’s experience has underscored a broader concern: the strategic use of foreign investment by authoritarian regimes to gain control over critical minerals and expand their geopolitical influence. CIPE’s work in regions like the Lithium Triangle is crucial in advocating for stronger regulatory frameworks and a robust business enabling environment that can attract constructive capital investments. Protecting critical mineral supply chains through free market principles and strong governance is essential not only for the economic future of resource-rich nations like Bolivia but also for the stability and security of the global economy.
For Bolivia, developing its lithium reserves offers a potential pathway to economic growth and improved living standards. But concerns have arisen over the deal’s fairness and long-term consequences.
CIPE’s Bolivia partner Fundación Milenio recently researched the “Accidental Association Contract”, signed in 2024 by Bolivia’s state-owned Yacimientos de Litio Bolivianos (YLB) and UOG. The contract outlines plans for a lithium and lithium carbonate extraction plant in the Uyuni salt flats. The Fundación Milenio report, “Contract between YLB and Uranium One Group: All the Risk for the State, None for the Investor,” raises concerns about the nature of this partnership.
The Risk of Authoritarian Partnerships
While the overall project stretches over three years, the contract that the executive was trying to push through only covers the initial 18 months. It is not clear who will be responsible for the completion and future operation of the plant after the initial joint venture phase concludes. And while YLB holds a majority stake, UOG retains plant ownership and controls the crucial rights to buy and market the extracted lithium. YLB will need to sign a separate contract to cover operational costs.
Financial Burden on Bolivia
The terms of the arrangement with UOG raises serious questions about when, or if, Bolivia will realize substantial returns from its valuable lithium resources. The contract requires Bolivia to repay all construction costs, essentially making Bolivia the main investor while guaranteeing a return for UOG. This arrangement upends the shared-risk model typical of constructive investment partnerships and leaves Bolivia with substantial debt and uncertainty about long-term returns.
The immediate certainty is that YLB, and by extension the Bolivian state, will need to repay nearly one billion dollars for the plant’s construction.
How the Partnership Favors Russia
The 2024 agreement between Bolivia’s YLB and Russia’s Uranium One Group is officially termed an “accidental association contract,” but Fundación Milenio’s analysis reveals the contract doesn’t meet the criteria. The contract only covers the first 18 months of the three-year project, and it lacks clarity on what happens afterward. This creates uncertainty around who will ultimately be responsible for operating and maintaining the lithium extraction plant.
While YLB technically owns a majority stake, UOG holds ownership of the physical plant and all marketing rights. This means Russia controls the sale and export of the lithium, a critical resource in the global clean energy race. Further, YLB must pay back UOG’s construction costs in full, regardless of the project’s success. This clause virtually eliminates financial risk for the Russian firm, while Bolivia assumes all liability.
While the next steps remain uncertain, the action taken by the Bolivian courts serves as a clear example that advocacy can be effective—even in countries with limited democratic space. Furthermore, as Bolivia enters the presidential campaign season, the delay in approving the UOG contracts provides citizens with more time to use their vote to influence the future of the country’s natural resources.
In the end, CIPE and Fundación Milenio argument that such partnerships are not only economically risky but also undermine democratic governance are resonating. Now, this is just a partial victory since challenging corrosive capital flows, such as those from China and Russia, that bypass accountability, weaken institutions, and encourage corruption is only the first step. If countries like Bolivia want to use their vast mineral resources to improve the well-being of their citizens, they must promote investment models grounded in free-market principles, transparency, and mutual benefit, that will attract interest from other countries and companies. CIPE’s work in Bolivia and across the Lithium Triangle is focused on helping create this environment by promoting the legal and regulatory environments needed to attract ethical investors and achieve sustainable development.
Published Date: May 30, 2025