Bolivia Seizes Glencore’s Colquiri Mine

June 23, 2012 at 07:56

truthing

Glencore has demanded compensation from Bolivia after the country’s left-wing government nationalised one of the commodities group’s tin and zinc mines.

The company warned President Evo Morales that his actions risked driving out foreign investment, saying it “strongly protests the action and reserves its rights to seek fair compensation pursuant to all available domestic and international remedies.”

Mr Morales has already seized the country’s natural gas and electricity industries under a policy of resource nationalism that has swept across South America from Ecuador to Argentina.

However, his intervention at the Colquiri mine came only after the government had to deploy hundreds of soldiers to stop violent clashes in which 18 workers were injured. The violence began when nearby co-operative workers seized control of the site last month.

The government had been renegotiating terms with Glencore under which the government’s share of total earnings would have risen from 77 to 79 percent and Glencore would have committed to invest more than $160 million in the industry over the next five years, including $56 million in Colquiri.
After the clashes, which echoed battles six years ago that left 17 people dead, the unions called on the government to nationalise the mine to restore order.

In response, Alvaro Garcia Linera, the vice president, this week revoked Glencore’s licence and signed an agreement between the workers, the state, and the co-operatives. He said: “We’re recouping a company that belonged to the state and now returns to state hands, and we’re democratically resolving the contradiction between two factions of the Bolivian population — co-operative workers and salaried employees. We’re not going to hand our country to foreigners who destroyed Bolivia and left it stagnating for 20 years.”

The mine, which produced 2,000 tonnes of tin concentrate last year, was acquired by Glencore in 2005. Analysts said it was “not particularly significant,” but the troubles contributed to an 8 percent fall in Glencore shares over the week as they came alongside concerns over whether its merger with Xstrata would go through.

A spokesman for Glencore, which has invested $250 million in the Bolivian mining industry, said: “The action will pose a number of serious questions relating to the government’s future policy toward foreign investment in the mining sector.”