Bolivia - Morales does seem to pick 'em!
Koreans enter where Indians fear to tread
Bolivian president Evo Morales does seem to pick 'em!
His government's iron-steel joint venture with Indian conglomerate Jindal Steel and Power is foundering. See: Bolivia: to nationalise or not?
But now he's invited yet another foreign company to discuss brokering a major minerals agreement. This time around, South Korean conglomerate Kores is after Bolivia's huge reserves of lithium, as well as other minerals.
Unfortunately, Lee Sang-deuk - the Korean who's "fine-tuning" this deal - will arrive in La Paz this month, carrying some embarassing personal baggage.
According to Korea Times (25 June 2012), Mr Lee has been embroiled in a number of recent domestic bribery scandals.
These range from allegedly receiving $344,322 in return for lobbying to deter the closure of a savings bank, and "influence-peddling" to help another bank attract investment, says the newspaper.
Meanwhile, as Glencore fumes at the state takeover of its relatively-small Colquiri zinc-tin operation, one Bolivian expert says the government isn't aiming to nationalise larger mines, "because it doesn't have the ability to take charge of them".
For earlier story on MAC: You can't dress up El Mutun as a spring lamb!
$8 billion resource reserve likely to lift Bolivia's depressed economy
By Cecilia Jamasmie
27 June 2012
The total value of the copper, silver, indium and manganese reserves discovered by South Korean company Kores in Bolivia last year, may be worth more than $8 billion, said the State-owned Mining Corporation (Comibol) to local newspaper La Razon.
According to Comibol's president, Hector Cordova, a potential agreement to explore the deposit between the government and Kores would allow the underprivileged country to tap into international markets and, more importantly, sell its vast quantities of lithium worldwide.
Though rich in mineral and energy resources, data from the Unicef shows that Bolivia is one of the poorest countries in Latin America and the weakest economy in all of South America. Cordova believes a deal with Kores could help the country mitigate the effects of poverty.
In October 2011, Korea Resources Corporation (Kores) confirmed the finding of a huge reservoir of about 100 million tonnes of copper in Corocoro, located 110 kilometers southwest of capital La Paz.
Young Hwan Moon, President of Corocobre, a subsidiary of Kores, and operator of a proposed venture between the Asian company and Bolivia, said the deposit covers 51 mining concessions in an area of 27.2 square kilometres.
The exploration program's first phase, with an estimated investment of $7 million, began in October 2009 and ended last year. It included 32,000 meters of drilling and excavation of trenches in more than 3,000 meters.
Another $3 million is being invested in the second phase, which includes metallurgical testing and feasibility studies expected to end in December this year. If the project is determined to be feasible, construction is planned to commence in 2013 with an estimated project capex of $200 million.
Kores seems so confident in the viability of the project that Lee Sang-deuk, former six-term lawmaker and older brother of President Lee Myung-bak, announced he is travelling to Bolivia next month to fine tune the deal.
According to Korea Times, Lee Sang-deuk is facing bitter criticism over the planned visit:
His aide claims that the former legislator has been scheduling a meeting with Bolivian President Evo Morales on behalf of a consortium of six Korean companies, which will sign a $3 million project to set up a joint venture with Bolivia's state-run miner.
Opponents said Lee has nothing to do in the South American country, as he does not have any official title and his only merit is to be the brother of the state's chief executive.
Lee has been involved in various corruption accusations, says the Korea Times article, ranging from an alleged receipt of about $345 million (400 million won) in return for lobbying to prevent the closure of a savings bank and influence peddling to help Mirae Savings Bank attract investment [see below].
President's brother in hot seat for Bolivia trip
By Lee Tae-hoon
25 June 2012
Lee Sang-deuk, former six-term lawmaker and older brother of President Lee Myung-bak, is facing strong criticism over a planned visit to Bolivia to fine tune a deal for the development of lithium reserves in the western South American country.
Lee is expected to travel to Bolivia in early July.
His aide claims that the former legislator has been scheduling a meeting with Bolivian President Evo Morales on behalf of a consortium of six Korean companies which will sign a $3 million project to set up a joint venture with Bolivia's state-run miner.
But critics denounced Lee in light of the fact that he currently has no official title including his former position as a legislator and is merely a brother of the state's chief executive.
"Former lawmaker Lee Sang-deuk is a person who should be investigated by prosecutors and summoned to the National Assembly once a parliamentary probe is launched against him," Rep. Park Jie-won, floor leader of the main opposition Democratic United Party, said Monday.
"I advise President Lee's relatives that they should not meddle with state affairs under the pretext of pursuing resource diplomacy. I demand former lawmaker Lee restrain himself."
The elder Lee has been embroiled in a number of bribery scandals, ranging from an alleged receipt of 400 million won ($344,322) in return for lobbying to deter the closure of a savings bank and influence-peddling to help Mirae Savings Bank attract investment.
