Morales submits mining tax â€˜reforms’ to Bolivias Congressadmin
Celebrating his one-year anniversary as Bolivia’s President with a four-hour speech, Evo Morales announced Monday that he has sent a bill to Bolivia’s Congress calling for an increase in the Complementary Mining Tax (ICM) levied on foreign mining firms operating in Bolivia.
Apparently the amount of the ICM to be paid will be based on the price of minerals in the international market. This means that if metals prices increase, the amount of the ICM tax on Bolivia’s mineral exports will also increase, according to Morales.
In his lengthy address to Congress, Morales insisted that ”mining resources must benefit the country and not just exporting companies.” He referred to the Bolivian mining industry as another one of the sectors that can generate increased income for the General Treasury of the Nation. Bolivia is considered South America’s poorest nation.
However, Morales made it clear that his proposed increase in the ICM tax would not impact small mining cooperatives, which have strongly expressed their opposition to an increase in minerals taxes.
He vowed that his reforms would amount to a ”second nationalization of the mining sector. Morales also insisted that he would seek to regain ownership of the nation’s largest tin smelter, the Vinto tin smelter and refinery, formerly Empresa Metalurgica Vinto (Bolivia’s national smelting company) which was acquired by Switzerland metals company Glencore in 2005.
Morales previously stated that he plans to invest $10 million in the Vinto tin smelter, located in the western department of Oruro. The money would be used to change the installations at the smelter, ”to put in the right furnaces, so that all the miners of the region can smelt here and do not have to go to Peru,” according to Morales. The $10 million would come from Morales’ close ally Venezuela President Hugo Chavez.
The Bolivian Chief Executive has based his current strategy on a management report issued by Ministry of Mines and Metallurgy, which asserted that higher international metals prices constitutes a fundamental impetus for reactivity within the Bolivia mining sector.
Meanwhile, the report also revealed that the ministry will promote a new ”normative judicial framework for the integral development of the mining industry, as well as the development and diversification of a potential mining metallurgical sector for the country,” according to the Bolivian newspaper La Razon. The ministry also is seeking legislation that will strengthen small mining cooperatives and increase the participation of indigenous communities in mining.
The ICM tax increase and other mining initiatives are anticipated to also impact U.S., French, Canadian and other foreign mining interests in the nation. Among the foreign mining and metals companies now operating or investing in projects in Bolivia in addition to Glencore are U.S. companies Apex Silver Mines and Coeur d’Alene Mines, and Canadian miner Pan American Silver.