The Rocky Road Ahead
by Jules Caron
The current mining crisis affecting Bolivia could potentially impact on the life of one-tenth of the country's population. Besides the controversial privatization of COMIBOL and ensuing lay-offs, one of the biggest dangers facing the sector is a lack of fresh capital and proper technology in the mining cooperatives and the small mines. The Small Mines Assistance and Development Fund (FADEMIN) is set to begin operations by lending financial, technical and material assistance to this sector. However, the road won't be easy and, ultimately, the miner will suffer.
Bolivia has witnessed a significant contraction of its mining sector in the last decade. Beginning with the polemic privatization of the state-owned Bolivian Mining Commission (COMI-BOL) in the mid 80's, and dropping mineral prices in the same decade, approximately 27,000
COMIBOL miners were laid off. The Asian crisis and an unstable financial market can now only contribute to Bolivia's woes. Bolivian Vice minister of Mining and Metallurgy, Rene Renjel Dominquez said, “The Asian Crisis will affect all mine-related activity... by lowering prices and
investment.”
The hardest-hit have been the mining cooperatives and the small mines industry. According to the World Bank, in the early 90's, there were approximately 5000 mining cooperatives and 6500 small mines operating in Bolivia. Today, there are only 842 cooperatives and 500
small mines in the country.
Edwin Castro Menacho, Executive President of the Foundation for the Assistance and Development of Small Mines (FADEMIN), who believes the most vulnerable sector of the mining industry are the cooperatives and the small mines, attributes the current problems facing the mining sector in Bolivia to a chronic lack of capital, little interest among foreign investors, archaic technology and falling metal prices. Tin, central to the Bolivian mining industry since 1895, has dropped 20 percent in value since last year.
It is the impact of this recession on Bolivian society, however, which is the most worrying. Since a small mine is basically constituted of a family, “if there are 6500 families, with five members per family, approximately 32500 people will be directly affected,” said Menacho. “If one considers the importance of the mining industry to the country, for example it comprises 40 percent of the country's total exports, this activity has a multiplying effect not present in other sectors,” he added.
The social ripples caused by the faltering cooperative mining sector are much more serious. There are approximately 120,000 registered and non-registered miners working with these cooperatives. Directly affected are the over 500,000 miners and their families. “If the multiplier effect is taken into account, approximately 800,000 people are affected with the mining crisis at hand,” said Menacho. This represents over 10 percent of the country's total population.
These miners, who are being forced to relocate, have few places to go. Some end up in the Chapare region and participate in illegal activities such as the cultivation of coca (used to make cocaine), others in what are called the “strings of misery” in the principal urban centers of La Paz, Cochabamba and Santa Cruz. Finally, some work illegally in Argentina, often in unjust and unfair conditions.
Cooperatives and small mines
Small mines and mining cooperatives are characterized by low financial resources, strongly hindering further development. Neither can be considered a company; the small mine is similar to a family business, whereas the cooperative is a solidarity organization. In Bolivia, both use outdated technology.
The difference between a small and medium mine is the latter mobilizes a strong capital base. “We are talking of US$40 million compared to US$4000,” said Menacho. “They also use much better technology and their organization is completely corporate,” he said.
Fernando Peredo, president of the Nueva Karazapato Cooperative explained that a cooperative worked under the principal that each miner would be helping a fellow miner. “All for one and one for all,” he said. Secretary General of the Playa Verde Cooperative, Maximillian, said, “the advantage of a cooperative over a company is that we own the source of our labor and we are more united in our occupation.” He added that unfortunately it had now become subsistence work and most cooperativists barely make enough to survive. Both Maximillian and Peredo blame archaic technology and falling metal prices for the decline of the cooperatives.
In Huanuni, Bolivia's biggest tin mine 100km east of Oruro, supported by a 19,000 strong population, the differences in working conditions between the state-owned Huanuni Mining Enterprise and the city's four cooperatives are striking. To start, a miner working for the company will make anything from Bs 800 to Bs 1000 per month, whereas the cooperativist starts at Bs 300 per month and is lucky to make Bs 800. Furthermore, the company employee benefits from health security, an athletic center, a pension and all work-related tools are supplied by the company. The cooperativist must supply his own tools, and enjoys none of these securities. Furthermore, the area in Huanuni where the cooperativists work appears to double as the village garbage dump.
However, due to a recent privatization of COMIBOL's corporate sector, many of the company's workers have been laid off. “Through COMIBOL'S privatization, our people are being massacred,” said Max Evedia Rohas, an employee for the accounting section of the Huanuni
Mining Company. “Since December of last year, 328 of our workers have been put on the street.” Currently the company only employs one third of its previous work force, 187 employees. It appears no aspect of the Bolivian mining industry is immune from the crisis.
