SUNS  4326 Wednesday 18 November 1998


Bolivia: Asian crisis pounds mining



La Paz, Nov 16 (IPS/Alejandro Campos) -- The international financial crisis sent international metal prices crashing through the floor hand in hand with foreign investment, striking at the core of a Bolivian mining sector approaching the end of the privatisation process.

Between January and October, Bolivian mineral production fell 10% and the value of its exports was 8% down on 1997 figures.

Bolivia's mining sector has now hit the lowest point of recent years, and its effect, should the tendency continue, could equal the 1985 crisis.

In the eighties, nose-diving tin prices marked a turning point for the State Bolivian Mining Corporation (Comibol), with the workforce shrinking from 27,566 to barely 980 in 1998.

Part of this army of unemployed moved to the cities and another group decamped to the province of Chapara, in the tropical centre of the country, joining the army of illegal coca farmers, producing
for the narco-traffickers.

As if this were not enough, Comibol's remaining 980 miners have now also started to be laid off, as the Huanuni and Colquiri mines, the last units under State control, are being transferred to the
private sector.

Since 1953, when then president Victor Paz Estenssoro nationalised the mines, State mining has literally formed the backbone of the Bolivian economy, with tin exports being especially important in
the late seventies.

In its golden era, State mining represented 60 percent of total mining exports in Bolivia, but this had fallen to barely five percent by 1998.

The slow death of the last State owned mines is now compounded by a complex crisis in private mining, responsible for 95% of the nation's mining production, mainly concentrating on gold, zinc and silver.

Government estimates are that Bolivia lost some $60 million in recent months due to falling mineral prices as a result of the Asian crisis.

Up until September, the month of the latest available data, Bolivian private and State mining generated income of $339.5 million.

Given the dire situation, both entrepreneurs and the government brought in urgent action to find a safe exit to the mining crisis.

Alvaro Ugalde, general manager of Inti Raymi - the country's biggest gold company - appealed in the name of the owners of middle range mines, for deferred payment of taxes on the importation of
goods, which represent 20% of investments in the sector.

Ugalde also spoke in support of establishing greater flexibility in deadlines for programmes to adapt mining operations to the latest environmental legislation.

The entrepreneur also proposed the approval of a foreign trade law containing incentives for investments based in the country.

Viceminister of Mining, Rene Renjel, said the government was looking into these proposals and was well aware of the critical situation of the mining sector.

"We are all worried about the mining crisis. As are the United States and Canada," he said.

Charles Bruce, expert and promoter of mining investments in Bolivia, said this country had no alternative but to adopt the miners' proposals, as the alternative would be a "dog in a manger"
policy, not eating the hay nor letting the others eat.

Bruce said even Brazil had reduced its taxes and other big mining countries of the region, like Argentina and Peru, are also doing so in the hope of attracting investors.

Bolivia receives three percent of all international investments in Latin America's mining sector, adding up to a total figure of five billion dollars per year, said sources in the Ministry of Mines.