San Cristóbal - Lipez (Bolivia)

The San Cristobal mine in Lipez, Potosí Department, Bolivia is a mine being developed by Apex Silver Mines Limited of Denver, Colorado and is said to be rich in silver, zinc, and lead. The mine has been in various stages of development since the early 1980s but only recently has significant operations been undertaken at the site.

Apex Silver owns 65% of the San Cristobal project along with Sumitomo Corporation of Japan at 35%. San Cristobal property is considered to be one of the world’s largest silver-zinc-lead development projects. It is located in southwestern Bolivia and hosts approximately 450 million ounces of silver and 8 billion pounds of zinc and 3 billion pounds of lead contained in 231 million tonnes of open-pittable proven and probable reserves. As the ore body is open both at depth and laterally, reserve expansion potential is considered excellent. ¹

Controversy

The San Cristobal mine faces some controversy with the Bolivian government due to Bolivian President Evo Morales's desire to nationalize, at least in all but name, the mining industry in Bolivia. Previously the oil and natural gas industry was nationalized and Bolivian troops seized the fields; initially the nationalization took shape in the form of increased taxes for profits in this industry - from 50% to 83%. There has been great fear that next would be the mining industry.

However on May 1, 2007 President Morales signed Presidential Decree 29117² that assured all mining concessions existing at the time of the Decree will be respected and will remain in effect. This is the most significant step since the May 10, 2006 ruling by the Bolivian Supreme Court which declared the Mining Code to be unconstitutional. The Court’s ruling is not effective until May 2008 and the Court urged the Bolivian Congress to enact legislation during that time which may supersede the ruling.

Under the Mining Code, all mineral deposits in Bolivia are the property of the State. Mining concessions awarded by the State grant the holder, subject to certain payments, the exclusive right to carry out prospecting, exploration, exploitation, concentration, smelting, refining and marketing activities with respect to all mineral substances located within a given concession. Under Bolivian law, local and foreign companies are treated equally in obtaining mineral concessions.

The court determined that the natural resources of Bolivia are owned by the public and the public must maintain ownership in part of these resources regardless of concessions made to foreign entities wishing to develop these resources. It ruled the State does not have the proper authority to give the aforementioned concessions to private companies wishing to engage in the mining of natural resources. In essence that is to say that a foreign company cannot own in full a mining operation in Bolivia without the State owning a part of it.

The mining Decree by the President also designated all unclaimed mineral resources within the national territory as a Mining Fiscal Reserve to be administered by Bolivia's national mining company, COMIBOL. As indicated above, this portion of the decree does not interfere in any respect with any mining concession existing at the time of the decree, and in fact reinforces those privately-held rights as inviolable.³

References

1. Apex Silver Mines Limited website on the San Cristobal project - [http://www.apexsilver.com/home.html]

2. Presidential Decree 29117 (Decreto Supremo No. 29117) (in Spanish) [http://www.derechoteca.com/gacetabolivia/decreto-supremo-29117-del-01-mayo-2007.htm]

3. "Part III: Bolivia’s Mining Rollercoaster: Negotiating Nationalization" Written by Andean Information Network - Thursday, 16 August 2007 [http://ain-bolivia.org/index.php?option=com_content&task=view&id=94&Itemid=52]