--Government seeks greater participation in mining through
state-run Comibol
--And it wants more ore processed within the country
--Mining cooperatives, communities are challenges for sector
By Martin Arostegui
LA PAZ, Bolivia--The Bolivian government wants to increase its
role in the mining industry through state-run mining company
Comibol and taxes that promote onshore processing of the country's
mineral wealth, according to top officials.
"The state will participate at all levels of the mineral
production chain with a view to increase revenues and strengthen
Comibol," Hector Cordoba, the company's president, said at a mining
conference in La Paz.
In 2009, Bolivia changed its constitution to require miners to
form joint ventures with the government mining company Comibol for
all new projects. Mr. Cordoba, a metallurgical engineer, said
Bolivia needs to focus on "industrializing" its mineral wealth.
Comibol plans to build five smelters for silver, gold, zinc and
other metals to process the ore in Bolivia, rather than shipping it
abroad, he said.
Bolivia's history is closely intertwined with mining. Silver
mined from the Cerro Rico mountain in Potosi generated fabulous
wealth for the Spanish crown during the colonial era. For much of
the 20th century, tin was king in Bolivia, with tin baron Simon
Patino thought to be one of the world's wealthiest tycoons at the
time of his death in 1947.
Today, mining accounts for 6.3% of Bolivia's gross domestic
product and 37% of exports. Mineral exports are the country's No. 2
source of hard currency after natural gas. Bolivia's mining
production was valued at $2 billion last year, up from just $430
million in 2005, while exports grew almost fivefold during that
period, according to Comibol.
Speaking at the same conference, Deputy Mining Minister Freddy
Beltran said Bolivia needs to find ways "to gain more government
revenues from mineral exports." Those measures might include higher
taxes and creating incentives for the production of value-added
products from minerals, he said.
Bolivia already levies some of the highest taxes on mining in
Latin America, said Humberto Rada, president of Coeur d'Alene
Mines' (CDE) Coeur South America, at the conference.
Mining companies pay a 37% tax on their profits as well as
royalties of between 5% and 7%, among other taxes, he said.
President Evo Morales is expected to sponsor legislation and
issue decrees in the next few months that will increase the state's
role in the sector.
Mr. Morales has already nationalized two privately-owned mines
this year. In July, he seized South American Silver Corp's (SOHAF,
SAC.T) Malku Khota mine after local communities invaded the mining
site. The previous month, the government took over Glencore
International PLC's (GLNCY, GLEN.LN, 0805.HK) Conliquiri zinc and
tin mine.
Mr. Beltran said the government didn't have a "predetermined
policy of nationalizations" in those cases.
South American Silver lost its mine because of the conflict with
local communities, while the government had been trying to
renegotiate Glencore's concession since 2006, he said.
Mr. Morales may be looking to repeat in mining what he managed
to accomplish in the energy sector. Shortly after taking office in
2006, he nationalized the oil and gas industry and put state-run
YPFB in charge of the sector.
Many foreign energy companies pulled up stakes following the
nationalization. But the Morales administration has started to
actively court foreign investors again, with YPFB hosting its
second annual energy conference this year.
Investment has started to return, enticed by government
overtures and Bolivia's vast natural gas resources.
But the expropriation of foreign mining assets and the collapse
of an iron-and-steel joint venture between the government and
India's Jindal Steel & Power Ltd. (532286.BY) haven't helped
the investment climate. Mr. Cordoba fears the government's latest
nationalization binge might scare away badly needed foreign
investment.
"We have serious deficits in two key areas; technology and
trained personnel," he told The Wall Street Journal. "For this we
need to associate with foreign companies."
Mr. Cordoba also complained about what he described as the
"excessive influence" that local communities and mining
cooperatives have over mining projects.
Bolivia's 100,000 cooperative miners have gained significant
sway over the sector under the Morales administration. Those
miners--together with indigenous communities, who under the
constitution are the owners of the country's natural
resources--have occupied several mines in Bolivia.
Mr. Cordoba said he wants to expel representatives of the
powerful national federation of cooperative miners, or Fencomin,
from Comibol's management due to "conflict of interests".
Mr. Beltran said that Fencomin and other grassroots sectors need
to be included in the drafting of new mining legislation.
-Write to Martin Arostegui at arostegui7@hotmail.com
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