Bolivian Mining Conflict in Mallku Khota: Analysis

The violent conflict around the Mallku Khota mining area and subsequent nationalization of the mineral deposit highlight the recurring issues in Bolivia of consultation, resource competition, and the role of transnational corporations.  The conflict is complex, and many aspects remain unclear.  An administration that ran on a platform against foreign exploitation of Bolivia’s rich resources inherited a contract with a corporation seeking to profit from one of the largest undeveloped silver and indium deposits in the world.  Communities with pre-existing conflicts in the area became further divided between those promised benefits from mineral exploitation and those that stood to lose more than they would gain if the project advanced to the exploitation stage.  Months of tension and hostility resulted between communities, police, and the mining company, causing in multiple injuries and the death of a protester.

South American Silver Corporation

In 2003, the North American company, General Minerals Corporation (GMC), bought the rights to the Mallku Khota concession and began exploring the area in 2004 under the subsidiary Compañía Minera Malku Khota  [sic](CMMK).  GMC formed the South American Silver Corporation (SAC) in 2006, which took over CMMK and began operating in Mallku Khota that same year.  According to SAC, the company has completed half of the exploration; extraction has not yet begun.

SAC’s contract extends to 2015, and the company projected to invest $50 million dollars during this period.[1]  SAC says it has invested over $16 million dollars since 2007.[2]  Its 2011 Preliminary Economic Assessment estimated that $411.4 million dollars of initial capital would be required for the extraction phase of the project.[3]  As a small, speculative company, SAC may have been planning on selling its investment or joining with a larger company to begin exploitation.  Substantial outside investment and guarantees against nationalization would have been necessary to continue the project .  Interestingly, SAC did not release a statement regarding the conflict until June 14th, two and a half months after the first kidnapping incident.[4]  Even then, the company downplayed the conflict, describing it as, “a small group of people carrying out illegal artisanal mining on exploration concessions owned by South American Silver” and “activists from outside the local community” that “have been encouraging confrontations between communities and attempting to interfere with work on the project.” [5][i]  SAC also echoed the erroneous assertion of Minister of Government Carlos Romero that the man who was killed during the conflict with police on July 5th died by his own hands.[6]

Mineral Deposit

Mallku Khota has one of the world’s largest undeveloped silver deposits and possibly the largest undeveloped indium deposit.[7]  Indium is a semiconductor used in touchscreens and liquid crystal displays (LCD) like computer monitors and flat screen televisions, making it a highly desirable resource with the rising popularity of these technologies.  There is estimated to be 140-230 million ounces of silver and 935-1,480 tons of indium in Mallku Khota.[8]  SAC also reports the existence of gallium (a semiconductor), copper, lead, and zinc.

Independent cooperativist miners also  illegally mine gold,[9] although, SAC did not previously report the existence of gold in their public reports.[10]  As recently as July 13th, SAC reported that gold makes up about 0.1% of the mineral deposit.[11]  Potosí governor Félix Gonzáles claimed the company’s failure to report the gold or the illegal exploitation helped fuel conflict between communities.[12]  In an interview several days later, SAC CEO Greg Johnson stated that they had not reported illegal cooperativist gold mining on the  concession, because it was “not economically that significant to our project.”[13]  He added that “it was causing conflict with other communities in the area,” and that there were accusations of environmental damage. [14]

Community Support and Opposition

Community support for SAC is highly disputed.  The Bolivian press and SAC report conflicting and inconsistent figures about the number of surrounding communities, as well as how many were in support of or opposition to SAC.  Los Tiempos quoted a report that estimated the opposition to SAC to be around 600 people,[15] but it also reported a week earlier that 8,000 anti-SAC protesters marched from Mallku Khota to La Paz.[16]  SAC maintains that 43 of 46 surrounding communities “strongly support” the company.[17]  Newspapers report between 44[18] and 45[19] communities in favor of SAC, comprising five[20][21] or six ayllus, but do not list the overall population or a total number of communities or ayllus in the area.[22]  SAC also asserted that several petitions have been signed supporting the company, although the press reported none of these.[23]

SAC claims to have undertaken development projects in local communities, but it is unclear how many or which communities benefitted from these initiatives.  The projects may have been unevenly distributed among communities, contributing to the conflict.  One local leader said SAC’s presence provoked divisions, noting, “They’ve played us against each other by putting money into our own social organizations.”[24] Employment opportunities with SAC also exacerbated friction.  It is unclear how local employment with the company is distributed in the communities.  On June 12th, anti-SAC protestors attacked three communities who had allegedly defended the company.  The Potosí governor identified some of the victims as SAC mine employees.[25]

