An Emerging Mining Policy for
Andean Information Network,
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
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 [
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 “
The Four Pillars: An Emerging Mining Policy for
In the aftermath of the Huanuni conflict3 and the prolonged negotiations over “nationalization” and new terms for foreign investment, a somewhat ambiguous mining policy has emerged. Like the hydrocarbons nationalization, this policy attempts to maintain foreign investment necessary to upgrade and develop the industry, while providing greater economic benefit to the state. Unlike the hydrocarbons industry, the need to placate the powerful and volatile cooperative miners has led to modifications in initial implementation plans.4 The Morales government has outlined four general policy points for the reform and “nationalization” of the industry:
1. “Recovering” the nation’s minerals: Asserting the state’s control of over all aspects of the mining industry - exploration and prospecting, exploitation, extraction, refining, and sale of the nation’s mineral wealth.
2. Re-writing the Mining Code: The current code was written in 1997 when
The Morales administration seeks to accomplish two main goals in writing a new mining code:
a. Change the tax structure determined by the existing law in which companies paid a total of $67 million in taxes in 2006, when net profits were $600 million. The Bolivian government plan would increase the current 35% tax on profits to a 50 percent tax on net profits.5
b. Give COMIBOL the right to manage and run mines without the current restrictions on the state company, and instead require private companies interested in operating in
3. Upgrade the industry in two fundamental areas:
c. Technology: Since there has been little investment in the industry since the mid-1980’s, the Morales government would require that any investor share technology with the state company and help upgrade the technological capacities throughout the industry.
d. Training for cooperative and artisan miners: The government plans to invest more in training programs for the majority of the miners who use “artisan methods.” considered both inefficient and more polluting than newer technologies. The 1997 Mining Code mandates training for miners, but very few have benefited from the programs.
4. Popular participation: the Morales administration has said that it will invite “all stakeholders” to the table as
The Morales administration does not expect the new mining code to pass easily, given that the opposition holds a slight majority in the Senate. The marketing and investment director of the Mining Ministry, Freddy Beltran, explained, “The idea of the opposition is to not allow anything to pass that comes from the government, therefore, of course we will have a tough battle there (in the Senate).”6 Furthermore, while the Morales administration has done its best to accommodate the cooperative miners, this group has consistently opposed any proposed tax hikes.7
The voice not heard: Mining and the environment
Outside of Huanuni a sludge-filled river trickles from the COMIBOL plant at the base of the Posokoni tin mine, where independent miners attempt to extract any remaining tin. The communities downriver no longer plant or graze their animals along the river bank due to the pollution. Many documented cases of environmental contamination from mining exist. Local organizations and the Oruro Departmental government have expressed concern about the Kori Kollo mine, operated by Inti Raymi, a subsidiary of Newmont Mining Company. A study by a professor at the Oruro Technical University identified extensive environmental damage including “seeping and leakage of cyanide in several places (around the mine) and many years of water overflow from the evaporation and filtration ponds, the dispersion of toxic dust, the acceleration of the process of soil salinization, the movement of heavy metals and increased sediment in the Desaguadero River.”8 This contamination has severely affected the water supply and farming in the region.
While the Morales administration has said that environmental groups will play a role in policy development, environmental advocates are skeptical the Morales administration has the political will and capacity to implement a mining policy that offers greater environmental protection.
They fear that within a government looking to create jobs and generate tax revenues, the voices of environmentalists challenging this vision and ecologically harmful mining practices are seldom heard, especially over the dynamite blasts of cooperative miners. 9
Threats against environmentalists and local community leaders
Environmental advocates have been threatened as a result of their work supporting local communities suffering the negative environmental impacts of mining operations. On
El Mutún: the Sleeping Giant
El Mutún, a small mountain chain in the Santa Cruz Department along the Brazilian border, is one of the largest iron ore deposits in the world, containing an estimated 40 billion tons of medium-grade ore and 10 billion tons of manganese. In June 2006 the Bolivian government received only one bid, from
The Giant is still sleeping…
However, as the deadline passed the government claimed that Jindal submitted only a photocopy of one the 14 required documents. The Indian Ambassador, Armind Sharma, assured the government that they are preparing the additional documents. Sharma claims that any “discrepancies in questions of form” that appear in the documents result from the translation.12 In early May the Mining Minister, Luis Alberto Echazú, asked the people of Puerto Suarez, the town that stands to benefit the most from the exploitation of El Mutún, to pressure Jindal to complete the bureaucratic requirements. The same day, citing the potential benefit to the nation, President Morales granted another extension. The extension would give Jindal until the first week in July to present the required paperwork.
Iron ore has not been mined in
Nationalization of the Vinto Foundry
President Morales warned that other former COMSUR properties that once belonged to Sánchez de Lozada would also be “re-nationalized.” He stated the government would maintain existing jobs at the foundry. The Morales administration also plans to invest $10 million to upgrade the facility because private investors did not follow through with agreed upon capital investment. As a result, the foundry operates at only about half-capacity and
Implementing a new mining policy is a balancing act that makes the nationalization of the hydrocarbons nationalization look like a stroll through the park. The effort faces multiple impediments, including the sometimes contradictory visions and expectations of the Bolivian government, private investors and cooperative miners. The cooperative miners are vocal about protecting their interests to a Morales administration that does not want 40,000 angry miners marching through the streets of
First published at AIN