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The Case of Artisanal Mining in Bolivia: Local Participatory Development and Mining Investment Opportunities
The Case of Artisanal Mining in Bolivia: Local Participatory Development and Mining Investment Opportunities
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1. The issues
Globalization has become increasingly pervasive in recent
years, with the mining sector providing a typical example of
its scale and content. Today no country, at least in theory, is
off-limits to foreign direct investment in mining. Countries
policies on foreign investment have moved in cycles.1 Experienced observers (Crowson, 1997) note that current trend
has clear parallels with the 19th century mining expansion.
National governments are now revamping legislation, especially mining codes and competitive tax systems, to create
an enabling environment for private investments, while
becoming sensitive to environmental concerns. The growth
of foreign direct investment in minerals is strong in Latin
America, in line with a revitalization of the mining sector in
The author is an international consultant in natural resource management.
1
It has been suggested that the period 1960 to 1970 was the decade of
nationalization and creation of state-owned enterprises based on the principle of sovereignty over natural resources. From 1970 to 1980 was the
decade of powerful state-owned companies. The 1990s gave rise to the
privatization of state-owned companies; hence, the emergence of prosperous
private mining companies using the strategy of large-scale mining supported
by low-cost mining through advanced technology (see K. Sawada, nd).
recent years. While in the 1980s Chile led the way, in the
1990s, mining was a strong component in the economies of
Bolivia, Chile, Guyana, Jamaica, Peru and Surinam, accounting for between 5 and 50% of GDP and over 25% of export
revenues. Exploration investments in the region increased
by 130% in the last half of the 1990s. If Chile is excluded,
this figure increases to 500% (World Bank, 1999).
In spite of the expansion the mining sector in Latin
America, small-scale mining remains marginalized, and for
many countries how to make small-scale mining more sustainable remains unclear.2 A recent study conducted by the
2002 United Nations. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.
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were laid off from private mines (Nash, 1992). Some desperate workers were lured to accept settlement schemes in
tropical areas, while others migrated to the coca producing
region to find work as labourers. The bulk remained and
consolidated the process of small-scale mining, in some
cases under cooperative arrangements. The miners hunger
and misery were the heaviest price paid during the tin crisis
of the 1980s (Nash, 1992). In the 1990s, violence erupted
among Bolivian mining communities, still striving for access
to the benefits flowing from the countrys mineral resources.
In 1996, the Altiplano communities of Amayapampa and
Capasirca witnessed the seizure of the local mine by workers
to press their demands for a share of benefits from the
operations owned by foreign capital in association with
national interests. Armed police forced the miners out of
the mine. Nine miners and one policeman lost their lives
(Centro de Estudios y Proyectos, S.R.L. or CEP, 1999).4
As argued below, political violence stemming from social
inequity holds Bolivias mineral resources captive and at
the same time, opportunities for sustainable human development are compromised.5
The analysis of the case study proceeds in the following
way:
To
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estimates that the number of workers involved in smallscale mining could be as high as 13 million worldwide and
1.6 million in Latin America and the Caribbean. To estimate the economic value of this activity, ECLAC (2000) suggests assuming a monthly salary of US$ 150 per worker.
Based on this calculation, small-scale mining contributes
more than US$ 2 billion yearly to the economy of the
continent. In the context of regional economies, this is an
important flow of funds. In Brazil, small-scale gold miners
(garimpeiros) have been able to modify government policies
and have consistently produced as much miner as formal
companies, or more. However, on the downside, small-scale
mining is also a source of political violence and environmental degradation.
There is no universal definition of small-scale mining.
Sometimes the definition is based on volume of output
(Colombia), sometimes the capital invested (Argentina and
Thailand), the number of workers (Chile, Pakistan and USA)
or even the technology applied. In the Bolivian Altiplano,
conditions are complex and range from seasonal familybased exploitation of local deposits, to loose cooperatives of
former COMIBOL cuadrilla or pirquiero miners, to mines
owned by single entrepreneurs as proprietary businesses
with more or less permanent labourers, to formally owned
small corporations with shareholders.
