Bolivia’s President Evo Morales is considering nationalizing South American Silver Corp’s Malku Khota property, with reserves estimated at over 230 million ounces of silver in the wake of last Friday’s deadly protests.
We have repeatedly warned readers that government nationalization of mining companies is a MUCH LARGER current risk than is confiscation of physical gold or silver. You are witnessing a prime example, as South American Silver shareholders are receiving a beating today (down 30%), which will obviously intensify should Morales in fact nationalize the mine.
Bolivia will consider nationalizing Canadian miner South American Silver Corp’s silver property, President Evo Morales said on Sunday, following violent indigenous protests against the mining project.
Leftist Morales, who last month took control of global commodities giant Glencore’s tin and zinc mine in the Andean country, said he hadn’t taken a final decision on whether to revoke the Canadian miner’s concession.
“Nationalization is our obligation, I already raised the issue of nationalizing (the Malku Khota project) last year, and I told (local residents) to reach an agreement, because when they want we’re going to nationalize,” Morales told a farmers’ gathering.
Exploration work, in which South American Silver plans to invest some $50 million, is expected to end within three years. The company describes it as “one of the world’s largest undeveloped silver, indium and gallium deposits.”
On Sunday the Bolivian Labor Minister, Daniel Santalla, signed an agreement to secure the release of the final three detained individuals with the indigenous opponents to the project. As part of this agreement the opponents were seeking cancellation of the mining concession, however, the government minister acknowledged that this could be difficult due to the original decree giving South American Silver the rights to the project.
Also on Sunday, President Evo Morales and the Government Minister Carlos Romero agreed that a “prior consultation” among all indigenous communities in the project area would be needed to proceed to determine the direction of the project based on the consensus view of all communities.
At this time there has been no change in the status of the project concession. The Company is continuing to work with the government at all levels and with the local communities to agree on an approach to development that is inclusive of all communities in the project area and allows development of the Malku Khota project to its fullest potential.
As noted in earlier updates, Bolivian government authorities have previously stated that there will be a period of constitutionally mandated consultation with local indigenous communities before the project enters the extraction phase.
On May 28 the Mining Minister Mario Virreyra signed an accord with 43 out of 46 indigenous communities in the project area specifying that the state will not reverse the mining concession and stating that the company should continue exploration activities and that Bolivian authorities should provide increased police security in the region.
The vast majority of the indigenous groups in the project area have formally demonstrated their support for the project and understand the social and economic benefits to their communities that the development of a world class, modern mine at Malku Khota will bring and which will create with thousands of well-paying local jobs.
By contrast, the artisanal mining that has been centered near one of three villages in opposition to the project would provide little economic benefit to the 43 other indigenous communities in the project area and has been cited by the Bolivian Mines Minister as causing local environmental damage.
South American Silver has worked closely with the local indigenous communities over the past several years providing significant direct employment on project related jobs, as well as jointly developing programs with the communities to facilitate job training, education, agricultural enhancement and water management for long-term sustainable development.