Bolivia Mining Sector Background
From 1557 to 1985, the mining industry dominated the Bolivian economy. Bolivia, known for centuries for its minerals — first silver and then tin — became synonymous with cocaine towards the end of the 20th Century. Coca-related exports often equaled or exceeded legal exports in 1980s, generating from US$600 million to US$1 billion annually, although estimated 1988 cocaine revenues fell below US$300 million. Hydrocarbons became leading export in 1980s, accounting for 11 percent of GDP and over 50 percent of government revenues in 1985. Natural gas replaced tin and other minerals as leading export, growing from 21 to 44 percent of exports in 1980-87; most went to Argentina and Brazil.
When Francisco Pizarro arrived in Tumbes (in present-day Peru) in 1532, the Incas thought he was Viracocha Inca returning. After conquering the Incas, the conquistadors systematically destroyed the Incan and other "backward" Indian cultures. For almost three centuries, the Spaniards exploited the rich silver mines of what they called Upper (Alto) Peru or Charcas (present-day Bolivia). They subjected the mainly Aymara Indians on the Altiplano and the Quechua Indians in the temperate valleys to a system of feudal peonage in the mines and textile mills (obrajes) and on the haciendas, denying them even the right to learn to read and write their own languages. Imported African slaves died off so rapidly doing the strenuous high-altitude mining work and the Indians feared them so much that they were used mainly for domestic work in the silver-mining city of Potosi.
For many years Potosi was the richest and largest city in the Americas (160,000 residents in 1660). The highlands were rich in minerals, and Potosi had the Western world's largest concentration of silver. The area was heavily populated and hence could supply workers for the silver mines. Silver production fluctuated dramatically during the colonial period. After an initial fifteen-year surge in production, output began to fall in 1560 as a result of a severe labor shortage caused by the Indian population's inability to resist European diseases. Around the same time, Potosi 's rich surface deposits became depleted, which meant that even more labor would be required to extract silver.
The labor shortage was addressed by Francisco de Toledo, the energetic viceroy (the king's personal representative) of Peru, during a visit to Upper Peru in the 1570s. Toledo used the pre-Columbian mita to extract forced labor for the mines at Potosi from some sixteen districts in the highlands, which were designated as areas supplying mita. Adult males could be required to spend every sixth year working in the mines.
Since the colonial period, tin had been mined in the Potosi region; nonetheless, Bolivia historically lacked the transportation system necessary to ship large quantities of tin to European markets. The extension of the rail link to Oruro in the 1890s, however, made tin mining a highly profitable business. The decline in European tin production also contributed to the Bolivian tin boom at the beginning of the twentieth century. With the development of huge mines in southern Oruro and northern Potosi, La Paz eclipsed Potosi as the mining industry's financial and service center.
By the end of the 19th Century, the Liberal Party drew most of its support from the tin-mining entrepreneurs in and around La Paz, whereas Conservative governments had ruled with an eye on the interests of the silver mine owners and great landowners in Potosi and Sucre. The mining and landowning elite kept the mine laborers and landless peasant migrants in a system of neo-feudal peonage called pongaje and intensified the despoilment of the Indian communities of their ancestral land.
Tin prices started to decline in the 1920s. After peaking in 1929, tin production declined dramatically as the Great Depression nearly destroyed the international tin market. This decline was also caused by the decrease in the tin content of ore and the end of new investment in the mines in Bolivia.
Bolivia is a globally important supplier of bulk ores and mineral concentrates. In 2013, the country was estimated to have produced 8% of the world’s total mine output of tin; silver, 5%; antimony and zinc, 3% each; and lead and tungsten, about 2% each. Most of the volume of Bolivia’s mineral production was exported in raw form by rail to ports on the coasts of Argentina, Brazil, Chile, and Peru and then shipped to processing facilities located in Asia, Europe, and North America. Bolivia’s mineral resources have not been fully explored or developed. In addition to the minerals listed above, Bolivia is thought to have globally relevant resources of cadmium, chromium, gold, indium, iron ore, lithium, nickel, palladium, platinum, potash, and tantalum.
Preliminary data for 2013 indicated that the value of Bolivia’s marketed production of minerals decreased by 18% compared with that of 2012 to about $3.1 billion. The greatest decrease in value was for gold, the value of which decreased by 48.7% compared with that of 2012. Silver continued to generate the most value. The marketed value of silver was about $1 billion followed by that of zinc ($757 million), gold ($562 million), tin ($370 million), antimony ($51.7 million), and wolframite (tungsten) ($30.2 million). The value of marketed production of other minerals (unclassified) was $292.7 million, of which the value of other metals (unclassified) was $74 million.
Mining remained one of Bolivia’s most important economic activities. Despite more than 500 years of continuous mining in Bolivia, estimates suggest that only 10% of Bolivia’s mineral resources have been extracted. Principal metals and industrial minerals include gold, silver, zinc, lead, tin, copper, tungsten, sulfur, potassium, lithium, borax, and semi-precious stones. Mining accounted for approximately 19.5% of Bolivia’s exports or $1.7 billion in 2015. There is one large US firm operating a major silver mine in Potosi.
Bolivia was looking to capitalize on its large in-ground lithium supply, but had yet to find a company willing to partner on the government’s terms. Bolivia has the largest lithium deposits of any country and its deposits are estimated to be about half of the world's supply, however they are located in the Uyuni salt flats, one of Bolivia’s great natural treasures. The government has already started a pilot project to produce lithium batteries in La Palca (Potosi). It has invested $2 million, and has yet to see results from that investment.
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