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Bolivian President Evo Morales has revoked the mining rights of Vancouver-based South American Silver Corp., the latest blow to foreign miners operating in Latin America amid a growing wave of resource nationalism.
The decision to expropriate the Canadian company’s Malku Khota silver mine was the second for Bolivia in a month, highlighting the increasing risks to developing mining and energy assets in the mineral-rich region.
From expropriations in Venezuela, Bolivia and Argentina to violent opposition in traditionally mining-friendly jurisdictions such as Peru and Chile, the rising political tensions pose a risk to a decade-long bonanza mining companies have enjoyed.
“Resource nationalism is not just about expropriation,” said Alan Hutchison, an expert in mining and energy securities and corporate law at Fraser Milner Casgrain LLP who specializes in Latin American matters. “It is the role and the stake that the government is going to take in any resource project and I think you are seeing that on the rise with the continued high commodity prices.”
Mr. Morales has been a champion of his country’s natural resources since he became Bolivia’s first indigenous president in a landslide victory in 2006, when he promptly nationalized the key natural gas industry. Backed by the nation’s indigenous majority, he has since taken control of several utility companies as well Bolivia’s largest smelter and its top telecommunications firm.
South American Silver says it took extra care to develop good community relations since it discovered the silver deposit and started explorations aimed at bringing it to development starting in 2007. But it couldn’t stop a fight with local artisanal miners from escalating.
“The situation just escalated very quickly,” said South American Silver president and chief executive Greg Johnson. “It suddenly appeared to go to a national political level and the company was not involved and really shocked to see it take the path it did in such a rapid succession.”
The expropriation by Supreme Decree came not even a month after Mr. Morales nationalized the Colquiri tin and zinc mine, owned by global mining giant Glencore International PLC.
“Companies are pitting brothers against cousins, neighbours,” Mr. Morales told the state information agency ABI on Wednesday as he accused South American Silver of creating a conflict between pro- and anti-mining communities around the silver-indium-gallium project in the southwestern province of Potosi.
Last week, deadly clashes left five people dead in Peru – three of them from gunshot wounds suffered as demonstrators clashed with police in protests against the $4.8-billion Conga gold project that promises to be the biggest mining project in Peruvian history and is owned by Newmont Mining Corp.
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