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