Canadian Mining Journal

News

NATIONALIZATION – Bolivia swallows oil & gas

BOLIVIA - This week the government of Bolivia nationalized that country's oil and gas fields. That leaves the minin...


BOLIVIA – This week the government of Bolivia nationalized that country’s oil and gas fields. That leaves the mining community wondering if it will be next.

Bolivian president Evo Morales announced on May Day (appropriately) that foreign companies have six months to turn over 51% of their projects to the government, renegotiate their contracts or leave the country. During the transition, 82% of oil and gas profits will go to the government and only 18% to private owners.

Maybe some Bolivians can cheer their president’s rampant nationalism, but they are probably a minority. Morales’ decree has angered his Latin American neighbours, undermined foreign confidence in his country, and set the industry back at least 10 years.

The mineral industry must sit up and take notice as it could be next on the list. If similar takeover terms were applied to mines and exploration projects, some companies would be forced out of the game.

Canadian companies own two producing mines in Bolivia. The Cangalli gold mine near La Paz is 100% owned by GOLDEN EAGLE INTERNATIONAL. ORVANA MINERALS owns the Don Mario gold mine near San Juan. And let’s spare a thought for NEWMONT MINING, which holds an 88% interest in the Kori Kollo gold mine near Oruro.

Bolivia is home to several projects soon to become mines. APEX SILVER MINES is readying the San Cristobal silver-zinc project for production in the second half of 2007. COEUR D’ALENE MINES is in the midst of preparing its San Bartolome silver mine. Development continues on the San Vincente silver mine half-owned by PAN AMERICAN SILVER.

And there are Canadian juniors, including APOGEE MINERALS, EAGLECREST EXPLORATION, LUZON MINERALS and SAMEX MINING, with multiple exploration projects in Bolivia.

Toronto-based Apogee Minerals issued a press release saying that the Bolivian minister of mines and metallurgy, at this year’s PDAC meeting, recognized the need to create a competitive and secure environment for mining investment. The minister assured Apogee this week that there are no plans to rob private companies of their mineral assets.

Coeur d’Alene is not so optimistic. It pointed out that most of the land and mining rights it is exploiting at San Bartolome are already owned by the Bolivian national mining company, COMIBOL. Nonetheless, Coeur reminded its stakeholders that it has a risk insurance policy that would cover 85% of any loss arising from “expropriation, political violence or currency inconvertibility”.

The situation in Bolivia will have to be watched very closely. It is probably too late for the oil and gas sector, but the mining industry may still be able to head off a government takeover.


Print this page

Related Posts



Have your say:

Your email address will not be published. Required fields are marked *

*