Bolivia's response to falling Zinc prices...Bolivia's President declares zinc mining emergency, allocates $5m in govt. funds
Bolivian President Evo Morales has issued a supreme decree aimed at helping the country’s zinc miners continue to export their metals production internationally.
Author: Dorothy Kosich
Posted: Monday , 27 Oct 2008
RENO, NV -
Bolivian President Evo Morales has declared an emergency in the country's zinc mining sector, announcing that the government will add an additional $5 million to a $12.7 million fund aimed at small-scale zinc producers.
Official state news service ABI quoted Bolivia Mining Minister Luis Alberto Echazú, who said the fund would be allocated to cooperatives and small miners, who will reimburse the state once zinc prices are pegged at 85-cents per pound. A year ago, the price was $1.50.lb.
Echazú said a supreme decree was within the scope of the law to create this fund for a preventative maintenance of production and employment in the mining sector.
Morales said he would also arrange meetings with countries which consumed Bolivian zinc and other minerals to guarantee these markets for Bolivian mining production. As soon as zinc prices are stabilized, the money will be reimbursed to the General Treasury of the Nation (TGN) through the Mining Fund.
"It's an incentive credit of universal character, Echazú said. "It has no guarantees because it is made by means of financial credit and returns through the same mechanism."
Bolivia's 3,300 small zinc operations mine about 45,000 tons of the metal annually. Ramiro Aguilar, president of Bolivia's National Mining Chamber, told Bloomberg, "This debacle has caught us unprepared."
"This funding is insufficient to help the industry get through this period of low prices, and we lack conditions to invest in mining," he told Bloomberg. Zinc, silver and tin sales accounted for a third of Bolivia's $1.39 billion in exports last year.
Meanwhile, the Cambridge Energy Research Associates' Carlos A. Lopez, Bolivia's former secretary of energy, recently advised that "the continued political, legal, and social instability is delaying critical investment and jeopardizing the country's future role as a regional natural gas hub. It is becoming increasingly certain that Bolivia will not be able to maintain its export commitments in the medium term."
Bolivia's ability to supply gas has also been hurt by Morales' program of resource nationalization, Lopez asserted, adding the country is no longer a reliable natural gas supplier to its neighbors.
ABI outlined the mechanisms of the funds including:
· Zinc producers will sell the metal, but will certify the price for which they sold their product.
· Once zinc prices climb from their current 50-cents per pound to 85-cents per pound, the miners will have to reimburse the difference to the General Treasury of the Nation (TGN).
· The annual approximate production of zinc will be set between 40,000 to 50,000 metric tons in the international market.