Fred McMahon of the Fraser Institute says, “The mechanics here are not uncommon. A small group of activists claims to represent the majority and uses… I’m trying to get the right word, and I don’t want to say terrorism, because that’s too strong, but they use violence and coercive tactics, and that just jars the country.”
Lostritto comments, “A small group used tactics that can be considered terrorism. Maybe it was an excuse for the government to change control of the asset, whether for their purposes or someone else’s. I’m not on the ground, and I don’t have all the data, but it doesn’t add up. My gut tells me there is more to it.”
The “mechanics” of the Malku Khota expropriation look fair to become robbery as usual in Bolivia. Its government nationalized Glencore’s Colquiri lead-tin-zinc mine in June, following similarly local protests that went national. (It nationalized Glencore’s Vinto tin smelter in 2007.) Karen Hooper of global intelligence firm Stratfor told the Northern Miner, “There were violent clashes between the cooperative union and the police, and it snowballed. Once the government starts to get involved, you can bet one of the first things they consider is nationalization to pacify the unrest.”
Expropriation has a long history in Bolivia, going back to 1937 when the government grabbed Standard Oil (now ExxonMobil), but under Morales the country has become a world leader in this department. He nationalized Bolivia’s national gas industry in 2006, its biggest telecommunications company in 2008, it hydroelectric complex in 2010 and its leading power company in 2012.
The Chinese will as gracious guests in Bolivia try to get them to see the value of opening their markets and participating as reasonable citizens, as opposed to being effectively at the far end of the hyperbolic scale of resource nationalists —John King Burns
For all his thievery, Morales’ seemed ambivalent about the practice. The Economist commented acerbically in May, “When Labour Day came and went in Bolivia on May 1, 2011, investors breathed a sigh of relief. Evo Morales, the president, had announced a nationalization on the holiday every year since he took office in 2006. But last year he chose instead to repeal and symbolically bury a copy of the 1985 decree that began a series of pro-market reforms. Most observers assumed he was done with expropriations.” (A month earlier, Coeur d’Alene Mines TSX:CDM was assured that its San Bartolomé silver mine was not under threat.) After Morales nationalized Transportadora de Electricidad, the Economist observed, “That calm now looks complacent.”
Just so. In June, Morales declared in a speech, “Another policy ought to be how we recover or nationalize all natural resources, so they are in the people’s hands under state administration.”
McMahon says that Bolivia will now reap the whirlwind. “This policy is not something a new government can come in and reverse because miners will believe that even though the new government has favourable mining policies, the next government may reverse course. Miners spend years throwing money into the ground before they start taking money from the ground. Even if a country has a good mining policy in any given year, mining companies are more interested in what the mining policy will be five to 20 years down the road. If they can’t trust domestic stability, that’s a reason to veto an investment, even if the current policy is good.
“I’m sure you remember Windy Craggy,” McMahon says. He refers to the massive copper deposit with an estimated worth of $8 billion to $15 billion seized and turned into a park in 1993 by BC Premier Mike Harcourt. “As you know, we do a mining survey, and there has yet to be a year, almost 20 years later, when somebody doesn’t mention Windy Craggy. So you can imagine the long-term memories of miners for something like [Malku Khota].” It is generally accepted that Harcourt’s action killed British Columbia mining development for at least 15 years afterward.