January 19, 2007 / 1:50 PM / 12 years ago

Morales says Bolivia to nationalize mining sector

RIO DE JANEIRO (Reuters) - Bolivia’s government will move ahead with plans to nationalize the mining industry, President Evo Morales said Friday, in the latest move by a left-leaning Latin American nation toward more state control of key sectors.

Morales, speaking to reporters at a summit of presidents of the Mercosur trade bloc in the Brazilian city of Rio de Janeiro, said however it would not be a full nationalization. His government was still studying the details, he added.

“We are discussing some deep reforms that will allow investors to recover their investments but they are also going to have to make an economic contribution to the state,” Morales said. “I’ve said it before, we need partners not masters.”

Morales nationalized Bolivia’s energy industry in May 2006 shortly after taking office as president of South America’s poorest country.

His latest move follows an announcement by Morale’s chief ally, Venezuelan President Hugo Chavez last week that his government would take over telecommunications and energy companies. Investors are concerned that Chavez also has his eyes on Venezuela’s mining sector.

The developments are signs of a more radical left wing in Latin America, led by Chavez, which has alarmed Washington. Morales outlined his mining plans at a summit of South American leaders aimed at increasing regional unity but marked by differing visions of the region’s path to development.

Bolivia, which has the second biggest natural gas reserves in South America, has significant deposits of tin, zinc, lead, silver and gold. It also has the El Mutun iron-ore deposit, believed to contain one of the world’s biggest reserves of the raw material for steel.

Morales declined to mention any other possible sectors that might be targets for state intervention, and he gave no further details on the mining plans.

“Where the companies have invested, they will get special treatment so that they can recover their investments,” he said. “But where there weren’t investments by these companies, those will be nationalized.”

NO MORE EMPIRE

A number of Canadian companies have mining assets in Bolivia, including Eaglecrest Explorations, Apogee Minerals Ltd., and Orvana Minerals Corp.

U.S.-based mining companies Apex Silver Mines Ltd. and Coeur d’Alene Mines Corp. were expected to start production in two multimillion-dollar mining projects in Bolivia this year.

Morales has repeatedly vowed to nationalize the mining industry. While government officials have previously ruled out expropriations, they have talked about raising taxes on mining companies and revitalizing state miner

COMIBOL.

Mining Minister Guillermo Dalence said earlier this month he would like to see taxes increased by as much as 600 percent, though officials said companies would be consulted before any potential increases were implemented.

He has also referred to the “rewriting of shared-risk contracts,” suggesting the mining reform might resemble the energy nationalization.

Late last year, foreign energy companies signed new operating contracts in line with the nationalization that granted the state a bigger share in profits and gave a bigger role to state oil firm YPFB.

The Chavez camp in Latin America, which is backed by Venezuela’s oil wealth, contrasts with more moderate leftists like Brazil’s President Luiz Inacio Lula da Silva and Chile’s President Michelle Bachelet.

Morales praised Chavez and Cuban leader Fidel Castro as beacons of integrity and resistance to the model of capitalism promoted by the United States.

“In Latin America, the era of subservient democracies to the empire is over,” he said.

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