Prosecutors have also indicted his former aide Park Bae-su for receiving kickbacks worth 600 million won from SLS Group chairman Lee Kuk-chul in exchange for influence peddling.
Park Young-joon, a former aide to Lee and former vice minister of knowledge economy, is also accused of masterminding an illegal surveillance of civilians and receiving kickbacks from Lee Jeong-bae, a former representative of the construction project named Picity, in 2006 and 2007 in return for helping the project approved by Seoul City.
However, lawmakers of the ruling Saenuri Party and industry insiders expressed caution over the issue, saying the national interest is at stake over Lee's visit to Bolivia.
"We should refrain from interpreting it as a political matter," Rep. Kim Young-woo, spokesman of the ruling Saenuri Party, said.
He noted that Lee's upcoming visit will pave the way for Korea to conclude a landmark deal with the Bolivian government in establishing a joint company with Bolivia's government-run miner, Comibol, for the manufacturing of anode materials used to produce lithium batteries.
Kang Cheon-ku, a director at the Korea Resources Corporation (KRC), also pointed out that Lee's visit has been arranged upon the request of Korean companies that will participate in the lithium development project.
"It is of the utmost importance that Lee, who has built up strong trust with Bolivian President Evo Morales come with us," he said. "The KRC CEO made 11 business trips to Bolivia, but has never been able to meet with Morales, who has the final say in the signing of the historical deal with Korea, without Lee's help."
He noted that Lee had talks with Morales six times in Bolivia and helped him to have a state visit to Korea, during which the two countries signed an memorandum of understanding in the development of the Latin America's rich natural resources.
Moon Seong-kon, a senior aide to Lee, said that Lee is in dilemma over the trip as he believes he can play an important role in helping Korean companies finalize a lithium deal, but also wants to avoid unnecessary suspicions.
Meanwhile, netizens cast strong suspicion over President Lee's brother's trip to the energy-rich Latin American nation, saying the scandal-ridden politician might be trying to divert the public attention from his irregularities and seeking an unsolicited commission from the bilateral project.
Govt won't nationalize large-scale mines, expert says - Bolivia
By Harvey Beltrán
Business News Americas
25 June 2012
The Bolivian government is not likely to nationalize large-scale mining assets because it lacks the experience required to develop or operate major mines, former deputy mining minister Epifanio Mamani told BNamericas.
"With the large-scale projects in Bolivia, [the government] isn't aiming to nationalize them because it doesn't have the ability to take charge of them. Sinchi Wayra is considered medium-scale," Mamani said.
Mamani, who is also a mining consultant and professor at the Universidad Autónoma Tomás Frías in Potosí, was speaking in reference to President Evo Morales' recent decision to terminate the JV leasing contract it had with Glencore International subsidiary Sinchi Wayra at the Colquiri zinc-tin mine.
"In addition, nationalizing a large-scale mine such as San Cristóbal or San Bartolomé would mean paying a lot of money if it goes to international litigation," he said.
San Cristóbal is owned by Japanese firm Sumitomo, while Coeur d'Alene operates the San Bartolomé mine. Both are silver mines.
The situation at Colquiri, where Sinchi Wayra's salaried workers called for the nationalization of the area, was the result of a lack of social investment from the state, he said.
"There's a social problem within these mines because the government does not reinvest from the profits received and this must be done. For example, with all the profits generated by the mines in some areas, there isn't even a gas pipeline," said Mamani.
To implement the decision to cancel the contract, the government issued a supreme decree earlier this month that establishes that state miner Comibol will assume control of the Colquiri mine complex and nationalize the company's machinery, equipment and inputs.
According to the decree, Comibol will carry out prospecting, exploration, processing, concentration, smelting and refining for minerals and metals, in addition to selling them, while the state will create the Empresa Minera Colquiri, a mining company under Comibol.
Jindal Steel seeks alternative to Bolivia deal
By Silvia Antonioli
21 June 2012
NEW YORK - India's Jindal Steel & Power Ltd is looking for alternative coal and iron ore projects following a disagreement with Bolivia over power supplies for it $2.1 billion venture in the country, the company's top executive told Reuters on Wednesday.
Chairman and managing director Naveen Jindal said the company is now looking elsewhere in South America, as well as in Africa and Australia.
Jindal Steel has given Bolivia notice it is making plans to scrap its iron ore and steel investment in the country because the government had not met contract terms to supply natural gas for the project.
"For the last five years we were so focused on Bolivia that we stopped looking as well, but now we are looking elsewhere. We know we can make it happen elsewhere," Jindal said in an interview on the sidelines of the AMM Steel Success Strategies conference.
