Evo Morales, Bolivia’s leftwing president, has vowed to nationalise the country’s mining industry, overruling senior members of his cabinet in a move that could affect foreign investors such as Coeur d’Alene and Apex Silver of the US.

“Our mineral resources, our forests and our water resources should be returned to the hands of Bolivians,” Mr Morales told a crowd at an agricultural fair in Pucarani, a highland town near La Paz, on Sunday.

The Bolivian leader added that if he did not extend nationalisation before an elected assembly to rewrite the constitution convenes in August, delegates to the assembly would be charged with doing so.

Mr Morales announced the nationalisation of Bolivia’s gas industry last week, sending in troops to occupy installations and raising taxes to 82 per cent on the country’s largest gas fields.

The threat to private mining interests comes as Bolivia is preparing an auction of El Mutún, an iron ore deposit in the south-east with an estimated 40bn tonnes of ore. Uncertainty could damp the interest of international miners in El Mutún. Ten international companies had originally expressed an interest in the deposit, including CVRD of Brazil, Rio Tinto, the Anglo-Australian miner, and Teck Cominco of Canada.

Peter Munk, chairman of Barrick Gold of Canada, warned at the company’s annual general meeting in Toronto last week that Bolivia was not an attractive destination for mining investment. “Pakistan . . . from a mining point of view, from a business point of view, is among the better countries,” Mr Munk said.

Three companies are still likely to put in offers for El Mutún, including Mittal Steel and Jindal Steel of India. But the rules for operation are still unclear and the bidders are said to be concerned about the government’s insistence that the project be fuelled by natural gas.

Mr Morales’s comments have exposed the divisions within government ranks. “Some on the left want to nationalise mining, while others are just pushing for tax increases,” said Carlos Arze of Cedla, a La Paz think-tank.

Vice-President Alváro García and Walter Villaroel, the mining minister, have both ruled out expropriating foreign-owned mining assets, although Mr Villaroel said last week: “It would be irresponsible not to make the most of the rise in the price of minerals.”

Mr Morales will face tough conversations as he visits Vienna this week for a summit of Latin American and European leaders. José Luis Rodríguez Zapatero, the Spanish prime minister, is under pressure at home to take a hard line with Mr Morales to defend the interests of Repsol, the Spanish energy giant that is the second biggest foreign investor in Bolivia.

Get alerts on US & Canadian companies when a new story is published

Copyright The Financial Times Limited 2022. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Comments have not been enabled for this article.

Follow the topics in this article