Nationalization grips Bolivian mining sector

The troops of nationalization have marched on Bolivian industry once again and this time the mining sector is feeling the squeeze.

On Feb.9 some 200 soldiers turned up at Glencores Vinto smelter. Shortly after the troops cut through chains fastened by workers in an effort to keep them out, Bolivian President Evo Morales himself arrived to sign a decree stating the facility was now the property of the government.

Vinto refines ore containing tin, lead and silver.

Morales had already nationalized the countrys natural gas and oil industry last year.

Early reports say that no compensation will be given to Glencore, as Morales has deemed the project to have been acquired by illegal means.

Beyond the Vinto smelter, Glencore also owns five other mines in the country through its subsidiary Sinchi Wayra. The projects were once held by former Bolivian President Gonzalo Sanchez de Lozada — who was chased out of the country after some 60 civilians were shot by the military while protesting a new tax imposed by Lozada on the working class.

In 2001 the Bolivian government sold the smelter to Allied Deals, which in turn sold it to Comsur — whose largest stockholder was Lozada. Glencore bought the plant from Comsur in 2004.

It is still unclear as to whether the five mines will come under national control as well.

For its part Glencore says it will challenge the nationalization in court.

“We’ve started to give Bolivia its dignity,” Morales told local news agencies after the decree.

Morales has previously stated that he will spend US$10 million to modernize the plant.

The move follows up on Morales commitment to not only control its rich mineral resources but also its downstream production.

“Our natural resources have been looted again and again,” Morales told the smelter’s employees on Friday. “We have never been permitted to industrialize our own natural resources. With so many false pretexts … they tried to keep Bolivia merely an exporter raw materials. But now the hour has come to industrialize all of our natural resources.”

Miners with significant stakes in Bolivia such as Coeur dAlene Mines (CDM-T, CDE-T) and Apex Silver Mines (SIL-N) can take solace in Morales statement that projects that abide by Bolivian laws would not be targeted.

The market seemed to support such assurances. Both Apex and Coeur dAlene the two companies most consistently tied to Bolivia due to the size of their respective San Cristobal and San Bartolome projects were both up on Feb. 12. Apex rose US11 to US$13.72 in New York while Coeur dAlene gained 7 to $5.06 in Toronto.

To date, the Bolivian governments involvement in the mining sector has been limited to a handful of deposits operated by state-run Comibol. While the government owns all mineral concessions mining is carried out by either independent Bolivian miners’ cooperatives or larger international companies.

Morales has stated that foreign companies in the country will likely face a tax hike aimed at recovering more revenue from mineral exports.