In recent weeks, Bolivian mining sites have been at the centre of the commodities debate in the region after Glencore announced that it reached an agreement to sell its zinc business in Bolivia to Santa Cruz Silver Mining Ltd, from Canada, in a deal estimated to be in the region of USD 110 million. At the same time, Sumitomo denied the sale of its Minera San Cristóbal mining company in Bolivia after rumours emerged that two local businessmen had acquired an unspecified stake in the company.
A former vice-minister of investment and external financing explained, “It’s not surprising that Glencore left, they’ve had so many problems in Bolivia. Years ago, at the beginning of the Movement for Socialism (“MAS”) government, several investments were nationalised, such as the Vinto smelter, and throughout the years, they have suffered constant harassment from residents of the regions where they operate.”
Several companies have left the country throughout the last decade following the 2007 nationalisation of Glencore’s Vinto tin smelter in 2007 and the Colquiri zinc mine in 2012. Coeur Mining, Jindal Steel, Quiborax and Orvana Minerals have been some of the companies that have divested from Bolivia, while Glencore started arbitration proceedings against the Bolivian government claiming USD 676 million in damages. The proceedings started in 2019 and are still ongoing.
The outlook for foreign mining companies in Bolivia doesn’t look promising either, “President Arce has taken an aggressive stance towards the business community,” explained a former director of the Bolivian mining authority, “and he is now doing favours for the mining co-operatives and mining unions that supported his election, making them more powerful than ever before.”
“Arce has taken an aggressive stance towards the business community.”
Former Director, Bolivian Mining Authority
The former deputy minister continued, “The only multinational still looking to invest in Bolivia is Canada’s Pacific Mining. It already has some concessions and wants to buy others from COMIBOL [the state mining company], but this process has to go through various ministries and the Senate and has not progressed for 4 years! They are being extorted but still they persist, I don’t know why.”
While Glencore sold its assets to exit operations in Bolivia, Sumitomo said that the company was taken by surprise with the announcement by Fernando Barbery, spokesperson of the reported 1,500 businessmen that would reportedly take over Minera San Cristóbal. Sumitomo publicly contradicted the information provided by Barbery and said that it remained committed to exploiting the San Cristóbal site, the largest in Bolivia. At the moment, the Bolivian government has not taken a public position on the issue.
The former vice minister gave us his opinion, “Country risk in Bolivia is too high, it is no surprise that Sumitomo are trying to leave but they’re not as desperate as Glencore. It seems clear that there were ongoing negotiations but I’m sure the price offered was too low and Sumitomo rejected it, but the Bolivians went and announced the deal anyway. That is extortion and because Sumitomo is listed it could bring serious problems for them.”
“Country risk in Bolivia is too high, it is no surprise that Sumitomo are trying to leave but they’re not as desperate as Glencore.”
Former Vice Minister of Investment and External Financing
Barbery said that negotiations were reaching the final stage and that he could not provide further details into future operations due to confidentiality clauses. Nevertheless, he said that the new ownership aimed to extend mining operations until 2050, while Sumitomo expected to exploit the site until 2024.
The former mining director explained the latest position, “What the businessmen did not foresee is that the Ministry of Mining was going to speak up against them. Sumitomo met with the Minister who gave the company all his support not to sell, because of course, the company is in a fight with the civic committee of Potosí who are behind this negotiation. But unlike Glencore, the communities do not want San Cristóbal to be sold. Sumitomo has a very good relationship with them and the communities are afraid that the Bolivian investors who buy San Cristóbal will break this cooperation.”