Legal obligations
The government, with the aid of the Oruro and Potosi mining communities, is trying to find solutions to confront the crisis. As stated in Law 1786 and regulatory decree 24635 and as established by the Mining Code Law, article 22, a mechanism to help and promote development in the cooperatives and small mines must be initiated.
FADEMIN was born of the cooperation between the National Mining Chamber and the National Federation of Mining Cooperatives in 1990. It obtained legal status in 1996 and initiated its operations in February of 1998. The foundation will lend technological, economic, financial and administrative assistance to the small mining sector, and to mining cooperatives, in accordance with the stated laws. Last Thursday, the national newspaper Presencia wrote that FADEMIN will replace COMIBOL's operative side, to help develop and modernize small mine and mining cooperatives. The government has already approved most of these functions.
“The Bolivian population is confused and getting wrongly upset about the privatization of COMIBOL,” said Menacho. “What is getting privatized are its factories and its operative side, COMIBOL's... autonomous administration duties will not disappear,” he said. COMIBOL will also become an environmental regulator.
Help is on the way
FADEMIN insists it is not giving presents or gifts to the miners. It is giving them the ability to work, and with the fruit of their labor, pay back what they have borrowed. “We are not an aid foundation, but an assistance foundation,” said Menacho.
What the small mining sector needs now is a minimum of technology, machinery and materials. According to a study conducted by a Romanian Mission, Bolivia is at “the peak of hammer and wedge technology”. “The miners need wheelbarrows, picks, shovels, hammers and bags. Big companies have this vital internal infrastructure, but the cooperatives' infrastructure is totally abandoned, if not completely outdated and the small mine's infrastructure is non-existent,” said Menacho.
Financial sustainability is one of the main objectives of FADEMIN. “It's the only way to confront and maintain competitivity in this whole process of globalization,” said Menacho. Among projects are plans to industrialize the metallic and non-metallic mining sectors, and to begin exporting processed primary resources. “This is the only way to enter the global market,” he said. “As a first step we need to acquire appropriate existing technologies to exploit our huge wealth of resources,” he added.
It is estimated that in Bolivia only 15% of its geological land mass has been explored. “Therefore, we are not only talking about an obvious increase in exploration projects, but to use these resources that for historical, political, social and economic reasons belong to the small mining sector,” said Menacho. He added that foreign investors will not be able to ignore the country's huge mineral potential.
Although FADEMIN currently does not have any capital, the National Mining Cooperative Association has pledged to fund the foundation. There will also be a transfer of assets from COMIBOL to FADEMIN. “But we need fresh capital, and we are currently working with banks and private and public institutions,” said Menacho. “The Bolivian miner has value as an individual and as a worker. Furthermore, we are talking here of productive capital, not speculative capital which caused most of the problems in Asia,” he added optimistically.
Vice Minister Dominquez described FADEMIN as, “a second level bank, which would help to increase productivity and lower costs of production.”
FADEMIN is not met without criticism, however. Rohas explained that as the foundation would be mostly controlled by foreign capital, Bolivia would be losing a piece of national sovereignty to foreign institutions. “The state is obliged to provide our country with funds to preserve what is rightfully ours,” he said. “The government is like the father of a family, he is obliged to help it through good or bad times. What they are doing is simply anti-democratic,” he added.
Dominiquez said the government simply had no money, and no Bolivian company could afford the costs. “The state recognizes that to survive, the mining sector must continue production and export, and attract foreign companies by giving them more liberties and tax breaks,” he said.
The cost
“We are trying to solve the problem of the Bolivian miner,” said Menacho. “We must not forget that the center of any economic plan is Man, in this case, the miner. We see him as a person and not as a ‘productive agent,'” he added.
This philosophy can be observed in the consultative council of FADEMIN. Based on transparency and completely independent from the government, it is comprised of three members each of FENCOMIN and CANALMIN (the National Small Mines Association), the president of FADEMIN and one member of each institution involved in a project. Furthermore, the president is not part of any of the cooperatives or small mines which FADEMIN works for, to ensure completely impartial and fair judgment.
“Huanuni,” according to a civic official who asked not to be named, “is 100 percent dependent on the mining industry. And the government no longer wants to help,” he said. “What we need are more jobs.”
Of the four cooperatives at Huanuni, only two had heard of FADEMIN. they both agreed that it started from good intentions, and could potentially help, but to what extent, none of them knew.
“Unfortunately the ones who will suffer the most are the miners, who can expect lowered incomes,” said Dominquez. “The crisis is a reality, however, and we must confront it with the best tools available.”
None of the miners approached agreed to an interview. According to local radio station DJ and director, Marco Antonio Montaña Ortega, “They're too proud to say that for them life is very hard.” |
