Morales: No Compensation for Glencore

Dan Keane, Associated Press Writer, Feb 22

La Paz, Bolivia — The government will not pay Swiss mining giant Glencore International AG for nationalizing its Bolivian tin smelter earlier this month because the company illegally purchased the plant and failed to invest in its upkeep, President Evo Morales said Thursday.

Glencore has threatened to seek international arbitration to recover its investment in the Vinto smelter, located on a high Andean plain 110 miles southeast of the capital of La Paz.

Morales nationalized the plant Feb. 9 and has refused to reimburse its former owners, saying Glencore should instead pay Bolivia for failing to upgrade the smelter's furnaces and other machinery.

"If they can document indisputably that they have invested in modernizing the plant, that they spent money on modernization beyond just the purchase price, then we'll have to pay," Morales said at a Thursday news conference in La Paz. "But if they can't show that investment, they'll have to reimburse us."

Glencore officials did not immediately return calls seeking comment.

Previously, Glencore has said it based its demands for compensation on a 1991 bilateral treaty between Switzerland and Bolivia, which it said forbids the seizure of Swiss companies' assets unless accompanied by adequate payments.

The Swiss government said it recognized Bolivia's right to determine its own economic policy within the framework of international treaties, but expected it to meet "in full" its obligations under the treaty.

Built in the 1970s under military dictator Hugo Banzer, Vinto is Bolivia's only mineral smelter and has strong symbolic value. After its 1996 privatization, the plant was eventually bought by Comsur, a private mining company whose largest stockholder at the time was former Bolivian President Gonzalo Sanchez de Lozada.

Lozada fled Bolivia in October, 2003 during protests and riots against his administration that left 60 people dead.

Glencore bought the plant from Comsur in 2004 for $14 million, but the Bolivian government claims the plant is worth as much as $95 million.

"Not only the Bolivian people but also the international community and the financial experts know of the shady dealings that the Swiss company conducted with Gonzalo Sanchez de Lozada," Morales said. "There should be justice for this swindle."

Morales nationalized his country's natural gas reserves on May 1, granting the state a greater share of revenues and control over operations. But the complex structure of Bolivia's mining industry presents a unique challenge.

Nearly all of Bolivia's extensive mineral deposits are already owned by the government, though state mining company Comibol works only a few. The rest are mined through private concessions split between independent Bolivian miners' cooperatives and giant international companies, including Glencore and U.S.-based companies Coeur d'Alene Mines and Apex Silver Mines Ltd.

Administration officials said initially that the mining nationalization would affect only concessions left idle or lacking investment. Since the Vinto takeover, however, the government has said it may include properties that were sold illegally.

Rising international metal prices doubled the value of Bolivia's mineral exports to more than $1 billion last year from $547 million in 2005. The metals _ mostly zinc, silver, gold and tin _ are Bolivia's largest export after natural gas.

Morales has said he aims to dramatically increase the $45.5 million in mining taxes collected last year by greater state control over the industry.

Republished from Houston Chronicle

No comments:

Bolivia Rising