The search is also part of the company's plan to raise its self-sufficiency in raw materials to 80 percent to 90 percent by 2015 from 70 percent currently.
The project in Bolivia - the country's single largest foreign investment - will be scrapped unless the government offers more support and accepts a smaller version of the original venture due to smaller than expected gas availability.
"If they respond to that favorably, then we can talk. We are keen to do the project, but on fair terms, Jindal said. "So if they offer one fourth of the amount of gas which they had promised before, they have to realize that the whole project has to be reconfigured."
Withdrawal from the Bolivian project could cost Jindal about $200 million, he added.
According to the contract signed in 2007, Bolivia undertook to supply 10 million cubic meters per day of natural gas, but it is now offering only a fourth of that.
"If they resolve it, we are happy to invest, otherwise there are many other investment options all over the world," he said.
The new project is half the size of the original venture. About $1 billion would be invested, with annual output of 500,000 tonnes of steel and a million tonnes of direct reduction iron, a raw material used in steel making. Iron ore and pellet production, however, would be broadly unchanged at about 10 million tonnes and 2 million to 5 million tonnes per year, respectively.
The government also needs to address bank guarantees and import taxes on equipment that is imported because it is not available locally, Jindal added.
Glencore to seek compensation for Bolivian mine nationalisation
25 June 2012
Angered by the nationalisation of a tin and zinc mine in Bolivia, global commodities firm Glencore said on Friday it may seek compensation domestically or abroad.
Bolivia's leftist government, headed by Evo Morales, took over operations at the Colquiri mine on Wednesday after weeks of violent protests.
Morales, who has already nationalised the Andean country's natural gas and electricity industries, said the decree brought the local operating company Sinchi Wayra - which has been owned by Glencore since 2005 - back into state hands, resolving the dispute between employees and independent miners that has left 18 injured.
Glencore said on Friday that it would seek an orderly handover of control of the mine but condemned the government's action.
"Glencore strongly protests the action taken by the government of Bolivia and reserves its rights to seek fair compensation pursuant to all available domestic and international remedies," the company said in a statement.
Liberum Capital analyst Dominic O'Kane said the mine was "tiny" in the context of Glencore's international operations.
"It's a tiny, tiny mine. It's not particularly significant. It's a small negative," he said.
However, Glencore queried the effect the move would have on foreign investment in Bolivia, where Morales is seeking to capitalise on high metals prices with sweeping mining reforms.
"The action taken by the government of Bolivia will pose a number of serious questions relating to the government's future policy towards foreign investment in the mining sector," Glencore said.
It said it had paid over $300 million in fees to Bolivia, including over $70 million for Colquiri, and would have invested over $160 million over the next five years in the country.
Glencore shares were down 2.4 percent to 315 pence at 1154 GMT, compared to a European mining index down 1.7 percent.
(Reporting by Rosalba O'Brien and Sarah Young; Editing by Alison Williams)
Glencore will get little for Bolivia tin/zinc mine takeover
By Carlos Quiroga
21 June 2012
LA PAZ - Bolivia will not compensate global commodities giant Glencore for rescinding its contract to mine tin and zinc at Colquiri, which was shaken by violent protests, a government decree signed on Wednesday showed.
Evo Morales' leftist government took over operations at Colquiri to end a weeks-long dispute between employees and independent miners. The decree said officials will only pay Glencore's local subsidiary, Sinchi Wayra, for the machinery and goods stored there, minus any debts the company has.
Morales has nationalized the key natural gas industry as well as the telecommunications and electricity sectors, arguing Bolivia's poor should benefit more from the country's rich natural resources.
"Today we're signing a great decree, for two reasons. We're recouping a company that belonged to the state and now returns to state hands, and we're also democratically resolving the contradiction between two factions of the Bolivian population: cooperative workers and salaried employees," said Vice President Alvaro Garcia.
Garcia signed the decree as acting president while Morales attended a United Nations conference in Brazil.
Bolivian state mining company Comibol will have control over the Colquiri mine, 12 years after it was semi-privatized. The decree permits an independent cooperative that has mined one area of the site to continue working there.
Officials at Sinchi Wayra declined to comment on the move.
Last week, hundreds of police and soldiers were sent to Colquiri following violent clashes between groups of workers at odds over the management of the site, which lies about 200 km (125 miles) south of the administrative capital La Paz.
A similar battle for control of the state-owned Huanuni tin mine six years ago ended in clashes between rival groups of miners that killed 17 people.
Colquiri, which is one of three mines operated by Glencore's Sinchi Wayra subsidiary in Bolivia, produced 2,000 tonnes of tin concentrate last year, according to Comibol data.
Sinchi Wayra exported minerals worth more than $300 million last year.
Morales' government is working on a sweeping reform of mining legislation aimed at giving the state a bigger slice of the sector's profits.