It appears some communities received job training and education about the benefits of SAC’s project.  A non-governmental organization documented three projects funded by SAC– two educational programs about the benefits of the company’s project and one training participants for basic mining jobs.[26]

Environmental Issues

The environmental concerns about the mining project are considerable.  Because of the nature of the deposit, the minerals would have to be extracted using open sky exploitation, a technique with a high environmental impact.  Community members fear that mineral exploitation will contaminate the three major lakes in the area, which residents use to raise trout and water sheep and cattle.[27]  A government study revealed that there is already pollution in Mallku Khota Lake and other water sources in the area. Its causes, however, are contested.  The Bolivian government faults some 400 to 600 local families who use mercury in the process of illegally exploiting gold.[28]  However, the National Council of Ayllus and Markas of Qullasuyo (CONAMAQ), a confederation of highland Aymara-, Quechua-, and Uru- speaking indigenous communities, maintains that the contamination is from SAC.[29]

Prior Consultation

Protesters denounced that the community was not consulted prior to the initiation of SAC’s project.  According to the new Bolivian constitution passed in 2009, indigenous communities have the right to consulta previa, or “prior consultation,” before any exploitation of natural resources on indigenous territories occurs.[ii]  The state must consult residents of any communally held indigenous land title (TCO, tierra comunitaria de origen) before agreeing to any activity in the area.  The SAC concession directly affects 42 TCOs, and many residents understandably feel entitled to a consultation; it was a repeated demand in negotiations.[30]  Even communities who supported SAC asked that a prior consultation be carried about before the actual exploitation began.[31]

However, there are two complications.  First, GMC and subsequently SAC obtained the rights to the concession prior to the passage of the new constitution.  Second, the legislation specifies that consultation must be done before exploitation takes place, and the SAC project is still in its exploratory phase.  The lack of legislation interpreting prior consultation for projects that predate the new constitution creates a legal gray area in the conflict.

Celia Garcés  and the Center for Documentation and Investigation (CEDIB)

 Government’s Late Intervention

The Morales administration ignored requests of the governor of Potosí and local indigenous leaders to intercede before tensions exploded into violence.[32]  The government intervened only after the second hostage situation and outbreak of violence between community members in mid-June.

When several thousand Mallku Khota protesters marched to La Paz to demand the reversal of SAC’s concession, the police tear-gassed protesters, including children.[33] Vice-Minister of the Interior and Police Jorge Pérez claimed that unnamed outside sources funded the march and denied that police had detained the 15 protesters unaccounted for after the skirmish.[34]

On June 13th, after protesters took over a mining camp and attacked three pro-SAC communities, the government dispatched 230 police officers to the area,[35] which gradually rose to 500.[36]

On July 5th, anti-SAC protesters clashed with police. Four protesters sustained bullet wounds, and one was fatally wounded.  Medical professionals as well as representatives from the Permanent Human Rights Assembly confirmed that protester José Mamani Mamani died from a bullet that entered the nape of his neck.[37]  Minster of Government Carlos Romero denied that there was any confrontation with police.[38]  He also asserted that Mamani Mamani died because he drunkenly mishandled dynamite.[39]

In addition, at the site of Mamani’s death, a joint inspection by local authorities, including the Human Rights Ombudsman, revealed 24 used tear gas canisters, 30 bullet casings, four loaded bullet shells, 13 rounds of used 9-millimeter casings, a shotgun, and other police paraphernalia.[40]

Conclusion

Resource management issues have plagued the Morales administration, and are likely to continue to generate conflict .  The tension in Mallku Khota unfolded concurrently with a clash between miners in Colquiri, La Paz, as well as a series of protests in Cajamarca, Peru against a US mining company that left several dead.[41]

The Morales administration has consistently expressed the desire to develop Bolivia’s rich natural resources to bring social benefits to the population.  The strong anti-transnational platform that Evo Morales campaigned on makes it politically difficult to appear in favor of companies like South American Silver.  However, financial and technological limitations make it difficult to move forward with massive projects such as Mallku Khota without external investment, in spite of Vice-President Alvaro García Linera’s claim that the government willing and able to spend up to $1 billion dollars to develop this project.[42]

With the rising silver prices and the increasingly high demand for indium, Mallku Khota has the potential to generate substantial state income.  The challenge remains to figure out how the state can utilize Bolivia’s rich natural resources with minimal environmental impact and maximal benefit to Bolivians, only with the consensus and participation of the communities surrounding these resources.