Bolivia’s leftist government announced it won’t pay any financial compensation to Swiss miner Glencore (LON:GLEN) after yesterday’s decision to take over its Colquiri tin and zinc mine. The purpose for the move is to create greater control over the local mining industry.
According to Terra.com, President Evo Morales resolved to nationalize the Colquiri mine to end a long dispute between the global commodities giant and its workers. The decree said the government will only pay Glencore's local subsidiary, Sinchi Wayra, a nominal amount for the machinery and belongings stored there, but nor for any debts the company has.
With the presidential ruling, the control of the deposit goes back to the State mining company Comibol which sold off Colquiri in 2002, which was then acquired by Glencore in 2005 from former president Gonzalo Sánchez de Lozada.
Morales has raised taxes and nationalized the key natural gas industry as well as the telecommunications and electricity sectors, since taking power in 2006. Earlier this year, Bolivia took over assets from Spain’s Red Eléctrica Corp. (REE) and Pan American Energy LLC.
Last week, hundreds of police and soldiers were sent to Colquiri following violent fights between rival miners. It is believed that the battle began when Glencore workers tried to forcefully take back control of the mine from a rival state-based company.
There is history behind the fighting seen at the Colquiri mine. Six years ago similar circumstances saw violence break out over access to the state-controlled Huanuni mine. The clash ended in the death of 17 people.
Bolivia is a current hot spot for investors as President Morales has been in consultation with local leaders to allow the extraction of resources originally thought to be untouchable.