One leftist leader courts mining investment, while another backs off.
Last march, Ecuador negotiated $1.4 billion in investment with the Chinese owned Ecuacorriente, as part of the Mirador copper project. The government also agreed to set a maximum on royalties, which under existing law only bare a minimum of 5 percent. President Rafael Correa hopes the reform will create more certainty for investors. However, the country’s Confederation of Indigenous Nationalities (CONAIE) continues to resist the mining projects for the sake of their land, the environment and resource sovereignty.
Meanwhile, Evo Morales of Bolivia has been quite fickle. He has botched copper and gold mining deals with India’s Jindal and nationalized tin mines owned by Swiss Glencore. Most recently, Morales cancelled operations at a silver mine owned by a subsidiary of the Canadian South American Silver Corp. The mine, with silver and indium reserves worth an estimated $2 billion, will be turned over to the state-owned firm Comibol. His move comes after clashes that killed one indigenous protester.
Both countries have a history of foreign resource exploitation, but Bolivia’s had been by far the most destructive. During the era of colonialism, its silver mines helped fund the exploits of the Spanish empire – most notably the Spanish Armada. Galleons were berthed and then decimated, on the backs of Quechua and Aymara slaves. Additionally, the influx of silver throughout Europe caused massive inflation. By trading with the Spanish, French currency reserves lost 80 percent of their value.
Around the late 19th century, tin replaced silver as Bolivia mining staple. Tin barons ran amuck in the landlocked Andean country, dominating national politics at the turn of the century. The 1952 Bolivian revolution nationalized the country’s mines to create the state-owned Comibol. However, in 1986, facing debt, inflation and inefficiency, the government privatized parts of company. The move caused massive layoffs and closed many mines, as private companies sought to close huge efficiency gaps due to overemployment and the operation of unprofitable mines. Since 2006, President Morales has renationalized many projects where he hopes to boost production and employment.
Click here, for an analysis of national v. private mining practices and their effects on social responsibility in Bolivia.