The pirquiero system refers to mining operations comprised of a dozen or more labourers working independently
under a foreman. Sales contracts may be concluded with
companies for the extraction and sometimes also processing
of the mineral in hand-operated facilities. The proceeds are
distributed equitably among the workers, giving recognition
to the level of skill. On the other hand, a typical large mine,
owned by an entrepreneur, can extend over several km2, with
a number of passages (adits) into the ore body, a haulage system (rail or road), usually one or more concentrator plants,
a number of waste heaps for mine and concentrator wastes
and perhaps a tailings dam (World Bank, 1995). Hard rock
mining in the Altiplano has traditionally been underground
with low levels of mechanization. The major economic
ore bodies consist of complex non-ferrous metals, usually
with a sulphide matrix. Extracted ores usually undergo some
level of processing or concentrating near the mine.
Processing facilities may range in size from very small
operations relying on primitive techniques to large relatively modern smelters (World Bank, 1995). A national tin
smelter was built in the late 1960s with financial aid from
Russia and Eastern Europe. Large mines normally include
offices, workshops, schools, and a health dispensary for the
personnel. When the mine closes, however, it takes these
amenities with it. This brings additional distress to the laidoff workers, as no alternative employment exists for their
services. Therefore, internal migration results.
The potential and constraints of small-scale mining can
be analyzed and classified according to management competencies, which are central factors for sustainable mining
development (ECLAC, 2000). These competencies are: (1)
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environmental protection, (2) partnership for local development and (3) the use of technology. Within the framework
of the mining cycle (i.e. business planning, followed by
exploration, exploitation of the mineral resource and mine
closure),12 specific environmental/legal regulations for
sustainable mining development apply to each phase. The
degree of management commitment to environmental protection is reflected by its adherence to the regulations applicable to each phase. The capacity of management to build
partnerships for local development depends on its ability
to interact positively with regional or national government
authorities, the community or the private sector to make mining economically equitable. Finally, the use of technology
to meet environmental regulations, can range from largescale operations supported by low-cost advanced technology
to rudimentary techniques. In terms of these characteristics,
it is possible to distinguish three types of mining organizations in the Altiplano, either private or corporate.
4.2. Types of mining operations
Formal mines. This category consists of private, profitoriented, corporate organizations working effectively within
government regulations, interacting with local communities,
and participating in the globalization process. They possess
legal, administrative and technical staff. They follow the
mining cycle to optimize economic returns by using technology to increase productivity, reduce operating costs, and
adhere to regulations and implement schemes to avoid
environmental degradation. In the Altiplano, there are currently two companies of this type: Inti Raymi S.A., and
Compaia Minera del Sur (COMSUR). Inti Raymi S.A.
has been operating the Kori Kollo mine for nearly 10 years.
In 1998, it produced 336,000 oz of gold and 968,000 oz
of silver. Compaia Minera del Sur (COMSUR), operating
the former COMIBOL mines of Bolivar in the Precambrian
shield, and Porco, as well as the gold mine Puquio Norte
(Arpin, 1999). It is associated with foreign capital and
new technology, with particular emphasis on zinc and gold
(World Bank, 1999). This capital-intensive approach reduces
the demand for unskilled labour. The company has a good
environmental record, maintaining the established standards,
and in many cases exceeding them, as revealed in a recent
review of the sector (World Bank, 1999).
Certain of the mining units organized under Asociacin
Nacional de Mineros Medianos could also belong to
this category of operation, such as proprietary businesses
owned by single entrepreneurs with mostly local, permanent
labourers.
Organized small-scale mining. Although small-scale
mining is mainly engaged in as a means of economic sub12
These refer to standard mining engineering/economic procedures to
ensure environmentally responsible and profitable production. The Berlin
guidelines (UNDCTD & GTZ, 1992) and ECLAC (2000) review these
matters in detail.
