BOLIVIA MINING REGULATION
Bolivia, officially known as the Plurinational State of Bolivia, is located in the western-central region of South America. The country has a population of approximately 10 million and is the sixth largest country by area in Latin America It is landlocked and bordered by Brazil to the north and east, Paraguay and Argentina to the south, Chile to the southwest, and Peru to the west. . Bolivia is divided into nine administrative departments: Beni, Chuquisaca, Cochabamba, La Paz, Oruro, Pando, Potosí, Santa Cruz and Tarija. Under the administrative decentralization law of 1995, Bolivia’s nine departments received greater autonomy. Bolivian mineral resources are predominantly located in the western part of the country (Oruro and Potosi) where it produces silver, zinc, tin (wolfram), lead and gold. Although lithium has not yet been exploited, Bolivia has the largest lithium deposit in the world.
Since 2006, Bolivia has been served by President Juan Evo Morales Ayma, who indicated his desire to nationalize the mining industry shortly after coming to office. In February 2007, the Government nationalized a tin smelter owned by Glencore and then its Colquiri (tin and zinc) mine in 2012. In the same year (2012), the Bolivian Government nationalised South American Silver’s Malku Khota (silver, indium and gallium) project. These actions contributed to Bolivia having the dubious ranking of “bottom 10” in the Fraser Institute’s Policy Perception Index 2012/2013 Annual Survey of Mining Companies; more recently in the 2015 survey, it was ranked by the Institute as 94th out of 109 countries.
PRINCIPAL LEGISLATION AND REGULATOR
The Bolivian Constitution was passed in 2009 and required that all the mining concessions be adapted to the new constitutional regime, through their conversion to “mining contracts”, within a year. Bolivia finally passed a new Mining and Metallurgy Law (Mining Law), compliant with the Constitution, in 2014. The Mining Law was designed to strengthen the State’s control over its mineral resources. Whilst many provisions reflect modern mining concepts, such as the recognition that all minerals belong to the State (Art. 2) and the principle of first-come / first serve (Art. 13), there are other provisions that merit notice, including:
- Article 20: mineral rights confer no rights to land (no real property interest) (see also Art. 93); and
- Article 98: mining rights may not be pledged as security for purposes of financing.
In addition, whilst an exploration and prospecting licence gives a pre-emptive or preferential right to secure a mining contract over the exploration area (Arts. 155 and 156), it is unclear if complications on the exercise of such preferential right will arise in practice. The Mining Law is administered by a body called the Administrative Jurisdictional Mining Authority (AJAM), which is a legal body under the authority of the Ministry of Mining and Metallurgy. La Corporación Minera de Bolivia (COMIBOL) is also recognised in the new law as having authority to administer those areas under its control, which includes areas held by a variety of subsidiaries, areas specifically set aside for state exploration, and areas in respect of lithium and potassium, which are deemed strategic minerals (Art. 61).
GRANT AND FORMS OF MINERAL TITLE
Areas open for mineral rights are those that are not the subject of pre-existing mineral (exploration or mining) rights and areas that have not been reserved to the State (free mining area). An applicant must request a free mining area certificate over the area where exploration activities are going to be performed from the Mining Cadastre Authority. This certificate must be presented with the licence application. The mineral rights that are recognised under the Mining Law include:
- Air(borne Survey) Prospecting Licence: This licence is issued by AJAM and has a duration of up to 6 months; the licence grants priority for an exploration and prospecting licence.
- Exploration and Prospecting Licence: This licence is issued by AJAM and has a duration of up to 5 years, renewable for another 3 years. The licence gives a preferential right to secure an administrative mining contract. The titleholder must provide a semi-annual report on the activities performed. Failure to file two reports in sequence or the suspension of operations for more than 1 year gives rise to a right to terminate the licence (Art. 163).
- Mining Contract: An administrative mining contract gives the holder the right to engage in mining activities and has a duration of up to 30 years. It may be extended for another 30 years (Art. 142). The mining operator must commence mining activities within 1 year from the grant of the contract, and may not abandon or suspend the activities longer than six months (Art 144).
A licence pertaining to the beneficiation of ores and mineral products is also necessary, where applicable, and ore and concentrates are required to be marketed firstly to any State smelter or refinery, secondly, to any smelter or refinery within Bolivia and, thirdly, after the ore or concentrates have been preferentially offered to such entities, offered internationally (Art 173).
Holders of mining rights are entitled to seek surface rights in the area specified in the contract, as well as rights of egress through neighbouring properties. Where an agreement with surface rights owners is not possible, the mining rights holder may apply for an order of access and a determination of compensation (Art. 108). Furthermore, rights to water may be obtained with the prior authorization of the competent Water Authority (Art .111). The environmental impact assessment process is governed by the Environment Law (Law Nº 1333) and the Environmental Regulation of Mining Activities. In order to engage in mining activities, one will require an environment licence. For a new mine, the licence will require a study (EIA) examining the impact on local flora and fauna, social impacts and an assessment of any historic contamination and other environmental liabilities.
See Bolivia - Environmental Overview Commentary.