An Outlaw Nation
McMahon is not persuaded that the seizure of Malku Khota will do much for the campesinos for whom Morales presumes to speak. “Government-owned enterprises the world over are noticeably ineffective and politically inefficient, politically swayed, and they don’t invest properly. They don’t create new wealth, and they create new jobs only through featherbedding.”
From a technical perspective, Malku Khota resembles a car stolen by somebody who doesn’t know how to drive. Johnson told Resource Clips, “It is low grade and would require openpit mining and specialized processing technology, which is not really something the government mining company is familiar with. Optimal development requires a proprietary leach process that can recover precious metals and the indium, gallium and base metals, which is something we’ve been working on for four years with researchers from [the University of British Columbia], and we’ve taken that process to patent.”
In this regard, Celia Garces of GlobalResearch.ca has suggested the Bolivian government might have a plan to properly exploit the project. “Just days following the initial announcement from the government that Malku Khota would be nationalized, the President of COMIBOL [the state-owned mining company], Hector Cordova, suggested that several foreign companies had voiced their interest in the concessions for a partnership (this would include [South American Silver]). Looking not only at the silver, but also indium reserves present, it is likely that a future investment partner might also come from Asian companies, several who are presently also working in Bolivia (and are based in Japan, South Korea and China). SAC‘s recent offering resulted in the sale of 10 million shares to a conglomerate of strategic Asian partnerships, all interested in the prospect of indium within the reserves.”
Another policy ought to be how we recover or nationalize all natural resources, so they are in the people’s hands under state administration —Evo Morales
Gilbert Chan, President of NAI Interactive, a “leading investor relations platform targeting Chinese investors,” is dubious. He tells Resource Clips, “Chinese investors and groups understand the merits of the mineral and resource potential of Bolivia and are willing to develop these world-class deposits to become mines one day. The investors are a bit concerned about the current Bolivian government actions and hope things can become brighter and that the government realizes its need for overseas mining expertise to partner with the locals to be able to unlock such values, which will be beneficial to their own local economy at the end.”
John King Burns, a former top executive with Drexel Burnham and Barclays and now an independent director of China Gold International Resource Corp TSX:CGG, says, “China, as a nation, doesn’t like to intervene in another country’s politics. They are very sanctimonious about that because they have this view that it’s best to let individual countries deal with their own issues within their sovereign borders. They don’t anyone to mess with them or anyone to mess with anyone else. But 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.”
Burns argues that when resource nationalism goes too far, “It destroys marketplaces and discourages investors, Chinese and otherwise. And with the capital markets collapsing and debt-project finance available only in very limited and specific cases, the Chinese are the only ones besides the major players in the private sector who can develop any project of scale.”
Ironically, Morales’ hatred of international finance has not stopped him from going cap in hand to Goldman Sachs, Bank of America and Merrill Lynch, asking for their help to arrange a $500-million bond issue. McMahon says the expropriation of Malku Khota will make this a hard sell, “A country that can do this, you worry whether it’s going to repudiate its debt in a few years, as Argentina has in the past and may again in the future.” Indeed, Morales may get the opportunity to ponder the bleak judgment of the broken Simón Bolívar, “Those who have served in the revolution have ploughed the sea.”
