Mining Report
March 2023

WHAT IS NEW IN MINING?

BOLIVIA SEEKS LITHIUM INDUSTRIALIZATION IN SEVEN OF ITS SALT FLATS AND LAUNCHES CALL FOR BIDS

Yahoo News.

26/01/2024: Bolivia has announced a second global call to industrialize evaporitic resources and lithium using direct extraction technology across seven salt flats, including the vast Uyuni. The initiative seeks partners for industrial projects that go beyond lithium,  covering other minerals found in the brines of Potosí and Oruro. With  an emphasis on advanced technology, transparency, and respect for sovereignty and the environment, Bolivia aims to expand its lithium  production and strengthen its position in the global market. 

BOLIVIA SIGNS AGREEMENT WITH CHINESE LITHIUM BATTERY GIANT TO SET UP AN EXPERIMENTAL PLANT

The Associated Press en MSN

17/01/2024: The Bolivian government, along with the Chinese consortium CBC, which includes CATL, BRUMP, and CMOC, has agreed to establish a pilot plant in the Salar de Uyuni to produce 2,500 annual tons of lithium carbonate, essential for lithium-ion batteries.  The experimental project will determine the feasibility of a future  industrial plant. Additionally, Bolivia is seeking new foreign investors,  requiring their participation in the entire production chain. This is  Bolivia’s second agreement with CATL. 

TECHNOLOGICAL MINERALS AND RARE EARTHS IDENTIFIED IN FIVE REGIONS OF BOLIVIA

La Voz de Tarija

15/01/2024: Bolivia has identified technological minerals and rare earths in Cochabamba, Potosí, and Santa Cruz, focusing on  transitioning from traditional to technological minerals to meet global  demands. The Minister of Mining announced this shift towards more  sustainable mining oriented towards renewable energies and  electronics. The Bolivian Mining Corporation and the Geological Mining Service discovered these resources, and hundreds of samples have been collected in Santa Cruz. This initiative, supported by a new  management established in 2023, seeks to adapt to the changing  global energy market. 

COMIBOL PROJECTS INVESTMENT OF UP TO $3 MILLION IN PROSPECTING AND EXPLORATION OF RARE EARTHS

EjuTv / La Razón

08/01/2024: The Bolivian Mining Corporation (Comibol) plans to invest between $2 and $3 million in the prospecting and exploration of  technological minerals and rare earths, as stated by its president,  Reynaldo Pardo. The investment will focus on areas such as Cerro Manomó and Rincón del Tigre in Santa Cruz, and a new area in San  Luis, Potosí. The aim is to adapt to the growing global demand for  these minerals, which are used in advanced technologies such as  electric vehicle batteries and electronics, pursuing sustainable mining 
oriented towards renewable energies. This marks a shift in Bolivia’s  mining strategy, from traditional metals to technological minerals. 

MINISTRY OF MINING PLANS TO WORK ON THE EXPLOITATION OF THREE GOLD MINING DEPOSITS

Ministry of Mining and Metallurgy

20/12/2023: The Minister of Mining and Metallurgy of Bolivia,  Marcelino Quispe López, announced plans to exploit three gold deposits: Pico Suto, Madre de Dios, and Río Beni. Although initial  mining will be modest due to limitations in machinery, these projects aim to strengthen international reserves. A state gold company will be  created to manage exploitation and marketing. The Bolivian Gold Company (EBO) has already opened branches in San Ramón and  plans one in Riberalta to support the Central Bank of Bolivia. This is  part of the state policy of industrialization towards the Bicentennial of  the Plurinational State of Bolivia. 

BOLIVIA INAUGURATES ITS LITHIUM CARBONATE INDUSTRIAL PLANT

La Razón

17/12/2023: Franklin Molina, Bolivia’s Minister of Hydrocarbons and Energy, highlighted the significance of the new Lithium Carbonate Industrial Plant in Uyuni, Potosí. With an annual capacity of 15,000 tons and an investment of Bs. 766.9 million, this plant marks the  beginning of industrial lithium production, aiming to make Bolivia one  of the leading global producers. This project is part of a strategic  lithium development plan, focused on technological innovation and the creation of a strong and extensive industry, ensuring sovereignty  and mutual benefit in partnerships with foreign companies. The plant  will significantly contribute to the country’s revenue. 

