CHARGE MEETING WITH COEUR D'ALENE BOARDMEMBERS

C O N F I D E N T I A L LA PAZ 000918 SIPDIS SIPDIS E.O. 12958: DECL: 04/21/2018 TAGS: ECON EMIN EINV BL SUBJECT: CHARGE MEETING WITH COEUR D'ALENE BOARDMEMBERS Classified By: Charge Kris Urs for reasons 1.4 b,d ¶1. (C) Coeur D'Alene CEO Dennis Wheeler, South American Operations' President Jim Duff, and four members of the Coeur board of directors met with Emboffs April 21 to express their thanks for advocacy on behalf of Coeur's San Bartolome Mine and to discuss the investment and political climate in Bolivia. Wheeler described the new tax situation (after the 12.5 percent increase of late 2007) as "acceptable but not reasonable." Duff said that Coeur's legal advisors assure them that they will not be adversely affected by proposed legislation currently in Bolivia's lower house that would increase state control over mining concessions, because Coeur's concessions are leased from the state mining company COMIBOL. However, Duff said that the position of the mining industry is that a clause should be added to the new legislation that would ensure that the change would not be retroactive. ¶2. (C) After a discussion of recent investment-unfriendly moves by the Bolivian government (including a March 2007 supreme decree that eliminates accelerated depreciation for mining exploration investments,) Wheeler mentioned that he felt private U.S. interest in investing in Bolivia is on the decline: "Even with our project about ready to start, we find people resistant to the idea that investment is advisable in Bolivia." Wheeler mentioned that at one point Coeur put all capital investment in the San Bartolome project on hold for a year because of doubts regarding the Bolivian government's plans. ¶3. (C) In an earlier meeting with Jim Duff, Duff opined that if the MAS draft constitution were to pass as it is now, it would be "the end of mining in Bolivia," due to the increased state involvement and the rights of indigenous groups over land use decisions. Currently, mining in Bolivia is also complicated by power and fuel shortages. San Bartolome has just connected to the national electric grid, and Duff hopes that San Bartolome's contract with the city of Potosi will allow it to avoid the electricity shut-offs that Apex Silver's San Cristobal Mine is already experiencing. In keeping with predictions we have heard from some other industry members, Duff predicts electricity rationing within a year. ¶4. (C) Although production from the San Bartolome silver mine was originally predicted to begin in late 2007, a series of delays have meant that the mine is still not in production (although Duff said that production was expected to start "any day".) San Bartolome plans to have an opening ceremony on May 9th. URS