Political Risk Latin America Blog @PolRiskLatam

Bolivia: killing its cash cow slowly with its drill

Posted in Uncategorized by politicalrisklatam on July 29, 2011

by Andres Schipani for Financial Times – Beyond Brics, July 28th, 2011.

Cerro Rico, a mountain towering over the Bolivian city of Potosí, was once the world’s greatest treasure trove, a mine that for centuries bankrolled the Spanish empire.

But now, over 450 years after the first hole was drilled, it is in danger of collapsing. Intense mining has turned this soaring Andean peak into a honeycomb of gaping tunnels that threatens to cave in. For Bolivia, which has been riding the commodity price boom, the news could not have come at a worst time.

“The Andean mines are getting exhausted,” says Alicia Polo, a mining analyst at CRU.

Despite being largely a natural gas producer, Bolivia is inherently (socially as well as economically) a mining country, producing mostly tin, silver and zinc. It was born a republic thanks to mining and Cerro Rico is even emblazoned on the country’s heraldic shield.

“We have already hit almost $1.7bn in mineral exports in the first semester, seventy per cent more than last year, so we expect to surpass the $3bn by the end of the year. Volumes are slightly inferior, but the price is good,” Bolivia’s deputy mining minister, Héctor Córdova told beyondbrics. (continue reading… )

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