Bolivia unrest puts world-class lithium assets at risk

Bolivian President Rodrigo Paz has introduced legislation to expand military powers as nationwide protests entered their 36th day on Friday, adding uncertainty to the country’s vast lithium resources development.

The state of exception bill, presented to Congress on June 3, would establish a legal framework for military intervention alongside police forces during public unrest. The proposal follows the government’s passage of Law 1732 last week, which removed restrictions on military deployments during civic demonstrations that were imposed after the Sacaba and Senkata killings of 2019, where 21 people died and 180 were injured.

“The measure seeks to guarantee the transportation of food, fuel and medical supplies,” Paz said during the swearing-in ceremony of new Defence Minister Ernesto Justiniano in La Paz.

Bolivia hosts some of the world’s largest lithium resources, including the massive Salar de Uyuni deposit. The country has signed agreements with Chinese and Russian-backed groups to develop direct lithium extraction projects in the Salar de Uyuni and other salars. Several contracts still require legislative approval and commercial production remains limited compared with neighbouring Chile and Argentina.

However, political instability, regulatory uncertainty and recurring social unrest have repeatedly slowed efforts to develop projects viewed as strategically important to global electric vehicle, energy storage and critical minerals supply chains.

 

 

Lithium prize

Bolivia’s state-owned lithium company YLB opened its first industrial plant in late 2023 and last month said it expects to reach 3,600 tonnes of lithium carbonate and 87,696 tonnes of potassium chloride output. However, the facility has struggled to reach nameplate capacity, underscoring the challenges Bolivia has faced in translating its vast lithium resources into commercial production.

Two other major lithium players in the country are the partly Chinese-backed CBC (CATL, BRUNP Recycling and CMOC Group) consortium and Russia’s Rosatom. 

Bolivia’s Congress has yet to approve several proposed lithium agreements, leaving major investments in limbo. Chinese and Russian direct lithium extraction (DLE) agreements signed in 2023-24 collapsed into congressional turmoil in July 2025 and were later halted by court order.

As lawmakers prepare to debate the state of exception bill, the government argues prolonged road blockades threaten economic stability and the delivery of essential supplies. Protest leaders maintain they will remain in the streets until their demands are addressed, raising the prospect of further confrontation if the legislation is approved.

For mining companies, battery manufacturers and governments seeking secure supplies of critical minerals, the outcome could influence not only Bolivia’s political future but also the pace of development in one of the world’s most important untapped lithium regions.

Growing tensions

Government officials say the bill is intended to restore access to essential goods in the cities of La Paz and El Alto. Social organizations, however, warn the measure would provide legal cover for security forces to forcibly dismantle roadblocks and suppress demonstrations.

Vice Minister of Internal Regime Hernán Paredes said the legislation would provide full institutional support for joint operations involving police and military personnel to reopen major highways.

U.S. Secretary of Defence Pete Hegseth on Thursday characterized the anti-government protests as an attempted coup against President Paz and said Washington would oppose efforts to remove the government.

“The United States is watching. Bolivia must not allow itself to fall prey to the old status quo of narco-terrorist dominance in the region,” Hegseth wrote on social media.