Identifier
Created
Classification
Origin
06LAPAZ2046
2006-07-28 18:49:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
Cable title:
MINING COMPANIES BRACE FOR ROYALTY AND TAX
VZCZCXYZ0000 RR RUEHWEB DE RUEHLP #2046 2091849 ZNR UUUUU ZZH R 281849Z JUL 06 FM AMEMBASSY LA PAZ TO RUEHC/SECSTATE WASHDC 0086 INFO RUEHAC/AMEMBASSY ASUNCION 6018 RUEHBO/AMEMBASSY BOGOTA 3336 RUEHBR/AMEMBASSY BRASILIA 7187 RUEHBU/AMEMBASSY BUENOS AIRES 4450 RUEHCV/AMEMBASSY CARACAS 1725 RUEHPE/AMEMBASSY LIMA 1740 RUEHME/AMEMBASSY MEXICO 1758 RUEHMN/AMEMBASSY MONTEVIDEO 3939 RUEHQT/AMEMBASSY QUITO 4356 RUEHSG/AMEMBASSY SANTIAGO 8918 RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEHC/DEPT OF INTERIOR WASHINGTON DC RHEHNSC/NSC WASHINGTON DC
UNCLAS LA PAZ 002046
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: MINING COMPANIES BRACE FOR ROYALTY AND TAX
DECISIONS
REF: LA PAZ 1289
UNCLAS LA PAZ 002046
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: MINING COMPANIES BRACE FOR ROYALTY AND TAX
DECISIONS
REF: LA PAZ 1289
1. (SBU) Summary: U.S.-owned mining company representatives
said July 24 that they remained concerned by the GOB's
failure to make royalty and tax decisions. While officials
have repeatedly said the government will not act on President
Morales' promises to nationalize Bolivia's mining industry
(reftel),they have confirmed plans to modify the mining
code. U.S. firms complain that uncertainty complicates even
short-term decisions, but given the GOB's reluctance to
provide specifics, investors may have to wait some time for
clarity. End summary.
2. (SBU) In a July 24 meeting with the Ambassador, Apex
Silver representatives said they remained concerned by the
GOB's failure to makeQoyalty and tax decisions. President
and CEO Jeffrey Clevenger said the firm would move ahead with
its USD 800 million San Cristobal silver-lead-zinc mine but
noted that GOB delays in announcing higher royalties and
taxes made long-term planning difficult. If the firm were
not spending USD 1 million a day and were not at a point of
no return, Clevenger remarked, executives would consider
halting the project. Coeur d'Alene executives told Econoff
July 24 that they were hoping for GOB clarification before
deciding whether to pursue the firm's USD 180 million San
Bartolome silver mine, which has been on hold for nearly 18
months.
3. (SBU) While GOB officials have repeatedly said the
government will not act on President Morales' promises to
nationalize Bolivia's mining industry (reftel),they have
confirmed plans to modify the mining code to incorporate
higher taxes and royalties. Mining Minister Walter
Villarroel recently sent U.S. companies a letter promising
not to nationalize the mining sector, and Minister of the
Presidency Juan Ramon Quintana echoed that statement in a
July 25 meeting with Apex Silver representatives. Quintana
said, however, that the GOB would make "moderate,
intelligent" changes to the mining code and indicated that
companies should expect news within the next 90 days.
According to one Apex executive, Quintana bluntly asserted
that the "rules of the game" would change.
4. (SBU) Comment: U.S. firms complain that uncertainty
complicates even short-term decisions, but given the GOB's
reluctance to provide specifics, investors may have to wait
some time for clarity, particularly since GOB efforts to
build consensus among cooperatives, unions, and firms show
little sign of yielding quick results. While some companies
may be prepared to bear the risks of investing in Bolivia's
mining sector - Japan's Sumitomo is apparently considering a
"strategic alliance" with Apex - others, like Coeur d'Alene,
prefer to delay investment decisions. Continued uncertainty
can only harm a sector expected to play a key role in
boosting economic growth. End comment.
GREENLEE
SIPDIS
SENSITIVE
SIPDIS
STATE FOR WHA/AND
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH
E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: MINING COMPANIES BRACE FOR ROYALTY AND TAX
DECISIONS
REF: LA PAZ 1289
1. (SBU) Summary: U.S.-owned mining company representatives
said July 24 that they remained concerned by the GOB's
failure to make royalty and tax decisions. While officials
have repeatedly said the government will not act on President
Morales' promises to nationalize Bolivia's mining industry
(reftel),they have confirmed plans to modify the mining
code. U.S. firms complain that uncertainty complicates even
short-term decisions, but given the GOB's reluctance to
provide specifics, investors may have to wait some time for
clarity. End summary.
2. (SBU) In a July 24 meeting with the Ambassador, Apex
Silver representatives said they remained concerned by the
GOB's failure to makeQoyalty and tax decisions. President
and CEO Jeffrey Clevenger said the firm would move ahead with
its USD 800 million San Cristobal silver-lead-zinc mine but
noted that GOB delays in announcing higher royalties and
taxes made long-term planning difficult. If the firm were
not spending USD 1 million a day and were not at a point of
no return, Clevenger remarked, executives would consider
halting the project. Coeur d'Alene executives told Econoff
July 24 that they were hoping for GOB clarification before
deciding whether to pursue the firm's USD 180 million San
Bartolome silver mine, which has been on hold for nearly 18
months.
3. (SBU) While GOB officials have repeatedly said the
government will not act on President Morales' promises to
nationalize Bolivia's mining industry (reftel),they have
confirmed plans to modify the mining code to incorporate
higher taxes and royalties. Mining Minister Walter
Villarroel recently sent U.S. companies a letter promising
not to nationalize the mining sector, and Minister of the
Presidency Juan Ramon Quintana echoed that statement in a
July 25 meeting with Apex Silver representatives. Quintana
said, however, that the GOB would make "moderate,
intelligent" changes to the mining code and indicated that
companies should expect news within the next 90 days.
According to one Apex executive, Quintana bluntly asserted
that the "rules of the game" would change.
4. (SBU) Comment: U.S. firms complain that uncertainty
complicates even short-term decisions, but given the GOB's
reluctance to provide specifics, investors may have to wait
some time for clarity, particularly since GOB efforts to
build consensus among cooperatives, unions, and firms show
little sign of yielding quick results. While some companies
may be prepared to bear the risks of investing in Bolivia's
mining sector - Japan's Sumitomo is apparently considering a
"strategic alliance" with Apex - others, like Coeur d'Alene,
prefer to delay investment decisions. Continued uncertainty
can only harm a sector expected to play a key role in
boosting economic growth. End comment.
GREENLEE