AMBASSADOR'S MEETINGS WITH U.S. MINING EXECUTIVES

C O N F I D E N T I A L LA PAZ 001847

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/03/2017
TAGS: ECON EMIN EINV BL
SUBJECT: AMBASSADOR'S MEETINGS WITH U.S. MINING EXECUTIVES

REF: A. A. LA PAZ 1840

B. B. LA PAZ 1740

Classified By: Ambassador Philip S. Goldberg for reasons 1.4 (b) and (d
).

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Summary
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1. (C) Although representatives from the three major U.S.
mining companies in Bolivia listed specific concerns
regarding GOB proposed changes to the mining code and taxes
(ref B describes proposals),their basic request to the
Ambassador was that the Embassy encourage the GOB to open a
dialogue with mining companies. As previously reported, the
mining companies have been unable to arrange meetings with
the Mining Ministry and past requests for assistance from
Vice President Garcia Linera received the unhelpful response
that they should address their concerns to the mining
ministry. In a phone conversation with Garcia Linera on July
3, the Ambassador urged the Vice President to facilitate a
meeting between the mining ministry and mining companies, and
Garcia Linera agreed. End Summary.

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Ambassador's contact with Vice President Garcia Linera
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2. (C) In previous discussions between the Ambassador and
Vice President Garcia Linera, Garcia Linera claimed not to
have been aware of the lack of communication between the
mining ministry and mining companies. As it happened, Garcia
Linera called the Ambassador during the first of his two
meetings with mining executives. After discussing other
issues, the Ambassador asked Garcia Linera why mining
companies in Bolivia could not get meetings with the ministry
responsible for their sector. Vice President Garcia Linera
responded that mining companies should indeed be able to meet
with the mining ministry and that they would hear from the
minister. Post will follow up to see if in fact this takes
place. (Note: Mining Association president Humberto Rada
characterized Garcia Linera as the only reasonable individual
in the GOB with whom they could talk and who would recognize
the significance of the Mining Association's tax studies.)

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Specific U.S. corporate concerns
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3. (C) The U.S. companies and the Bolivian Mining
Association have publicly supported the GOB's stated goal of
50/50 sharing of profits. The current GOB proposals,
however, result in percentages of up to 80 percent for the
GOB (ref B.) Coupled with proposed changes to the import tax
regime, this profit-tax increase could potentially put Apex's
San Cristobal out of business. Recent proposed legislation
(not supported by the GOB) to nullify all contracts with
COMIBOL would destroy any remaining semblance of contract
security in the Bolivian mining industry. This proposal is
unlikely to pass, but is especially worrisome for Coeur
D'Alene, which would lose its contracts with COMIBOL.


4. (C) The GOB is deeply skeptical of the mining industry
and does not believe the Mining Association's calculations
showing a greater than 50 percent take for the GOB. The
Mining Association has offered to provide actual cost and
profit profiles (as opposed to the outdated estimates that
the GOB is using),but they have received no response.
Mining Association president Humberto Rada asserts that the
GOB lacks the technical capacity to understand the
ramifications of their proposals.

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Seeking dialogue with the GOB
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5. (C) All U.S. executives agreed with the Ambassador that
the GOB does not want to destroy some of the largest
investors in Bolivia. U.S. companies will continue to use
what leverage they have (for example, Coeur's good relations
with the cooperatives, Newmont's solidarity with their union,
and Apex's partnership with Japan's Sumitomo mining company.)
The Ambassador has encouraged Vice President Garcia Linera
to push for real dialogue between GOB ministries and the
mining sector. (Comment: At a time when the MAS needs
announcements of positive economic developments to shore up
their popular support, new investments from Inti Raymi and
strong performance from San Cristobal and San Bartolome
should be a GOB goal. However, the MAS's most popular action
to date has been the nationalization of the hydrocarbons
sector. As frustration with the rate of progress in the
Constituent Assembly grows, there may be pressure on
President Morales to make another populist declaration. See
ref A for a discussion of potential nationalization of the
mining industry. End comment.)
GOLDBERG