LA PAZ, BOLIVIA — The Bolivian government is “building a new relation between business and the state,” Bolivia’s Mining and Metallurgy Minister Cesar Navarro tells The Northern Miner in a sit-down interview in his government office.
Soon after taking office in January 2006, Bolivian President Evo Morales laid down the law to foreign companies. The new relationship between the state and investors would be that of partners, not “master and servant.”
True to his word, the president acted where he believed the partnership had broken down. Troops were sent to occupy the Vinto tin smelter, where the government said that commodity giant Glencore (LON: GLEN) had failed to carry out promised investments.
Mines, power plants and gas-fields followed, building up Morales’ popularity with supporters, but scaring off all but the bravest investors.
A decade on, Morales’s mines minister Navarro is looking to attract foreign companies back to its mining industry.
Economic necessities partly explain the about-turn.
Despite Bolivia’s massive geological potential, its mining industry remains tiny. In 2017, it exported just US$2.2-billion worth of minerals, compared with US$37 billion from neighbouring Chile.
But many of these operations are approaching the end of their mine life, and investment is needed to explore and develop new mines.
The vehicle for the new relationship is the Mining Production Contract, which private investors can sign with state mining company Comibol, which owns or has first say over the most prospective ground.
Although the state has ownership of the resource, it grants the company a lengthy concession period during which it can explore, build and operate a mine.
In exchange, the company promises to undertake certain investments in stages throughout the project’s life, including rehabilitating the site when the mine closes.
Once signed with Comibol, the contract is sent to Congress, where it would be approved as a law and finally promulgated by the president himself, giving the contract considerable legal weight.
In January, Navarro signed the first such deal for an exploration project with Vancouver-based New Pacific Metals (TSXV: NUAG; US-OTC: NUPMF). The 45-year contract is due to receive legislative approval by mid-year.
The government is already in talks with potential partners, and aims to sign at least two more contracts by year-end."
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