COOPERATIVE MINERS "TAKE" CERRO RICO

C O N F I D E N T I A L LA PAZ 000903 SIPDIS SIPDIS STATE FOR WHA/AND LPETRONI COMMERCE FOR JANGLIN TREASURY FOR SGOOCH E.O. 12958: DECL: 04/02/2017 TAGS: EMIN EINV ECON PREL PGOV BL SUBJECT: COOPERATIVE MINERS "TAKE" CERRO RICO Classified By: DCM Krishna R. Urs for reason 1.4 (c). ¶1. (U) Press reports indicate that approximately 16,000 cooperative miners "took" Cerro Rico, the mountain that supplies much of Bolivia's silver, April 2, demanding that the GOB retreat from a proposed decree suspending surface mining activity above 4,400 meters. The GOB has argued that mining activity should cease while the government undertakes a comprehensive study to assess the mountain's stability, which experts believe has been undermined by 500 years of often loosely regulated mineral extraction. ¶2. (SBU) According to Jim Duff, president of the local subsidiary of U.S.-based Coeur d'Alene Mines, miners have threatened road blockades and other measures if the GOB moves ahead with its decree; cooperatives have proposed instead that work continue while the GOB conducts a geotechnical study. Duff remarked to Econoff April 3 that gauging the severity of the situation is difficult, as thousands of miners work and "occupy" Cerro Rico every day. ¶3. (C) Duff indicated that the forced suspension of surface mining activity above 4,400 meters would have serious implications for Coeur d'Alene's $135 million San Bartolome project, as the area represents 40 percent of the venture's declared silver reserves. In a March 29 meeting with new Mining Minister Luis Alberto Echazu, Coeur d'Alene Chief Executive Dennis Wheeler bluntly said the company would have no choice but to "shut down and pursue international arbitration" if the GOB issued its decree, as the move would violate Coeur d'Alene's contractual right to exploit Cerro Rico silver deposits via surface mining techniques. ¶4. (C) Comment: Coeur d'Alene executives have raised their concerns in a letter to President Morales and in conversations with the mining minister and other GOB officials; they have not, however, spoken publicly. According to Duff, all they can do is wait, in hopes of seeing the GOB continue its pattern of giving in to cooperatives' demands; if it does, this latest threat to Coeur d'Alene's operations will evaporate as quickly as it appeared. End comment. GOLDBERG