Bolivia nationalizes Glencore mine as nationalization moves continue in South america - how long before we see this move elsewhere ?

http://online.wsj.com/article/SB10001424052702304898704577482502707776664.html

LONDON—Glencore International GLEN.LN -3.10% PLC on Friday protested Bolivia's decision to nationalize the Colquiri zinc and tin mine, marking the second such action against the Swiss company's assets by the current government.

The government of Bolivia said it will compensate the commodities titan for machinery and equipment, but Glencore said the move raises doubts about the country's policy toward foreign mining investment.

Bolivia has nationalized a string of assets in the natural-gas, mining and power-generation sectors since President Evo Morales took office in 2006, most recently taking control of Spanish Red Electrica Corp.'s power-grid operations in May. It also nationalized Glencore's zinc smelter in 2007, which led the commodities trader and producer to halt a $400 million mine expansion project.

Bolivia says it has nationalized assets to ensure that its citizens benefit fully from the country's natural resources. In the case of the Colquiri mine, the nationalization ends a standoff between workers at Glencore's Bolivian subsidiary, Sinchi Wayra, and co-operative miners who have been disputing ownership of the site's mining rights.

About 1,000 miners seized control of Colquiri at the end of May leading to violent clashes with the roughly 400 Sinchi Wayra employees.

Glencore fully owns Sinchi Wayra, which operates five mines in the Oruro and Potosi regions of Bolivia, including the Colquiri mine.

Glencore said in a statement that it "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."

Bolivian Vice President Alvaro Garcia Linera told a local news agency that the mine will be run by state-owned Comibol and that the government will calculate Glencore's compensation within 120 days.

The nationalization of Colquiri comes amid talks to amend Sinchi Wayra's mining contracts in order to bring them in line with Bolivia's new constitution, which requires mining companies to form joint ventures with the government.

Glencore said the new agreement would have awarded the Bolivian government a 55% share of the profit from its Bolivian mines, with the prospect of the share rising as high as 79%. Under the new contracts, Glencore said it also would have invested $160 million in its operations over the next five years, of which at least $56 million would have been invested in Colquiri.

Glencore said it has invested $250 million in the Bolivian mining industry and the wider economy to date, with $80 million spent on capital investment across its operations, including $22 million at Colquiri.

"The action taken by the government of Bolivia will pose a number of serious questions relating to the government's future policy toward foreign investment in the mining sector," Glencore said.

http://www.telegraph.co.uk/finance/newsbysector/industry/mining/9350114/Glencores-Colquiri-mine-seized-in-Bolivia.html

Glencore's Colquiri mine seized in Bolivia

Glencore has demanded compensation from Bolivia after the country's Left-wing government nationalised one of the commodities group's tin and zinc mines.

Independent miners who took the Glencore's Colquiri mine gather at the Jesus Bermudez Stadium in Oruro earlier this month. Evo Morales' intervention at the mine came only after the government had to deploy hundreds of soldiers to stop violent clashes in which 18 workers were injured. Photo: Reuters

By Philip Aldrick

9:00PM BST 22 Jun 2012

61 Comments

The company warned President Evo Morales that his actions risked driving out foreign investment, saying it "strongly protests the action and reserves its rights to seek fair compensation pursuant to all available domestic and international remedies".

Mr Morales has already seized the country's natural gas and electricity industries under a policy of resource nationalism that has swept across South America from Ecuador to Argentina.

However, his intervention at the Colquiri mine came only after the government had to deploy hundreds of soldiers to stop violent clashes in which 18 workers were injured. The violence began when nearby co-operative workers seized control of the site last month.

The government had been renegotiating terms with Glencore under which the government's share of total earnings would have risen from 77pc to 79pc, and Glencore would have committed to invest more than $160m in the industry over the next five years, including $56m in Colquiri.

After the clashes, which echoed battles six years ago that left 17 people dead, the unions called on the government to nationalise the mine to restore order.

In response, Alvaro Garcia Linera, the vice president, this week revoked Glencore's licence and signed an agreement between the workers, the state and the co-operatives. He said: "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 – co-operative workers and salaried employees.

"We're not going to hand our country to foreigners who destroyed Bolivia and left it stagnating for 20 years."

The mine, which produced 2,000 tonnes of tin concentrate last year, was acquired by Glencore in 2005. Analysts said it was "not particularly significant", but the troubles contributed to an 8pc fall in Glencore shares over the week as they came alongside concerns over whether its merger with Xstrata would go through.

A spokesman for Glencore, which has invested $250m in the Bolivian mining industry, said: "The action will pose a number of serious questions relating to the government's future policy towards foreign investment in the mining sector."