Will Silver Surge Following The Nationalization Of Bolivia's Silver Mines By Embattled President Evo Morales?

Tyler Durden's picture

Two weeks ago the precious metals space was closely following the fate of Sumitomo's San Cristobal mine, where a long strike had paralyzed work at the world's third largest producer of silver and sixth-largest producer of zinc. While the strike was eventually resolved with concession to the domestic workers, a far more troubling report from Bolivian daily La-Razon states that Bolivia's president Evo Morales is now planning on expropriating zinc, silver and tin mines sold off by previous governments. Bloomberg reports that "Morales will announce a decree May 1 to “dismantle the privatization model,” said Nicolas Fernandez, a spokesman for state mining company Corp. Minera de Bolivia, known as Comibol. "The government is recovering all the privatized companies,” Fernandez said today in a telephone interview from La Paz. “When the decision is taken, Comibol will be ready to manage these mines.”" Among the contracts to be affected are those with Glencore International AG, Pan American Silver Corp., and most importantly, Coeur d’Alene Mines Corp., which is operator of the San Bartolome mine: the world's largest pure silver mine. Notably San Bartolome and Sumitomo's San Cristobal "account for about 83% of the nearly 1.1M tons of fine silver Bolivia produced in 2009, according to Mining Ministry data" according to The Gold Report. If indeed this news is proven true, and we will know for sure in 16 days, looks for the price of silver to spike considering about 1.33 million kilograms of silver was produced in Bolivia 2009, according to the U.S. Geological Survey: an amount which will likely fall off a cliff following the utter chaos that is unexpected nationalization.

Bloomberg's report on this important development confirms that the potentially affected producers seem to be in a state of denial about this absurdly irrational development:

“Our property title is not subject to expropriation by the government,” Coeur spokesman Tony Ebersole said in e-mailed comments to questions.

Glencore spokesman Simon Buerk declined to comment and Pan American spokeswoman Kettina Cordero didn’t return telephone calls and e-mails seeking comment.

Bolivia produced 430,879 metric tons of zinc, 84,537 tons of lead, 19,581 tons of tin and 1.33 million kilograms of silver in 2009, according to the U.S. Geological Survey.

Nationalizing private industries is nothing new for the embattled Morales:

The government of then President Hugo Banzer sold off mining assets such as the Vinto tin smelter in 1999 in a drive to shed money-losing state companies and attract private investment. Morales seized the smelter from Glencore in 2007.

Morales took over gas fields and refineries on May 1, 2006 in a bid to increase state control over Bolivia’s natural resources. Private investment in the industry plunged 69 percent to $271 million in 2009 from $865 million a decade earlier, according to state energy company YPF Bolivianos.

With the political situation in Bolivia deteriorating (read the following update from La Razon on the strikes and blockade gripping La Paz) it is increasingly probably that the country's president will take irrational steps in order to safeguard his image, and supposedly to fill his coffers.

Full report from La-Razon here.

h/t Matt

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aVian's picture

bullish for silver

duncecap rack's picture

Sucks when you hold PAA calls though.

Herd Redirection Committee's picture

Personally, I think the Capital Research Institute is doing a  lot of good with their approach.  Can't match ZH for pure quantity, but there comes a time for spreading awareness AND planning solutions!

"On Psychology & Markets"


More and more people are catching on to the fact that two sets of rules are currently in place, one for the MEGAwealthy (net worth > $100 m), and one for the rest of us.  Besides the issue of the US government’s debt problems,  and spending more than they earn, there is the problem of the US dollar (world reserve fiat currency) on its deathbed, with a privately -owned central bank (the Federal Reserve) that has proven beyond a shadow of a doubt to have ONLY the interests of its private owners in mind.   Not only were the bailouts in 2008 a mistake, they were the largest theft in the history of mankind!  It was the largest reverse Robin Hood story in history!  The rich stealing from the poor to a degree only imagined (and probably salivated over) by the ‘great’ tyrants of the early 20th century, John D Rockefeller and JP Morgan.  Now in the 21st century we get Henry Paulson, Hank Greenberg, Ben Bernanke, Lloyd Blankfein,  Jamie Dimon, etc.

The question left to ask, then, is why haven’t EVEN MORE people woken up to facts, and the dire situation we find ourselves in?  After a long and careful look at this issue, the answer may be surprising to some.

cxl9's picture

It was the largest reverse Robin Hood story in history!  The rich stealing from the poor to a degree only imagined

How exactly does one steal vast wealth from the "poor"? Aren't the poor, by defnition, without significant wealth? No, the bailouts were more along the lines of the government and various privileged wealthy insiders stealing from the middle classes and unborn future generations.

Herd Redirection Committee's picture

The middle class and unborn future generations = poor, relative to the people who stole the wealth, isn't that right?

sun tzu's picture

George Soros and T Boone Pickens = poor, relative to Bill Gates and Warren Buffett, isn't that right?

sun tzu's picture

George Soros and T Boone Pickens = poor, relative to Bill Gates and Warren Buffett, isn't that right?

SilverBaron's picture

What would get you richer: stealing one million dollars from a rich guy, or stealing one dollar from each of three hundred million poor guys?

cxl9's picture

I suppose it would depend on the transaction costs.