BOLIVIA AND RUSSIA SEAL A MULTIMILLION-DOLLAR AGREEMENT FOR LITHIUM EXTRACTION

Deutsche Welle-DW

13/12/2023: Bolivia has signed an agreement to install a lithium extraction pilot plant, with a total investment from the Russian firm Uranium One Group. This plant, part of a $450 million project until 2025, will initially produce 1,000 tons of lithium carbonate per year, scaling up to 14,000 tons annually. President Luis Arce emphasized Bolivia’s participation across the entire lithium production chain, crucial for electric vehicle batteries. Bolivia, with its vast lithium reserves, aims to surpass its gas exports. 

FRENCH DELEGATE FOR STRATEGIC MINERALS AND METALS SUPPLIES VISITS BOLIVIA

Los Tiempos

01/12/2023: Benjamin Gallezot, the French Interministerial Delegate for Supplies in Strategic Minerals and Metals, will visit Bolivia on December 1st for meetings with stakeholders in the lithium and rare metals sector. This visit, in the context of growing global demand and France’s strategy to reduce dependence on these minerals, aims to promote agreements, scientific cooperation, and sustainable resource management. Gallezot coordinates the French energy strategy, focusing on batteries and low-carbon energies. The visit strengthens the France-Bolivia bilateral relations, initiated at the EU-CELAC summit, with French companies and institutions interested in collaborating with Bolivia. 

ANALYSIS AND OPINION

Author: Luis Fernando Valle, Asociado Senior PPO.

RELATIONSHIP WITH COMMUNITIES FROM A LEGAL PERSPECTIVE

Given the pre-colonial existence of indigenous communities, nations and rural indigenous peoples, the Bolivian State recognizes among its fundamental bases their participation in the different areas of economic development, such as mining. That is to say that, from the beginning, the mining activity carried out in Bolivia has been conditioned not only by purely legal and technical aspects, but also  includes an extremely strong and determining social component when  it is carried out. 

In this sense, the planning, preparation and especially the execution of  mining activities in our country, requires the owners – in addition  to other requirements required by law – to request what in mining  matters is called a “social license”, which refers to the continuous  approval and social acceptance granted by the community of a specific  place and/or interested parties so that the holders of mining rights can  carry out specific mining activities. Now, it should be noted  that  although the figure of the “social license” is not formally reflected in  legal instruments, it constitutes an essential and enforceable aspect  when carrying out any type of mining activity. 

On the other hand, Art. 30, paragraph II, numeral 15 and 16 of the Political Constitution of the State covers the figure of “social  consultation” and establishes that any human community that shares cultural identity, language, historical tradition, institutions,  territoriality and worldview has the right to be consulted through  appropriate procedures, whenever measures are foreseen that  may  affect the community, respecting and guaranteeing the right to  mandatory prior consultation carried out by the State regarding the  exploitation of nonrenewable natural resources in the territory  inhabited by these communities and allowing their participation in the benefits of the exploitation of the natural resources of their territories. 

In addition, Law 535 of May 28th, 2014, Mining and Metallurgy Law,  establishes some guidelines on prior consultation in mining matters  and indicates that mining operations that include only prospecting and exploration do not require prior consultation per se, and indicates  some other exceptions that are not subject to the procedure of said  consultation. 

Thus, it is necessary to understand that both the social license and the  prior consultation are processes of intra- and intercultural dialogue, in  good faith, free and informed that contemplate, on the one hand,  the relationship of the owners and the communities, and on the other  hand, the development of successive stages of a procedure between the  State, the requesting mining productive actor and the  communities as the subject of the consultation. Both figures with the  purpose of reaching agreements and cooperation within the  framework of the law. 

The social license is binding between the mining productive actor and  the community and it emerges from strategic agreements and public  interest for the development of the country and its administration. In  other words, among the objectives sought to be obtained with the  social license, is to promote the development opportunity that  ancestral communities have to the extent that they benefit from the  agreements obtained with mining producers who request a social license.

This type of relationship with communities, although it entails a social  perspective, is a clear example of protection and guarantee  of the  rights that communities that exercise control over their territories  have. A figure that requires the relationship between the productive  actors holding mining rights and the community members of the area where the mining activity is desired. 

Some of the legal effects that can emerge from a good or bad relationship with the communities are the total, partial or null authorization of the mining project, the revocation of the social  license, the granting or not of the environmental license based on  social aspects. that may influence it, the total or partial suspension of  the mining project, among others that, in short, constitute and/or  produce legal effects emerging from a social component.

