NATIONAL DEVELOPMENT PLAN PROPOSES MINING SECTOR

UNCLAS LA PAZ 001673 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/AND LPETRONI COMMERCE FOR JANGLIN TREASURY FOR SGOOCH E.O. 12958: N/A TAGS: EMIN EINV ECON BL SUBJECT: NATIONAL DEVELOPMENT PLAN PROPOSES MINING SECTOR CHANGES REF: LA PAZ 1660 ¶1. (SBU) Summary: Bolivia's national development plan, announced June 16 (reftel),proposes wide-ranging changes in the mining sector, among them increased state control of mineral production and sales and new taxes and regulations. The plan highlights the need for more research into available mineral resources, calls for greater industrialization and diversification, and urges enhanced support for small and cooperative mines. U.S. company executives told Econoff June 19 that the strategy appears to follow agreements reached by a tripartite commission of miners, GOB officials, and Comibol, the state-owned mining company, but said they remained worried that eventual changes may harm an industry already weakened by political and economic uncertainty. End summary. ¶2. (U) Bolivia's national development plan, announced June 16 (reftel),proposes wide-ranging changes in the mining sector, primarily through a "new model" of state intervention that promotes industrialization and improved use of mineral resources. The plan proposes a new law to permit state involvement (largely through an expanded Comibol, the state-owned mining company) in all aspects of mining, from concession assignments to mineral production and sales. The strategy encourages changes to mining concessions to prevent their "inefficient" use and suggests the GOB empower state entities to supervise mineral sales and exports. Further, the plan declares the sector's existing legal framework "insufficient" and urges new taxes and regulations - but provides few details. ¶3. (U) The plan highlights the need for more research into available mineral resources, calls for greater industrialization and diversification, and urges enhanced support for small and cooperative mines. The strategy emphasizes the need for broader geological studies and more exploration. It also encourages the production of value-added goods (as opposed to raw materials),states the GOB's desire to "see to completion" investments in San Cristobal, San Bartolome, and other mines (the first two are U.S.-owned),and expresses the GOB's intent to construct new processing facilities. Finally, the strategy promises to strengthen small and cooperative mines by introducing new technologies, providing technical and financial assistance, and improving environmental management. ¶4. (SBU) U.S. company executives told Econoff June 19 that the plan appears to follow agreements reached by a tripartite commission of miners, GOB officials, and Comibol, the state-owned mining company, but said they remained worried that eventual changes may harm an industry already weakened by political and economic uncertainty. Company representatives characterized the commission's recommendations as favorable but noted that its findings - and the plan itself - lacked specifics, in many cases leaving decisions to the upcoming Constituent Assembly, where outcomes are far from certain. Executives lamented the sector's prevailing uncertainty and complained that it delayed investment decisions and complicated even short-term planning. ¶5. (SBU) Comment: The national development plan appears to re-state earlier GOB declarations concerning mining; as such, the plan did not stoke the fears of sector representatives, but neither did it do much to alleviate them. Given the plan's lack of detail, company executives will have to continue to wait for clarification. End comment. GREENLEE