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The personal testimony of Juan Rojas, a Bolivian tin miner (Nash, 1992),
and of Domitila (Chungara, 1981) a miners wife and mother of seven
children, provide an in-depth description of the sufferings and injustices
endured by Altiplano mining communities.
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For instance, several years ago, USAID decided to entrust the execution
of most of its projects to NGOs, instead of to governments. This example
has been followed by several European bilateral assistance organizations.
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LOCAL ECONOMIC
DEVELOPMENT
PARTICIPATORY APPROACH
SUSTAINABLE LIVELIHOOD
SYSTEMS
SOCIAL STRUCTURE
AND ECOLOGY
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For example, the author visited field trials, conducted by the NGO San
Silvestre de Letanas, for adapting vegetable production to the Altiplano
ecology near the city of Viacha at an altitude of 3980 m above sea level.
Since the Altiplanos climatic conditions allow only a short period for
agricultural production, from October to May, rustic greenhouses have
been tried successfully. These are built with adobe and plastic for about
US$ 200/unit. This effectively can bring not only a second crop but also
can make vegetable production economically viable. Under these circumstances, the investment and production cost can be repaid quickly, given
the vegetable demand in the urban centres of La Paz and Oruro. It is also
possible to complement this production with small livestock, such as guinea
pig or rabbit. These are inexpensive to raise, and could provide both an
important source of animal protein and a considerable business opportunity
for women and children.
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small-scale miners associations, donor agencies and international mining companies will be needed.20
Overall, there is a window of opportunity for international mining companies, NGOs and local government to
lead efforts towards local economic development based
on the participatory approach. At the same time, there is a
window of opportunity for those who decide to continue
with small-scale mining. If properly organized, the anticipated activities can become the basis for sustainable
mining development. Here, technological solutions will be
productive. Stakeholders may be ready to take up training
in the use of appropriate technologies for adequate environmental standards. Such training would prepare for more
efficient techniques for production and processing, with the
potential of increasing productivity and recovery, leading
to rising incomes. Rising incomes would allow government
to increase taxes and fiscal revenues. Access to funds would,
in turn, allow government to perform its regulatory function,
and thus break the bureaucratic vicious circle.
In order to formalize the work of small-scale miners,
however, the process would need to address a host of
interrelated issues. Specifically, these issues are linked to:
technology (inefficient techniques and equipment); regulation (illegal trading and marketing); finance (lack of capital
and investment opportunities); environment (degradation of
soils); and social development (health/safety, child labour).
Perhaps the most effective way to tackle these issues is
to build capacity simultaneously for both small-scale
miners and local government authorities (ECLAC, 2000).
Although enterprise development and workers organization
would receive particular emphasis throughout the training
cycle, the central areas of concentration would be: community participation and management; management capabilities (administration/accounting, labour relations, corporate
management); and mining technology (environmental impact, mining geology, production/marketing principles).
20
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8. Conclusion
The process of impoverishment of the mining communities of
the Bolivian Altiplano has been difficult to reverse, in particular in view of the Governments own bureaucratic vicious
circle. The lack of attention to these communities operating
with limited managerial capabilities has generated costly
political conflicts and continues to damage the environment.
Remedial action has so far been inadequate and unrealistic.
Government (local and central), the private sector, NGOs
and donors need to consider a programme to promote the
institutional reforms required to introduce sustainable mining
development, as facilitators and partners. This programme
should have a time frame and be continuously monitored
and evaluated. As outlined above, the programme should
first focus on sustainable livelihoods adequate to ensure
the subsistence needs of individual families. Then, to the
extent that the first phase has been successfully achieved,
some miners may decide to continue working in smallscale mining activities. In such cases, their access to resources and capacity building must be facilitated. At the end
of the day, it is the reduced pressure on mineral resources
stemming from a wider availability of sustainable livelihoods
that will increase the viability of sustainable small-scale
mining. A decrease in political violence throughout the
sector will enable stakeholders to consider foreign direct
investment within the framework of Bolivias sustainable
human development goals.
Acknowledgements
The author wishes to thank the following people for
their invaluable assistance in completing the work for this
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