he recent nationalizations in Bolivia of Switzerland’s Glencore and Canada’s South American Silver mining projects have prompted a great deal of international media attention in the past few months. These events are not merely caused by the government’s inclination towards resource nationalism,1 but have more to do with President Morales’s administration giving in to the demands of a particular pressure group: the mining cooperatives.
Mining has always been a very important sector for Bolivia’s economy, sustaining the country since it gained its independence from Spain in 1825. In 1826, exports of silver, gold, and tin represented 97% of total exports (Pentland, 1975) and, until the 1960s, mining exports represented more than 90% of total exports (Esponoza, 2010). In 2010, the share of mining exports was around 34% of total exports (IBCE, 2012), and mining production amounted to around 6% of Bolivia’s Gross Domestic Product (UDAPE, 2011).
Mining cooperatives are part of the artisanal and smallscale mining sector, characterized by informal, labour intensive,2 minimally mechanized, and low-technology mining operations (Espinoza, 2012a).
Although some mining cooperatives can be traced back to the first half of the 20th century,3 the most significant event occurred in 1985 when COMIBOL (the state owned mine company) decided to close most of its mines and lay off around 23,000 workers due to the plummeting international price of tin4 and a government issue decree for a series of market reforms.
This was student review significant for the expansion of mining cooperatives since, having lost their jobs, many of workers recided to partner in mining cooperatives and “signed leasing contracts to exploit, in a semi-mechanized or even manual way, the veins left by COMIBOL” (Espinoza, 2010). Over the past 25 years, the number of miners working with the cooperatives has been increasing gradually, going from 32,700 (1987) to 42,641 (1997) to 48,500 (2007) (Ministerio de Minería y Metalurgia, 2009).
This growth, as well as an increasing electoral relevance, allowed mining cooperatives to increase their power to pressure various administrations and to obtain favourable policies5 by using activist tactics such as “blockades and demonstrations” (Espinoza, 2010). In recent years, the rising prices of minerals have triggered a rapid increase in the number of mining cooperatives and have, therefore, increased their political power. According to the vice ministry of mining cooperatives, in September 2011 there were 1,304 mining cooperatives in Bolivia; by the end of July 2012 that number had grown to 1,417.
This translates into approximately 110,000 cooperative miners. Albino The rising price of minerals has led to the increased power of mining cooperatives Szymon Kochanski García, the president of FENCOMIN (the national federation of mining cooperatives) points out that higher mineral prices encourage local villagers near mine sites to shift away from agriculture to form new mining cooperatives6 (Peralta, 2012).
This is because the cooperative sector in Bolivia “can start or shut down operations fairly easily, according to the price of minerals, because […] their equipment investments are low, […] and they do not incur costs for environmental prevention or mitigation expenses. Also, they do not pay mining patents and are exempt from paying the tax on company profits” (Espinoza, 2012b).
Espinoza points out that “if [in the 1980s] low prices [of minerals] caused the formation of new cooperatives then; highly rising prices are doing the same now” (2012a). Gary Becker states that “pressure groups […] have an incentive to be more rather than less active under democratic and other forms of socialism, because a larger raction of resources is controlled by the State” (1983).
It appears that Morales’s previous nationalistic measures, which led to a greater direct involvement in the economy President Morales has made it easier for unlawful takeovers and nationalization kk+ by the state, along with the rising number of cooperative miners, have greatly increased the power of mining cooperatives allowing them to not only demand more beneficial policies from the government but also to push for unlawful takeovers of established mining rights. In recent years, local villagers and/or cooperative miners have taken over around 200 mines.
In October 2006, the miners of four cooperatives tried to take over the Huanuni mine, operated by the state mine company.
This led to clashes with state miners in what has been called a “fratricidal confrontation” that caused the deaths of more than 12 people. The conflict was finally resolved by the incorporation of the miners into the state company and the dissolution of the four cooperatives (Espinoza, 2012c). In May 2012, a group of cooperative miners took over Glencore’s Colquiri lead-tin-zinc mine, which eventually led to its nationalization in June.
