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BOLIVIA Since the appropriation, involving the deployment of 1,600 soldiers and police officers, output fell to 337 metric tons (mt) in December—down from 429 mt, a 21% decrease. The number of workers, on the other hand, jumped to 1,249 from 959— a 30% increase. Morales for his part, was "very surprised" at the "worrying" figures, reported El Nacional. Of equal concern had been a two-week labor dispute between rival unions at the site three months after the takeover, costing the government nearly $4 million—at $250,000 a day—in production losses, according to officials. Still, La Paz officials remain defiant. "We're not going to hand our country to foreigners who destroyed Bolivia and left it stagnating for 20 years," Vice President Alvaro Garcia Linera told state-run Radio Patria Nueva. In an opinion piece for The Financial Times, Bolivian Finance Minister Luis Alberto Arce was even more confrontational. "We have not nationalized, nor will we nationalize, genuine investments in the private sector— either domestic or foreign," he wrote. The Bolivians are resting on their laurels, say observers, thanks to the dividends driving global resource nationalism in the first place: Huge global market demands for an industry that, in 2010, employed nearly 80,000 miners, according to data from Bolivia's Ministry of Mining Production and Development. Since 2008, moreover, statistics from the Bolivian National Statistics Institute (INE) reveal mining production has soared 60%. And, despite the Eurozone crisis and the U.S. government's own austerity challenge, 2011 exports alone increased 50% to $3.7 billion over the previous year, according to Moody's analyst Gabriel Torres. But for a sector constituting one-third of foreign currency earnings, Bolivians are "limiting their potential upside going forward," Torres told Bloomberg News. Overall tin concentrate export declines cited by Bolivia's mining ministry in the first three quarters of 2012 echo this assertion: State-owned mines generated 6,487 mt, down 7.3% in the same 2011 period. Far more troublesome was Q4 output at medium-sized mines following the Colquiri disruption—collapsing to 52 mt from 758 mt. A Long History and the Adoption of "Mother Earth" Huge complications emerged in October with passage of "Pachamama" legislation www.e-mj.com limiting access to Bolivia's natural resources by equating them with human rights. Named for the "Mother Earth" goddess in Andean folklore, the law invokes "a living dynamic system made up of the undivided community of all living beings." The law has left investors and miners puzzled in prohibitions against "megainfrastructure and development projects that affect the balance of ecosystems and the local inhabitant communities." In all, the amendment to 2009 constitutional reforms empowers 11 resources, including water and air. In a country with a 62% indigenous population, state takeovers of mines—with accompanying popularity among local populations—has deep-seated roots. Until the 1950s, many foreign-owned assets turned a profit on Bolivian miners toiling under poor conditions for meager pay. Convulsive violence between 1918 and 1947 fed into a 1952 Revolutionary Nationalist Movement that established Bolivia's National Mining Corporation (Corporacion Minera de Bolivia), or COMIBOL. Early on, though, COMIBOL proved a wholesale disaster. Union-driven rules trumped most sound management decisions, as COMIBOL's workforce swelled to 36,000 by 1955 from 24,000 four years earlier while productivity fell 20%; absenteeism—and theft of ore—flourished. Latin America's 1980s debt crisis, however, opened a window of privatization under President Gonzalo Sanchez de Lozada. But demonstrations preceded a referendum wherein 80% of Bolivians supported appropriation of national resources which was, in turn, ignored outright by La Paz. Morales' election followed turmoil in which foreign direct investment (FDI) plummeted more than 60% to $200 million from $567 million two years earlier. Moreales is reviewing the national mining code to increase revenues, while defining the roles of government and private sector businesses in profits, taxes and royalties. Present royalties by foreign miners range between 5% and 7%, up to 37% of profits. Under the new code, companies should partner with COMIBOL, which would take majority ownership and 55% of profits. But quixotic "Mother Earth" sows serious confusion: "She is in permanent balance, harmony and communication with the cosmos," the law reads, "and is com- prised of all ecosystems and living beings, and their self-organization." Before the most recent high-profile takeover, though, commodities giant Glencore had announced plans to invest $56 million in Colquiri despite having lost two smelters since 2007. Since 2005, Glencore invested $22 million into the operation and $250 million into Bolivia's mining sector while paying $70 million in taxes, royalties and fees. COMIBOL officials also cited feuding between workers as a rationale for expropriating the project. There's no denying Morales' agenda as a champion of Bolivia's native population. Nonetheless, the 52-year-old retains less control over Bolivia's mining sector than he would like, say experts like James Lockhart-Smith, a senior analyst at Maplecroft. "Nationalizations in Bolivia are typically a bottom-up process," he said. "This responds to the longstanding challenges that have faced Morales in managing and retaining his support base." Morales' recent eroding popularity only furthers his need to accommodate such support, noted Simon Whistler, a Washington-based senior manager for Global Risk Analysis at Control Risks Group. "He has tried to be pragmatic, but it's politically impossible for him to do so," he said. "It can lead to extremely difficult situations." Aggression with a Silver Tongue A prime example was the contentious takeover of the undeveloped Malku Khota mine—with one of the world's largest silver deposits—from Canada's South American Silver. Violent clashes and a hostage standoff preceded the August appropriation of the Potosi mine—home to 230 million oz of silver and 1,481 million mt of indium. According to the Vancouver-based company, the project run by subsidiary Minera Malku Khota S.A. had support from 43 indigenous communities—while three were opposed. After a series of protests, a largescale police raid on a local community escalated after two officers were taken captive. One peasant was initially reported murdered, though subsequent news reports concluded he mishandled a stick of dynamite while intoxicated. South American's then-President and CEO Greg Johnson noted that the company cultivated strong community ties since rights were granted in 2006, adding that APRIL 2013 • E&MJ; 101