Category Archives: Mining

Wright on Bolivian Lithium: Interesting, but Not Quite Right

It’s not the first time a respected, established journalist has presented a selective view of events in Bolivia.  In general, Lawrence Wright’s New Yorker article “Lithium Dreams” covers a great deal of territory, but lacks objectivity and thorough research in some areas.

Some errors are simple and avoidable, such as misspelling Pablo Solón, Bolivian ambassador to the U.N.’s name, or confusing the timeline of key incidents.  Wright claims, “After President George W. Bush placed Bolivia and Venezuela on a blacklist, saying that neither country was doing enough to combat drug trafficking, Morales and Chavez expelled their respective ambassadors.”  Morales actually expelled Ambassador Goldberg and Chávez followed suit on September 11 four days before the U.S. “decertification” of Bolivia’s antinarcotics initiatives.  Both assertions could have been easily verified by fact-checkers.

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Part III: Bolivia’s Mining Rollercoaster: Negotiating Nationalization

Re-inserting the State

Beginning in October 2006, the Morales administration has taken measures to reinsert the state into the mining sector, including the May Day presidential decree giving state institutions such as the mining company, COMIBOL, greater control.  The administration also seeks to increase the state’s share of the earnings in light of skyrocketing prices for Bolivia’s principal minerals: silver, gold, tin and zinc.  The Morales administration has negotiated several times with the 50,000 cooperative miners, who supported him during the 2005 elections and who represent 80% of Bolivia’s miners, offering them concessions in his “nationalization” plan.

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Mining Policy in the Morales Administration: Reactivation and Conflict

Protest by cooperative miners in La Paz at the San Francisco church, February 15, 2007. The signs say "We demanded daily bread for our children" and "The cooperative miners demanded the return of our sources of work in our deposit in the hill. Posokoni." President Morales has announced plans to commence a new era in Bolivian mining in 2007. The year 2006 saw the highest mining revenue since 1985 and exports jumped from $346 million in 2005 to over $1 billion in 2006. Increased demand for minerals, in large part c from China and India, has revitalized the Bolivian mining sector.  Price increases on the world market for Bolivia’s most profitable metals – zinc, silver, tin, and gold – has heightened hopes that mining can again become a dominant industry, as it had been for most of the nation’s history.  If the reactivation of the industry and tax reform can be structured and implemented effectively, the current mining boom could benefit most Bolivians for the first time.

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Part II: An Emerging Mining Policy for Bolivia

Future mining concessions eliminated; pre-existing concessions remain intact

While stopping short of fully nationalizing the industry, the decree clearly asserts state control over all mineral wealth in the national territory and continues the process of “recovering control” of Bolivia’s natural resources, a key element of the President’s 2005 electoral platform. However the original interpretation of the decree has shifted. Mining Minister, Luis Alberto Echazú, stated foreign and domestic private mining companies will be required to enter into joint ventures with COMIBOL, the state mining company, and that concessions will no longer be granted to private companies. “Future concessions have been modified; they are going to have to sign a contract with COMIBOL.  We’re not going to grant private concessions.”2

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Mining Policy in the Morales Administration: Reactivation and Conflict

Part II:  An Emerging Mining Policy for Bolivia
On May 1, 2007, one year after the “nationalization” of the hydrocarbons industry, Bolivian President Evo Morales declared all Bolivian territory a public mining reserve and reasserted state jurisdiction and control over all minerals, metals, precious and semi-precious stones. The state mining company, Bolivian Mining Corporation (COMIBOL) now administers all mineral wealth except concessions granted before the decree.  The decree also requires that the National Geological and Technical Mining Service complete a study previously unexplored and prospected areas to give the government and COMIBOL a more precise assessment of the vast mineral wealth within the nation’s borders. The decree prohibits granting further concessions, and freezes those currently under negotiation until a study can be completed.[1]
Future mining concessions eliminated; pre-existing concessions remain intact
While stopping short of fully nationalizing the industry, the decree clearly asserts state control over all mineral wealth in the national territory and continues the process of “recovering control” of Bolivia’s natural resources, a key element of the President’s 2005 electoral platform. However the original interpretation of the decree has shifted. Mining Minister, Luis Alberto Echazú, stated foreign and domestic private mining companies will be required to enter into joint ventures with COMIBOL, the state mining company, and that concessions will no longer be granted to private companies. “Future concessions have been modified; they are going to have to sign a contract with COMIBOL.  We’re not going to grant private concessions.”[2]
The May 1 decree should not modify previous concessions and other private investments, They will not have to renegotiate contracts, nor enter into a joint venture with COMIBOL. Echazú affirmed, “Those who are already working in [Bolivia] will continue working under the same conditions.” Therefore, the operations of U.S. based Apex Silver Mines and Couer d’Alene Mines, that plan to initiate production in the coming year, should not be affected by the May 1 decree.
However, what remains unclear is whether the ongoing petitions for concessions will be affected by the decree. At one point Minister Echazú held out the possibility that these concessions would only be delayed until the completion of the study. With regard to future private investment in the mining sector Morales reiterated his mantra “Bolivia wants partners, not masters.”  According to Morales, these contracts “will allow investors to recover their investments, but they will also to have to make an economic contribution to the state.”
The Four Pillars: An Emerging Mining Policy for Bolivia

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Part 1: Cooperative Miners in the Nationalization Process: Explosive Politics

While stopping short of fully nationalizing the industry, the decree clearly asserts state control over all mineral wealth in the national territory and continues the process of “recovering control” of Bolivia’s natural resources, a key element of the President’s 2005 electoral platform. However, unlike the “nationalization” of the hydrocarbons industry, which enjoyed widespread support throughout Bolivia, this decree raised the hackles not just of private mining interests, but of Bolivia’s cooperative miners, a powerful and vocal political force that has emerged over the last twenty years.

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