Thus, the relationship with communities from a legal perspective  entails a dynamic and determining challenge for the mining sector,  since it encourages growth and economic-social development in rural  areas and commits the productive sector to respect for cultures,  beliefs, religions, historical traditions, institutions, territoriality and  worldview of the ancestral communities that have inhabited our country for time immemorial and represent the wealth of Bolivia. A  social instrument that seeks to achieve balance in the Bolivian  economy and a favorable legal scenario for the actors involved, which translates into an indication of social well-being and protection of  rights for the entire Bolivian population. 

DID YOU KNOW THAT...

NEW EXTENSION OF DEADLINE FOR CONFORMING MINING RIGHTS TO ADMINISTRATIVE MINING CONTRACTS

On November 11, 2023, the Ministry of Mining and Metallurgy issued Ministerial Resolution No. 388/2023. This resolution extends the  deadline until May 5, 2024, for the submission of new applications  and the correction of observations in the procedures for conforming  Special Transitional Authorizations (STA) to Administrative Mining  Contracts (AMC), even for those cases previously out of term.

This additional period, starting from November 5, 2023, is established  after successive extensions of the original deadline, dating back to  June 2019. The need for these extensions arises from the legal and  social complexities inherent in the process. The mining areas in  question, some with rights granted over a century ago, show  significant variations in terms of grant date, methods of acquiring  rights, and supporting documentation.

Socially, the situation of entities such as mining cooperatives, which  often operate without formal document management procedures, is  highlighted. This results in prolonged delays in their regularization. To prevent social conflicts stemming from possible reversions of mining  areas, the authority has opted to repeatedly extend the conformity  deadline.

It is crucial that all mining stakeholders who have not yet initiated or  followed up on their conformity procedures take note of this extension  as definitive. The mining authority deems this extension final and warns that failure to meet the requirements within the established  deadline will lead to the definitive reversion of granted mining rights.

THE NEW GOLD EXPORT CERTIFICATE (CEO)

The regulation introduced by Bolivia on November 29, 2023, through Supreme Decree No. 5076, marks a significant change in the supervision of the export of precious metals, with the Central Bank  of  Bolivia (BCB) playing a predominant role. In this new scenario, the  BCB is positioned as the authority that will set limits on the amounts  of gold that can be traded internationally, as well as the issuing entity  of the indispensable Gold Export Certificate (CEO), without which no  gold transaction can be completed. 

With the entry into force of Board Resolution No. 156/2023, the BCB  has a detailed guide for managing these new responsibilities, including  issuing the GEC and setting export quotas. The BCB’s Economic Policy Advisory becomes a key consultative figure, whose  role will be to recommend the amounts of gold to be authorized for  international sale, with the BCB’s Board having the final say through
specific resolutions. 

This resolution not only determines the mandatory content of the CEO  but also defines the verification processes that ensure the export  does not compromise national gold reserves. The final decision on the  volume of gold released for export is subject to the discretion of the  BCB or what its Board deems appropriate in percentage terms.  

The decree impacts various tariff items, covering everything from gold  minerals and their concentrates to gold in different states, and  residues and waste containing precious metal. Until the end of 2023,  an export quota of at least two tons has been stipulated. 

The implementation of these measures suggests an effort by the  Bolivian state to increase control and supervision over gold exports.  The establishment of fixed quotas and the centralization of the CEO  issuance process signify a notable increase in the BCB’s regulatory  power, which could be perceived as a commercial restriction. 

However, this approach also reflects a concern to maintain a detailed  and updated record of the amounts of gold leaving the country, which  could in turn help preserve national reserves. This regulatory policy,  although potentially limiting for exporters in the face of global market  dynamics, aligns with national interests in economic security and resource control. 

Contact

If you require more information, the PPO team remains at your disposal.

Mattias Garrón

PARTNER

Luis Fernando Valle

SENIOR ASSOCIATE

Victor Armaza

ASSOCIATE

Mining Report - Edition N.º6

New Gold Law

Given the pre-colonial existence of indigenous communities, nations and rural indigenous peoples, the Bolivian State recognizes among its fundamental bases their participation in the different areas of economic development, such as mining. That is to say that, from the beginning, the mining activity carried out in Bolivia has been  conditioned not only by  purely legal and technical aspects, but also includes an extremely strong  and determining social component when it is carried out.

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