Oct. 13 (Bloomberg) -- Vale SA, the world’s biggest iron- ore miner, may seek a partnership with Bolivia to exploit the world’s largest lithium deposit, a government official said.

Vale held talks earlier this year with Bolivia’s mining ministry after at least three other groups made proposals to help develop the deposit in southern Bolivia, Mining Director Freddy Beltran said yesterday in an interview in La Paz.

Bolivia’s Salar de Uyuni, a salt flat located in Potosi province, contains about half the world’s known 11 million metric tons of lithium reserves, according to a U.S. Geological Survey report. Lithium is used to make batteries for portable electronics such as cellular phones, I-pods and laptop computers, and it may power electric cars.

“They’ve spoken generally about the issue, and they need to solidify a specific offer,” Beltran said.

A Vale spokesman who declined to be identified, citing company policy, declined to comment.

Other potential bidders include a French group made up of Bollore SA and Eramet SA, as well as a Japanese group including Mitsubishi Corp. and Sumitomo Corp. Bolivian President Evo Morales says the government must be a partner in any project.

“Any company can make a proposal, even if they haven’t yet contacted the government,” Beltran said.

Brazil Assistance

Brazil’s President Luiz Inacio Lula da Silva agreed on Aug. 22 to send Brazilian scientists to help study the reserves, according to remarks made that day in Villa Tunari, Bolivia.

Mining Minister Luis Alberto Echazu told reporters today in La Paz that the government is seeking financing for an industrial plant that will cost at least $200 million. He rejected a proposal by presidential candidate Manfred Reyes Villa to sell shares in the project.

Reyes Villa is running against the incumbent Morales in elections scheduled for Dec. 6.

Bolivia is managing the initial stages of lithium carbonate production through state mining company Corporacion Minera de Bolivia, or Comibol, and has begun construction on a $6 million pilot plant.

Rio de Janeiro-based Vale is seeking to diversify into minerals including fertilizers to reduce its dependence on iron ore, which accounts for more than half its revenue.

Fertilizer Development

Vale is Brazil’s sole producer of potassium, used in fertilizers, and aims to become a major player in fertilizers by developing its own projects, as demand grows amid rising agricultural output, Chief Financial Officer Fabio Barbosa said Aug. 4.

Production, import and the sale of lithium in Brazil is controlled by the state-owned Nuclear Energy Commission, according to Brazil’s National Mining Department’s Web site.

The metal is also used in production of primary aluminum, of which Vale is one of Brazil’s biggest producers, according to the Brasilia-based Department, known as DNPM.

Lithium is extracted from brine, which is most abundant in South America, or processed from minerals.

By 2020, a fifth of the world’s cars may be using lithium batteries, said Seifi Ghasemi, chief executive officer of Princeton, New Jersey-based Rockwood Holdings Inc., on Sept. 28. Rockwood exports the element from the Atacama Desert in northern Chile.

To contact the reporter on this story: Jonathan J. Levin in La Paz at Jlevin20@bloomberg.net

Last Updated: October 13, 2009 15:56 EDT