The Bolivian Coup Comes Down to One Precious Mineral
The Bolivian Coup Comes Down to One Precious Mineral
An Evo Morales supporter confronts Bolivian police in La Paz. (Natacha
Pisarenko / AP)
Bolivias President Evo Morales was overthrown in a military coup on
November 10. He is now in Mexico. Before he left office, Morales had been
involved in a long project to bring economic and social democracy to his
long-exploited country. It is important to recall that Bolivia has suffered
a series of coups, often conducted by the military and the oligarchy on
behalf of transnational mining companies. Initially, these were tin firms,
but tin is no longer the main target in Bolivia. The main target is its
massive deposits of lithium, crucial for the electric car.
Over the past 13 years, Morales has tried to build a different relationship
between his country and its resources. He has not wanted the resources to
benefit the transnational mining firms, but rather to benefit his own
population. Part of that promise was met as Bolivias poverty rate has
declined, and as Bolivias population was able to improve its social
indicators. Nationalization of resources combined with the use of its income
to fund social development has played a role. The attitude of the Morales
government toward the transnational firms produced a harsh response from
them, many of them taking Bolivia to court.
The idea that there might be a new social compact for the lithium was
unacceptable to the main transnational mining companies.
Related Articles
Bolivian President Evo Morales' Removal Denounced as Coup
Bolivian President Evo Morales' Removal Denounced as Coup
by Jake Johnson / Common Dreams
Chile and Bolivia Reports Expose Western Media's Rank Hypocrisy
Chile and Bolivia Reports Expose Western Media's Rank Hypocrisy
by Lucas Koerner / FAIR
Right-Wing Bolivian Senator Defies Constitution, Declares Herself President
Right-Wing Bolivian Senator Defies Constitution, Declares Herself President
by Jake Johnson / Common Dreams
Over the course of the past few years, Bolivia has struggled to raise
investment to develop the lithium reserves in a way that brings the wealth
back into the country for its people. Morales Vice President Álvaro García
Linera had said that lithium is the fuel that will feed the world. Bolivia
was unable to make deals with Western transnational firms; it decided to
partner with Chinese firms. This made the Morales government vulnerable. It
had walked into the new Cold War between the West and China. The coup
against Morales cannot be understood without a glance at this clash.
Clash With the Transnational Firms
When Evo Morales and the Movement for Socialism took power in 2006, the
government immediately sought to undo decades of theft by transnational
mining firms. Morales government seized several of the mining operations of
the most powerful firms, such as Glencore, Jindal Steel & Power,
Anglo-Argentine Pan American Energy, and South American Silver (now
TriMetals Mining). It sent a message that business as usual was not going to
continue.
Nonetheless, these large firms continued their operationsbased on older
contractsin some areas of the country. For example, the Canadian
transnational firm South American Silver had created a company in
2003before Morales came to powerto mine the Malku Khota for silver and
indium (a rare earth metal used in flat-screen televisions). South American
Silver then began to extend its reach into its concessions. The land that it
claimed was inhabited by indigenous Bolivians, who argued that the company
was destroying its sacred spaces as well as promoting an atmosphere of
violence.
On August 1, 2012, the Morales governmentby Supreme Decree no.
1308annulled the contract with South American Silver (TriMetals Mining),
which then sought international arbitration and compensation. Canadas
government of Justin Trudeauas part of a broader push on behalf of Canadian
mining companies in South Americaput an immense amount of pressure on
Bolivia. In August 2019, TriMetals struck a deal with the Bolivian
government for $25.8 million, about a tenth of what it had earlier demanded
as compensation.
Jindal Steel, an Indian transnational corporation, had an old contract to
mine iron ore from Bolivias El Mutún, a contract that was put on hold by
the Morales government in 2007. In July 2012, Jindal Steel terminated the
contract and sought international arbitration and compensation for its
investment. In 2014, it won $22.5 million from Bolivia in a ruling from
Paris-based International Chamber of Commerce. For another case against
Bolivia, Jindal Steel demanded $100 million in compensation.
The Morales government seized three facilities from the Swiss-based
transnational mining firm Glencore; these included a tin and zinc mine as
well as two smelters. The mines expropriation took place after Glencores
subsidiary clashed violently with miners.
Most aggressively, Pan American sued the Bolivian government for $1.5
billion for the expropriation of the Anglo-Argentinian companys stake in
natural gas producer Chaco by the state. Bolivia settled for $357 million in
2014.
The scale of these payouts is enormous. It was estimated in 2014 that the
public and private payments made for nationalization of these key sectors
amounted to at least $1.9 billion (Bolivias GDP was at that time $28
billion).
In 2014, even the Financial Times agreed that Morales strategy was not
entirely inappropriate. Proof of the success of Moraless economic model is
that since coming to power he has tripled the size of the economy while
ramping up record foreign reserves.
Lithium
Bolivias key reserves are in lithium, which is essential for the electric
car. Bolivia claims to have 70 percent of the worlds lithium reserves,
mostly in the Salar de Uyuni salt flats. The complexity of the mining and
processing has meant that Bolivia has not been able to develop the lithium
industry on its own. It requires capital, and it requires expertise.
The salt flat is about 12,000 feet (3,600 meters) above sea level, and it
receives high rainfall. This makes it difficult to use sun-based
evaporation. Such simpler solutions are available to Chiles Atacama Desert
and in Argentinas Hombre Muerto. More technical solutions are needed for
Bolivia, which means that more investment is needed.
The nationalization policy of the Morales government and the geographical
complexity of Salar de Uyuni chased away several transnational mining firms.
Eramet (France), FMC (United States) and Posco (South Korea) could not make
deals with Bolivia, so they now operate in Argentina.
Morales made it clear that any development of the lithium had to be done
with Bolivias Comibolits national mining companyand Yacimientos de Litio
Bolivianos (YLB)its national lithium companyas equal partners.
Last year, Germanys ACI Systems agreed to a deal with Bolivia. After
protests from residents in the Salar de Uyuni region, Morales canceled that
deal on November 4, 2019.
Chinese firmssuch as TBEA Group and China Machinery Engineeringmade a deal
with YLB. It was being said that Chinas Tianqi Lithium Group, which
operates in Argentina, was going to make a deal with YLB. Both Chinese
investment and the Bolivian lithium company were experimenting with new ways
to both mine the lithium and to share the profits of the lithium. The idea
that there might be a new social compact for the lithium was unacceptable to
the main transnational mining companies.
Tesla (United States) and Pure Energy Minerals (Canada) both showed great
interest in having a direct stake in Bolivian lithium. But they could not
make a deal that would take into consideration the parameters set by the
Morales government. Morales himself was a direct impediment to the takeover
of the lithium fields by the non-Chinese transnational firms. He had to go.
After the coup, Teslas stock rose astronomically.
This article was produced by Globetrotter, a project of the Independent
Media Institute.