SilverBaron's picture

There are no transaction costs, remember you are stealing.  Besides if there were transaction costs you would just put those on to the people too.  Call it delivery or transmission tax like they do on the electric bills.

mick_richfield's picture

Come on, man, my head is still hurting from the damn captcha!  Negative numbers!  WTF?!?

Central Bankster's picture

Bottom line is counter party risk.  With physical, there is no counterparty.  With any form of paper, any government can steal your "rights" or your claim of ownership.  Pan American Silver has a responsibility to defend their property interest (and that of their shareholders) by all means necessary.  They should consider hiring a private security force to defend their interests.

Bicycle Repairman's picture

Yeah.  Here you go "Central Bankster".  Here's your gun.  Go get 'em, tiger!

Central Bankster's picture

And when the rule of law and private contracts breaks down, what should one do?  You clearly are the type to grab your ankles rather than fight for your rights?  Scum.

CrazyCooter's picture

I wonder if this means that Obama will invade Bolivia ... you know, to protect the people...

"Tonight Pinky, we take over THE WORLD!"



spiral_eyes's picture

morales is obviously murdering his people, time for operation falcon punch.


longer than long john silver, bitchez


also btfd for svm, slw, hl, etc

Hugh G Rection's picture

Who gives a shit what Bolivia does, silver is going parabolic anyways. 


If they nationalize their coke production then I'll worry.

mt paul's picture

who gives a shit 

what obama does.. 

long silver

Xibalba's picture

COEUR D’ALENE, Idaho--(BUSINESS WIRE)-- Coeur d’Alene Mines Corporation (NYSE:CDE - News)(TSX:CDM.to - News) today announced that it has received assurances from the Morales Administration in Bolivia that its San Bartolomé mine is not subject to any proposed nationalization in Bolivia.

“During a meeting Thursday with Bolivian Mining Minister Jose Pimentel, the Minister assured Coeur Manquiri and members of the Federation of Mining Workers Trade Union (FSTMB) that Manquiri will not be nationalized,” said Humberto Rada, President of Coeur South America and Coeur Manquiri, the subsidiary of Coeur that operates San Bartolomé.

Coeur has maintained that its property rights at San Bartolomé are not the subject of expropriation. The Company operates the mine in Potosi where title already belongs to Bolivia and backed by Presidential Supreme Decree.

All surface mining and silver production at San Bartolomé are operating as usual. The labor unions working with San Bartolomé management have openly denounced any nationalization and expressed their support of Manquiri as have the mining Cooperatives in Potosi, who are a strong social and political influence in Bolivia.

tmosley's picture

Where's Francisco D'Anconia when you need him?

Temporalist's picture

I thought everything was bigger in TX...even the movie theathers (or is that only the mega-churches).

Tmos if I were in Lubbock next time I was in TX I'd take you out for some suds.

tmosley's picture

We've got two large theaters, and they are building a mega-theater now.  But none of them are showing AS.  It's a travesty they aren't opening it to a larger release.

I have a feeling that before long, I'll be able to amble into the completed mega theater, buy a beer, and get the whole complex as change.  Then I'll screen the full trilogy, and invite the whole ZH crew for beers (the mega-theater has two bars in it--awesome).

long juan silver's picture

Lubbock! It's no wonder you're miserable.

tmosley's picture

Awww, does the butthurt faggot not like the second lowest cost of living college town in the US?

long juan silver's picture

Can't you have a conversation without introducing your sexual proclivities? BTW I live on a beach that has palm trees.

tmosley's picture

lol, you don't even know what you're talking about.  Why don't you get out of here.  And stop coming back with new names, you idiot.  You don't fool ANYONE with that schtick.



akak's picture

Was that Mothman, or Balding_Snails?

tmosley's picture

William the Bastard, and his innumerable other sock puppets, all the way back to "MeTarzanUjane", at least.

akak's picture

Pathetic, worthless piece of shit lowlife trolls.

They deserve to be shot.

CrazyCooter's picture

I was born in Texas and lived there most of my life. I can't express how great the people are (native Texans) and what a wonderful environment it is to work (taxes, etc).

People can Texas bash all they want, but it doesn't change the facts.



long juan silver's picture

I love Matamoros-Reynosa-Monterrey area. You like thrills? Ever wonder what kind of man you really are? Go there some weekend. Leave the wife and kids home.

CrazyCooter's picture

So you cherry pick a fairly small area, which lacks security primarily because our govt would rather invade other countries than secure our own borders, as being representative of the the second largest state in the union?



Shell Game's picture

Lived in Texas for five years. Absolutely loved it.

AR15AU's picture

I didn't know...  just got tickets... thanks

The Profit Prophet's picture

You've been registered for 25 weeks without a post!!!......I wish I could junk you twice.

Welcome to "The List".

T.E.I.N. everyone!

NOTW777's picture

questionable selloff in other miners with no risk to bolivia situation

Cash_is_Trash's picture

No wonder CDE is tanking.

NOTW777's picture

i think their san bartolome mine did 6.7 mil ozs last year

Cash_is_Trash's picture

Wonder if we'll punch through $42 on this fine day.

JuicyTheAnimal's picture

How much silver is owed to SLW from Bolivia mines?  Is this what's holding their share price back?

Piranhanoia's picture

guessing that the rise of metal means collapse of paper. He has a country without paper, being pronged by Bechtel. Water next.  Might even be why Evo took control like Iceland did. He appears to get it.