The Bolivian government has cancelled a joint partnership with Germany's privately owned ACI Systems Alemania (ACISA) to develop a massive lithium project.

Residents in the city of Potosi, where the joint venture had planned to build a factory for electric vehicle batteries and a lithium hydroxide plant, have been protesting since early October against the project. Organized by the Potosi Civic Committee, protesters say the project would not benefit local communities.

Potosi Department Governor Carlos Cejas said Sunday he had received a decree from the government of President Evo Morales to overturn a previous decree permitting the project, Bolivian state news agency ABI reported.

ACISA did not immediately comment on the news.

No reason was provided for the decision, but Cejas accused "agitators" from inside and outside the state of undermining development in the region.

It comes as Morales is facing deadly unrest and calls for a new election after he was named winner of the October 20 election for a fourth term. Ahead of the election, Morales had blamed the opposition for organizing the protests against the lithium project to undermine his government.

Blow to Germany's electric battery industry

The Uyuni salt flat in Potosi state is believed to have one of the world's largest deposits of lithium, a key raw material for battery cell production.

Demand for battery metals such as cobalt, nickel and lithium is soaring as the German auto industry scrambles to build more electric cars and cut greenhouse gas emissions.

Read more: Germany hopes to mine lithium, the white gold of e-mobility

The joint venture between Bolivian state company YLB and ACISA aimed to produce up to 40,000 tons of lithium hydroxide per year over a period of 70 years, beginning in 2022.

More than 80% of the lithium was to be exported to Germany, Wolfgang Schmutz, CEO of ACI Group, the parent company of ACISA, said last December. 

German Economy Minister Peter Altmaier has urged German industries to secure raw materials for electric batteries to reduce dependence on Asian suppliers.

Morales has sought to avoid lithium being exported only as a raw material, and Germany's willingness to build production facilities in the country helped it secure the joint venture over seven rivals from Canada, Russia and China. 

The Bolivian government has argued lithium projects will bring jobs to a poor region of the Andean country.

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