NOVEMBER 13, 2019
Photograph Source: Sámediggi
Sametinget – CC BY 2.0
Bolivia’s President Evo
Morales was overthrown in a military coup on November 10. He is now in Mexico.
Before he left office, Morales had been involved in a long project to bring
economic and social democracy to his long-exploited country. It is important to
recall that Bolivia has suffered a series of coups, often conducted by the
military and the oligarchy on behalf of transnational mining companies.
Initially, these were tin firms, but tin is no longer the main target in
Bolivia. The main target is its massive deposits of lithium, crucial for the
electric car.
Over the past 13 years,
Morales has tried to build a different relationship between his country and its
resources. He has not wanted the resources to benefit the transnational mining
firms, but rather to benefit his own population. Part of that promise was met
as Bolivia’s poverty rate has declined, and as Bolivia’s population was able to
improve its social indicators. Nationalization of resources combined with the
use of its income to fund social development has played a role. The attitude of
the Morales government toward the transnational firms produced a harsh response
from them, many of them taking Bolivia to court.
Over the course of the past
few years, Bolivia has struggled to raise investment to develop the lithium
reserves in a way that brings the wealth back into the country for its people.
Morales’ Vice President Álvaro García Linera had said that lithium is the “fuel
that will feed the world.” Bolivia was unable to make deals with Western transnational
firms; it decided to partner with Chinese firms. This made the Morales
government vulnerable. It had walked into the new Cold War between the West and
China. The coup against Morales cannot be understood without a glance at this
clash.
When Evo Morales and the
Movement for Socialism took power in 2006, the government immediately sought to
undo decades of theft by transnational mining firms. Morales’ government seized
several of the mining operations of the most powerful firms, such as Glencore,
Jindal Steel & Power, Anglo-Argentine Pan American Energy, and South
American Silver (now TriMetals Mining). It sent a message that business as
usual was not going to continue.
Nonetheless, these large
firms continued their operations—based on older contracts—in some areas of the
country. For example, the Canadian transnational firm South American Silver had
created a company in 2003—before Morales came to power—to mine the Malku Khota
for silver and indium (a rare earth metal used in flat-screen televisions).
South American Silver then began to extend its reach into its concessions. The
land that it claimed was inhabited by indigenous Bolivians, who argued that the
company was destroying its sacred spaces as well as promoting an atmosphere of
violence.
On August 1, 2012, the
Morales government—by Supreme Decree no. 1308—annulled the contract with South
American Silver (TriMetals Mining), which then sought international arbitration
and compensation. Canada’s government of Justin Trudeau—as part of a broader push on behalf of Canadian mining companies in South
America—put an immense amount of pressure on Bolivia. In August 2019, TriMetals
struck a deal with the Bolivian government for $25.8 million, about a tenth of
what it had earlier demanded as compensation.
Jindal Steel, an Indian
transnational corporation, had an old contract to mine iron ore from Bolivia’s
El Mutún, a contract that was put on hold by the Morales government in 2007. In
July 2012, Jindal Steel terminated the contract and sought international
arbitration and compensation for its investment. In 2014, it won $22.5 million
from Bolivia in a ruling from Paris-based International Chamber of Commerce.
For another case against Bolivia, Jindal Steel demanded $100 million in
compensation.
The Morales government
seized three facilities from the Swiss-based transnational mining firm
Glencore; these included a tin and zinc mine as well as two smelters. The
mine’s expropriation took place after Glencore’s subsidiary clashed violently
with miners.
Most aggressively, Pan
American sued the Bolivian government for $1.5 billion for the expropriation of
the Anglo-Argentinian company’s stake in natural gas producer Chaco by the
state. Bolivia settled for $357 million in 2014.
The scale of these payouts
is enormous. It was estimated in 2014 that the public and private payments
made for nationalization of these key sectors amounted to at least $1.9 billion
(Bolivia’s GDP was at that time $28 billion).
In 2014, even the Financial
Times agreed that Morales’ strategy was not entirely
inappropriate. “Proof of the success of Morales’s economic model is that since
coming to power he has tripled the size of the economy while ramping up record foreign reserves.”
Lithium
Bolivia’s key reserves are
in lithium, which is essential for the electric car. Bolivia claims to have 70
percent of the world’s lithium reserves, mostly in the Salar de Uyuni salt
flats. The complexity of the mining and processing has meant that Bolivia has
not been able to develop the lithium industry on its own. It requires capital,
and it requires expertise.
The salt flat is about
12,000 feet (3,600 meters) above sea level, and it receives high rainfall. This
makes it difficult to use sun-based evaporation. Such simpler solutions are
available to Chile’s Atacama Desert and in Argentina’s Hombre Muerto. More
technical solutions are needed for Bolivia, which means that more investment is
needed.
The nationalization policy
of the Morales government and the geographical complexity of Salar de Uyuni
chased away several transnational mining firms. Eramet (France), FMC (United
States) and Posco (South Korea) could not make deals with Bolivia, so they now
operate in Argentina.
Morales made it clear that
any development of the lithium had to be done with Bolivia’s Comibol—its
national mining company—and Yacimientos de Litio Bolivianos (YLB)—its national
lithium company—as equal partners.
Last year, Germany’s ACI
Systems agreed to a deal with Bolivia. After protests from residents in the
Salar de Uyuni region, Morales canceled that deal on November 4, 2019.
Chinese firms—such as TBEA
Group and China Machinery Engineering—made a deal with YLB. It was being said
that China’s Tianqi Lithium Group, which operates in Argentina, was going to
make a deal with YLB. Both Chinese investment and the Bolivian lithium company
were experimenting with new ways to both mine the lithium and to share the
profits of the lithium. The idea that there might be a new social compact for
the lithium was unacceptable to the main transnational mining companies.
Tesla (United States) and
Pure Energy Minerals (Canada) both showed great interest in having a direct
stake in Bolivian lithium. But they could not make a deal that would take into
consideration the parameters set by the Morales government. Morales himself was
a direct impediment to the takeover of the lithium fields by the non-Chinese
transnational firms. He had to go.
After the coup, Tesla’s
stock rose astronomically.
This article was produced
by Globetrotter, a project of the Independent Media Institute.
More articles by:VIJAY PRASHAD
Vijay Prashad’s most recent book is No Free Left: The
Futures of Indian Communism (New Delhi: LeftWord Books, 2015).
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