Surging demand for lithium—used in batteries of electric vehicles (EVs), smartphones and laptops—has stoked interest in mining of the metal in countries such as Bolivia that has large known reserves.

Bolivia, which forms the so-called Lithium triangle with Argentina and Chile, has reached out to nations for exploration and extraction of the metal and manufacture of value-added products.

With one-fourth of the world’s lithium deposits, Bolivia has declared it as a strategic asset of the country. This means that any foreign company will have to partner state-owned corporation YLB to get access to lithium reserves in Bolivia.

In an interview, Bolivia’s ambassador to India, Sergio Dario Arispe Barrientos, said the South American nation wants to establish a government-to-government pact with India for extracting lithium from his country.

The value of bilateral trade between India and Bolivia is now $450-500 million. That compares with the $1.5 billion between China and Bolivia. However, the entry of Chinese corporations will not come in the way of their Indian counterparts from doing business in Bolivia, said Barrientos.

“The requirement of lithium in the Indian market is expected to be 350,000 tonnes per year, discussions with officials of the Society of Indian Automobile Manufacturers (SIAM) indicate. Bolivia is trying to put together a 15,000 tonne capacity plant and India’s demand will be incremental,” he said.

The biggest hurdle related to the adoption of EVs in India has been the sourcing of lithium as the government does not have any arrangement with any country for lithium exploration and extraction.

India is also at a disadvantage as it does not have an embassy in Bolivia, while nations such as Germany and China have established their missions. “India does not even have an embassy in Bolivia but China has an embassy. Who is at an advantage? Of course, the country with the embassy,” explained the ambassador.

The Bolivian government recently signed a contract with Germany’s ACI Systems GmbH for extraction of lithium and manufacture of lithium-ion batteries in the country. The German firm will invest $1.3 billion in the project.

However, countries like Bolivia are looking to strengthen diplomatic relations with India, which is one of the G-20 economies that intends to promote electric and hybrid vehicles in a big way in the next 10-15 years and given the expanse of the Indian market.

In May, the foreign minister of Bolivia is scheduled to lead the first ever ministerial delegation to India. According to Barrientos, lithium will be the most important subject that will be touched upon and some significant announcements will also be made.

Last week, the ambassador called on Union minister for new and renewable energy, R.K. Singh, and officials of SIAM, which proved to be quite fruitful.

Lithium in Bolivia, unlike that in countries like Australia and Chile, is found underneath a salt flat and firms do not need to dig deep to extract the metal, thus saving on costs. On the flip side, experts allege that Bolivian lithium is highly impure because of the high magnesium content and needs to be refined later.

As companies such as Suzuki plan to manufacture lithium-ion batteries in India, securing sources of lithium may be an arduous task. Hence India may look at securing a pact with countries like Bolivia in the near future. As of now Bolivia has a capacity of exporting 15,000 tonnes of lithium, which is paltry compared to the demand. However, with fresh investments, this capacity is expected to increase manifold.

“Perhaps India does not have the financial clout the Chinese have but it does have the upcoming market. If you would share a piece of this with the Latin American market, it will give you enough political clout,” explained the ambassador.