BOLIVIA Trends and Developments Contributed by: Jorge Inchauste and Rosario Echeverría, Dentons Guevara & Gutiérrez S.C.
• investment incentives, among other issues. Despite the regulatory changes on FDI in Bolivia, net FDI accumulated USD 7.416 billion between 2006 and 2016, representing an average share of 2.9% of the Bolivian economy. In these 11 years, net FDI grew at an average rate of 1.7%, reach - ing an all-time high of USD1.749 billion in 2013. However, FDI figures decreased significantly between 2019 and 2022. The Economic Com - mission for Latin America and the Caribbean (ECLAC) indicates that there was a disinvest - ment of USD217 million in 2019, with this figure reaching USD1.097 billion between 2020 and 2021. Despite this, Bolivia is currently attracting interest in private investment for the industriali - sation of strategic natural resources, including lithium. The development of lithium has been specifically regulated by Law 928 of 27 April 2017 (Law 928), which creates YLB to carry out all activities of the entire productive chain of lithium industrialisa - tion. YLB is authorised to enter into agreements with foreign investors to achieve its objective. According to the regulation issued by the Boliv - ian State, YLB will develop the basic chemical processes of its evaporite resources with (100%) participation of the Bolivian State for the produc - tion and commercialisation of: • Lithium Chloride, Lithium Sulfate, Lithium Hydroxide and Lithium Carbonate; and • Potassium Chloride, Potassium Nitrate, Potassium Sulfate, derived and intermedi- ate salts and other products of the evaporite chain. This means that any foreign investor will have no participation in the ownership of any of the
resources or plants installed for this purpose. Foreign investors may only participate (with an ownership stake) in the subsequent processes of semi-industrialisation, industrialisation and waste processing through joint venture agree - ments maintaining the majority participation of the State. Unfortunately, neither Law 928 nor its regula - tions provide a specific regulation for lithium extraction rights. Therefore, negotiations of the terms of lithium project agreements with YLB are often quite complex and subject, on many occa - sions, to YLB unilaterally defining the scope of these negotiations. To solve this problem, in 2023 the Bolivian State proposed the enactment of a specific law on evaporite resources, which is currently being discussed by the Legislative Assembly and would regulate: • the types of agreements that YLB can enter into; • the state’s shareholding in joint venture agreements; • the creation of a supervisory authority for all activities in the lithium production chain; and • the rates, taxes and royalties applicable to lithium, among other matters. However, there has been no news about the approval of this law. Approval by indigenous communities and the Bolivian Legislative Assembly Other challenges that investors must face include: • obtaining the consent of indigenous com - munities to be able to use the resources that exist in the territories they inhabit; and
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