SAO PAULO, Brazil: Bolivia has been famous
for its rich mineral resources since the time of Spanish
colonization, but it has always been mainly dependent on a
single metal: first on silver for roughly three centuries, and
then on tin for much of the 20th Century.
Such dependence proved dangerous, especially when tin prices
collapsed in the 1980s, impacting several Bolivian companies
and thousands of miners and their families. Since then the
government has been trying to stimulate the exploration and
commercial production of other metals, such as zinc and
The going has been tough from the outset, but with big
projects under way in the country the diversification attempts
look as they may finally be closing in on a reward. There are
still great difficulties on the way to this El Dorado,
Bolivian newspapers have been reporting behind-the-scenes
details of negotiations between the government and India's
Jindal Steel & Power Ltd. over the El Mutun iron ore and
steel project. In 2007, the Indian enterprise signed a
memorandum of understanding with the government for a 50-50
joint venture worth $2.1 billion, of which $1.5 billion would
be disbursed over five years-$300 million per year-followed by
$600 million in the following three years.
But Jindal wants to slow down the speed of these investments
and to downsize some of the project's plants-reducing
direct-reduced iron output to 4 million tonnes per year from 6
million tonnes, for example, and trimming crude steel
production to around 1 million tonnes per year instead of the
originally planned 1.7 million tonnes.
Jindal representatives have justified those requests by
saying that iron ore at the Mutun deposit-where reserves are
estimated at some 40 billion tonnes with a 50-percent iron
content-turned out to have a higher-than-expected phosphor
Sergio Alandia Pantoja, president of state-owned Empresa
Siderúrgica Mutun, which holds the 50-percent Bolivian
stake in the joint venture, told AMM in March that
nothing had been decided and Jindal's revised investment plan
was being studied.
Other good options exist in the Latin American country. The
51,100-tonne-per-year Karachipampa lead and silver smelter,
which was built in the 1980s but never operated because of a
lack of local ore concentrates, was expected to finally come
on-stream last year. Bolivia's national mining company,
Corporación Minera de Bolivia (Comibol), handed over a
65-percent controlling stake in the smelter to Canada's Atlas
Precious Metals Inc. (APM) at the beginning of 2008, with
production expected to start in 2009.
The startup was postponed to January of this year, since APM
needed approval to install a 500,000-tonne-per-year sulfuric
acid plant; in February, Comibol president Hugo Miranda told
AMM that there were still "some issues to be solved"
and the sulfuric acid plant was still in the United States,
waiting to be shipped; in March, APM's legal representative in
Bolivia did not reply to calls and e-mails on the subject.
Bolivian newspapers have suggested that the same old problem-a
lack of appropriate and constant supply of concentrates-could
affect the project
Despite these problems-attributed to the fact that the
country lacks infrastructure, is poor, landlocked and has
historically suffered from labor conflicts-Bolivia is moving
ahead on other fronts.
South Korea's state-owned Korea Resources Corp. has already
started drilling at the Corocoro copper deposit, which is
expected to produce between 30,000 and 50,000 tonnes of
electrolytic copper annually, probably starting in 2012.
And Bolivia's state-owned tin mine, Empresa Minera Huanuni
(EMH), has been increasing output over the past few years;
production of only 3,000 tonnes per year before its
nationalization in 2006 jumped to 7,875 tonnes in 2008 and
9,960 tonnes last year, and is expected to reach 10,500 tonnes
this year. EMH's general manager, Roberto Guillermo
Montaño Araoz, said a new plant capable of processing
some 3,000 tonnes of ore per day will replace the existing one,
which can process no more than 1,500 tonnes per day. "This way
tin output will increase to around 12,000 tonnes per year," he
There is more good news. State-owned tin smelter Vinto this
year will complete an expansion to increase its output to
18,000 tonnes annually from 10,000 tonnes, and Comibol will
soon launch a public bid for two zinc concentration plants each
with a capacity of 80,000 to 100,000 tonnes per year.
The Bolivian ministry of mining and metallurgy told
AMM that investments in the sector will more than
double this year to $457 million from $175 million in 2009, and
likely will keep increasing over the next few years.
Particularly encouraging is that about $386 million of this
year's investments will come from private companies, compared
with $127 million last year.
It is a good signal, given that Bolivia's leftist president,
Evo Morales, nationalized a few companies over the past few
years-apart from EMH in 2006, Vinto was taken from Glencore
International AG in 2007-and that a new mining code has just
started to be prepared, spreading rumors about possible
still-to-be-confirmed tax increases.