This time, the cooperative miners were not absorbed by the state company, but instead, after a series of demonstrations, pressured the government to pass a decree which allows them to exploit some parts of the Rosario vein. A similar situation occurred with South American Silver’s Mallku Khota silver-indium project after a group of local fraserinstitute.org
villagers started to illegally exploit gold, causing the surrounding lakes to become polluted, and then blaming the Canadian company for the environmental damage (Ministerio de Minería y Metalurgia, 2012). As recently as May 2012, the Mines Minister Mario Virreira described this gold exploitation as “illegal” and accused the first protesters of trying to “prevent the state from carrying out a project that is of national interest” (Ministerio de Minería y Metalurgia, 2012).
On May 28, the government signed a document with four ayllus—local villages of the region— stating that the company “must continue its exploration activities” and that its existing concessions must be respected (ANF, 2012). However, the government officially announced its nationalization plan in August after conflict, which included hostage takings, escalated between local villages for and against the Canadian company’s presence in the region (Decreto Supremo No 1308, 2012).
The area still remains tense due to the presence of groups that demand more benefits from the mine. Bolivia’s legislative assembly continues to debate a draft for a new mining code. However, it seems that regardless of its provisions, pressure groups will use their revitalized economic capacity and strong mobilization power to demand more from the government. Notes 1 Morales nationalized Bolivia’s natural gas industry in 2006, a telecommunications company in 2008, a hydroelectric company in 2010, and a power company earlier this year.
2 This has helped to alleviate some unemployment in the Andean region of Bolivia, and also has enabled the exploitation of low grade veins that otherwise would not be exploited.
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3 The first legally established mining cooperative was formed in 1939 in Potosi. 4 In October 1985 prices of tin dropped from £10,000 to £3,400 per tonne. 5 Espinoza (2010) lists at least 10 laws or decrees favouring mining cooperatives, passed by five different administrations in the 1990s and 2000s.
6 Around 30% of mining cooperatives are formed by local villagers of the mine sites.
References ANF (2012, May 30). Gobierno Ratifica Consulta Previa para Explotación del Yacimiento Argentífero de Mallku Khota. Agencia de Noticias Fides, , as of May 30, 2012. Becker, G. S. (1983). A Theory of Competition Among Pressure Groups for Political Influence. The Quarterly Journal of Economics, Vol 98, No 3, 371-400. COMIBOL La Destrucción de la COMIBOL. COMIBOL. , as of November 16, 2012. Decreto Supremo No 1308 (2012, August 1). Gaceta Oficial del Estado Plurinacional de Bolivia. , as of November 16, 2012.
Espinoza, J. (2010). Minería Boliviana, su realidad. Plural Editores. Espinoza, J. (2012a, June 22). Luces y Sombras del Cooperativismo Minero. El Diario, , as of June 22, 2012. Espinoza, J. (2012b, April 2). La Minería Boliviana en la última Década. Energy Press: 18-19. fraserinstitute.org
Espinoza, J. (2012c, October 15). Los Sectores Mineros y sus Notables Cambios. Energy Press, , as of October 15, 2012. IBCE (2012, January 30). Exportaciones de Bolivia. Instituto Boliviano de Comercio Exterior: Boletín Electrónico Biosemanl No 96, , as of January 30, 2012. Ministerio de Minería y Metalurgia (2012, May 21). Explotación Ilegal de Oro Causa Conflictos en Mallku Khota. Informa Minería, Boletín de Prensa No 6.
Ministerio de Minería y Metalurgia (2009). Estadísticas del Sector Minero-Metalúrgico 1980-2008. Ministerio de Minería y Metalurgia. Pentland, J. (1975). Informe sobre Bolivia. Editorial Potosí. Peralta, P. (2012, August 26). Tres de Cada Diez Cooperativas Mineras son de Comunarios. Página 7. , as of
August 26, 2012. UDAPE (2011). Dossier de Estadísticas Sociales y Económicas. Vol 21. Unidad de Análisis de Políticas Sociales y Económicas. , as of November, 2011.
Roberto Roca Paz has a B.A. in Engineering Economics from the UPSA University in Bolivia. He has worked as an intern at the economic program of Chile’s Libertad y Desarrollo and at the Fraser Institute’s Centre for Energy and Natural Resource Studies. He currently works at POPULI, a Bolivian public policy think tank, and as an entrepreneur in the Bolivian petroleum industry.
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