The Colquiri mine is one of three mines operated in part by Sinchi Wayra, a subsidiary of Swiss mining company Glencore. However, the 26 de Febrero cooperative operates a large portion of the mine's mineral deposits. The current dispute began in late May, when more than 1,000 members of 26 de Febrero occupied Colquiri, claiming a disputed portion of the mine as their own.
As a result, the Federated Union of Bolivian Mine Workers (FSTMB), which represents the 400 workers employed by Sinchi Wayra, went on strike in early June, demanding that the government nationalize the mine. Despite objections from the National Federation of Bolivian Cooperative Miners (Fencomin), which represents cooperatives at the national level, the government also hopes to nationalize the deposits controlled by 26 de Febrero. (Alleging the government has no legitimate claim over the cooperative-controlled parts of the mine, Fencomin has pledged protests and blockades in all nine of Bolivia's administrative departments.)
The government thus found itself caught in the middle of a dispute between two different types of mining workers. It needed to resolve a conflict between workers employed in the traditional mining sector, represented by the FSTMB, and members of mining cooperatives, represented by Fencomin. The dispute between the FSTMB and Fencomin illustrates how strongly workers' groups can influence Bolivian national policy by pressuring the government socially and politically.
Mining Sector Challenges
The Bolivian mining sector, which provides about 15 percent of Bolivia's gross domestic product, has been idling under the Morales administration. The 2009 constitution requires the government to take a majority stake in mineral deposits. Bolivia and its foreign investors have been negotiating how control would be divided ever since that statute took effect. According to the Bolivian government, Glencore agreed in early 2012 to reduce its stake in its three mines to 45 percent, leaving the remaining 55 percent stake to the government.
This shifting regulatory climate and the general uncertainty of operating conditions have reduced foreign interest in Bolivia's mining sector. Most foreign direct investment in the sector in recent years has been used to maintain the output of established mines — not for new operations. One of the few recently conceived projects is a $2.1 billion mining and steel-processing facility to be built by India's Jindal Steel. The project is faltering, however, and it will probably fail altogether.
Vulnerable Sectors
Nationalization has been an important tool for the government to gain greater control of the Bolivian economy since Morales came to power in 2006. Greater government control of resources means greater public access to capital and foreign currency. In a country as poor as Bolivia, the struggle for resources is critical. This is particularly true for the Morales administration, which came to power by promising to redistribute wealth to the poor.
One of Morales' first acts as president was to create a national hydrocarbons entity that controls all of Bolivia's oil and natural gas supplies. Morales has since nationalized two other assets owned by Glencore, as well as a host of assets owned by other foreign companies. The Colquiri nationalization is the third nationalization in 2012 alone.
That Morales decided to nationalize mining assets is unsurprising. In Bolivia, two sectors are continuously at risk of nationalization: those that generate significant export revenues — mining and natural gas extraction — and utilities.
Despite the uncertainty surrounding mining regulation, several foreign investors remain involved in Bolivia. A number of these companies, including Glencore, are invested in Bolivian mineral extraction. These include Singaporean gold miner Liongold Corp.; Canadian copper, gold and lithium extractor New World Resource Corp.; Canadian silver miner Pan American Silver Corp.; U.S. silver miner Coeur d'Alene Mines Corp.; Chinese gold miner China National Gold Group Corp.; and Canadian company South American Silver Corp., which operates a mine that is experiencing unrest similar to that of the Colquiri mine.
Utilities companies likewise are vulnerable to nationalization, as shown by the recent nationalization of Spanish electricity distribution company Red Electrica. Access to utilities is considered a basic right in Bolivia; private ownership and profiteering in these sectors is highly unpopular politically, particularly among Bolivia's poor, many of whom voted for Morales. Though nationalizations have aggregated most utilities under government control, several foreign companies remain invested in providing basic services to Bolivians, including Spanish electricity firm Iberdrola, Israeli electricity generator Cobee and Spanish toll road operator Abertis.
Many other industries, including construction and manufacturing, benefit from the investment of foreign companies that may find themselves at odds with local communities, unions and the government. The degree to which these companies risk nationalization depends heavily on the vagaries of local politics.
The sectors that face the highest risk of nationalization in Bolivia are those that directly affect government revenue and the administration of basic services. However, despite Morales' rhetoric encouraging comprehensive nationalization, the government still relies on foreign companies to bring in the capital necessary to develop mineral deposits and create jobs. While outright nationalization remains an important political management tactic for the Bolivian government, it will be used sparingly when it comes to resource extraction industries.
