Tuesday, May 09, 2006

Bolivia looks to mining nationalization

Bolivian president Evo Morales wants to follow up last week's nationalization of the gas industry with a similar grab for control over the mining sector. Morales said that if he did not enact the nationalization by August, members of an assembly to rewrite the constitution would be charged with doing so. From the Financial Times:

Mr Morales's comments have exposed the divisions within government ranks. "Some on the left want to nationalise mining, while others are just pushing for tax increases," said Carlos Arze of Cedla, a La Paz think-tank.

Vice-President Alváro García and Walter Villaroel, the mining minister, have both ruled out expropriating foreign-owned mining assets, although Mr Villaroel said last week: "It would be irresponsible not to make the most of the rise in the price of minerals."

The following excerpts come from a Mineweb article entitled, "Is Bolivian seizure a resource nationalism trend?":

Bolivian Vice President Alvaro Garcia Linera recently told a Las Paz radio station, that no mining companies shall be expropriated, nevertheless, adding that the state "shall assume a high level of control."

Meanwhile, Newmont Mining President Pierre Lassonde told reporters recently that he is nervous regarding the events in Bolivia, Ecuador and Venezuela. Lassonde noted that "it's every foreign investor's nightmare that you invest billions of dollars and all of a sudden you find that your investment has been nationalized."

Barrick Chairman Peter Munk declared last week that he would rather put his investment dollar in Pakistan rather than Bolivia and Venezuela.

Companies are retreating and taking their investment dollars with them.