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BOLIVIA Resource Nationalism: The 21st Century's Challenge to the Global Mining Industry By Joseph Kirschke, News Editor-Mining With this in mind, in April's E&MJ; we begin our first installment in an ongoing series addressing mining sector resource nationalism. In it, we shall explore the complexities and nuances of each global mining jurisdiction where it either currently prevails—or is emerging—in all its forms. We begin with Bolivia, a Latin American mining colossus—and one of the most aggressive countries anywhere when it comes to resource nationalism. Evo Morales, "Mother Earth" and Nationalism Workers from Colquiri mine who support Bolivian President Evo Morales participate in a march in La Paz June 27, 2012. Thousands of farmers arrived in La Paz to support Morales after the police mutinied over low wages and sparked a political crisis that lasted five days, according to local media. (Photo: Reuters/Enrique Castro-Medivil) Through the legacy of the Soviet Union's collapse, Chinese capitalist-style reforms, Internet technology and the 2008-2009 worldwide recession, among other factors, BRIC (Brazil, Russia, India and China) nation growth representing 40% of the world's population has surged—along with the economies of resource-rich countries servicing their markets. By 2040, the world's population may top 9 billion—up from some 7 billion today, according to UN statistics; and as China appears likely to supplant the U.S. with the No. 1 economy in the next decade, India is poised to exceed its neighbor's 1.3 billion people in its relentless population growth—amid dire energy poverty. Few grasp these demands better than the mining companies charged with satisfying them: Indeed, with global energy requirements forecast to surge 30% by 2030, according to the International Energy Agency (IEA), coal is fast outpacing oil as the world's biggest fuel, accompanied by increases in steel and baseline 100 E&MJ; • APRIL 2013 copper demands at 90% and 60%, respectively—among many others. But with heightened awareness of their endeavors comes an emerging threat from foreign governments: resource nationalism—the use of tactics from increasing taxes and royalties to tightening exports to outright expropriation—curtailing access to resources for economic or political gain. Deemed one of the biggest threats to the global mining in the 21st century, "this not only has operational and financial implications for extractive companies operating in these countries, but it could create further instability for global energy markets," according to Maplecroft, a U.K.-based risk analysis firm. In its 2012-2013 business risk report for mining and metals, global professional services and accounting firm Ernst & Young similarly placed resource nationalism at the top, so companies "continue to engage with governments to foster a greater understanding of the value a project brings to the host government," said E&Y; Global Mining and Metals Leader Mike Elliott. Similar to many developing nations, Bolivia's mining tradition has never been a terribly forgiving one. Origins of the gold and silver enriching Spain 500 years ago remain hardscrabble enterprises—ones where injuries and fatalities are endemic to a remote Andean landscape where air and prosperity are equally scarce. In this spirit, Bolivian miners have long paid homage to small "Tio" statues on the way down. At each entrance, the clay "Uncles" enjoy offerings including cigarettes, alcohol and tiny deposits of coca leaves—the same ones keeping miners' hunger at bay and their senses alert while descending into the silica-heavy depths below. Bolivia has vast natural resources. But since the 2005 election of Evo Morales, Latin America's first indigenous president, executives at foreign companies operating in the world's No. 4 tin producer have been saying their own silent prayers. And rightly so. In a country with a $5,000-per capita GDP—and 2014 elections looming—threats of state appropriations to Bolivia's second-largest industry won't end anytime soon. Demands, Extremism and Worries Bolivian resource nationalism has been catastrophic—even, to a degree, by Morales' own admission. The June takeover of the Colquiri zinc and tin mine—Bolivia's second-biggest—from Swiss major Glencore plc's Sinchi Wayra subsidiary following a labor dispute offers a textbook case. www.e-mj.com