11/22 MEETING WITH MINING MINISTER DALIENCE

Código Fecha Clasificación Origen
06LAPAZ3161 24 November 2006 Confidencial Embassy La Paz

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C O N F I D E N T I A L SECTION 01 OF 02 LA PAZ 003161

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/24/2016
TAGS: ECON, PGOV, PREL, BL
SUBJECT: 11/22 MEETING WITH MINING MINISTER DALIENCE

Classified By: Amb. Philip S. Goldberg for reasons 1.4 (b) and (d).

SUMMARY

1. (C) On November 22, Ambassador Goldberg met with
Minister of Mining and Metallurgy Dr. Jose Guillermo
Dalience. The Ambassador sought assurances regarding the
protection of American investment in the mining sector and an
explanation of the GOB’s plan for the mining industry.
Minister Dalience told the Ambassador that he had met with
the American companies and was impressed with their
operations. The minister expounded upon his political
beliefs and plans for to carry out the "democratic and
cultural revolution the Bolivian people voted for." Dalience
assured the Ambassador that any changes in the mining sector
would be "transparent and within the framework of the law".
The minister said that American contracts would be "ok" but
that Swiss contracts, such as Glencore, could be changed.
The meeting ended with the Minister offering to meet with the
Ambassador or his staff at anytime. End summary.

AMBASSADOR SEEKS ASSURANCES

2. (C) The Ambassador opened the meeting by explaining that
he sought assurances that American investments in the
Bolivian mining sector would be respected. The Ambassador
told Minister Dalience that American companies were nervous
and that while the word "nationalization" may play well
domestically, it carried a strong negative connotation to the
international business community. The Ambassador asked
Dalience to "give a sign that there will not be
expropriation." Dalience replied that he had met with the
American companies with investments in Bolivia, was impressed
with their operations, and that there were "no problems with
the San Bartolome and San Cristobal contracts." The Minister
added that "everything will be within the framework of the
law. We know that we can’t lose their investments."

THE VOTER’S GAVE A MANDATE FOR CHANGE

3. (C) The minister (a former state-run mining company
union leader) went into a political discourse of how Bolivia
is "living a democratic and cultural revolution." He told
the Ambassador that the Bolivian population gave this
government a mandate for change with fifty-four percent of
the vote. Furthermore, he claimed, "the percentage would
have even been higher if not for the fraud committed by the
opposition." Dalience said he sees the GOB’s top two
priorities as "reclaiming our indigenous identity" and
defending our natural resources such as "hydrocarbons,
minerals, land, water, and the coca leaf.". The Ambassador
responded that it is each country’s right to manage its own
natural resources but observed that coca is not a natural
resource.

COMIBOL WILL BE REBORN

4. (C) The Ambassador asked Dalience about the GOB’s plans
for reforming the mining sector. The minister acknowledged
that it was a difficult time and lamented that the industry
"is not operating at 100% capacity to take advantage of high
prices." He said that the GOB realizes it needs foreign
investment but wants "partners, not bosses." Dalience said
that he understood that "an investment deserves to receive a
profit." The minister complained that "the neo-liberal
governments of the past twenty years have taken the country
back to the 19th century and have broken down all government
institutions." Dalience explained that the state run-mining
company Comibol would be reborn, and like the state
hydrocarbons company YPFB, Comibol would become involved in
the entire mining process, from "exploration all the way to

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commercialization." Unlike YPFB he said, Comibol cannot
legally negotiate where concessions have been signed (as in
the case of American investments). The new Comibol would be
able to force new contract negotiations with Swiss company
Glencore, who bought ex-President Sanchez de Lozada’s mining
interests. Minister Dalience said that it is up to the
Constituent Assembly to change mining laws. He also said the
GOB wants to require congressional approval for all new
mining contracts.

COMMENT

5. (C) While Minister Dalience gave the Ambassador his
assurance that American mining contracts will be respected,
he clearly favors heavy state involvement in the industry.
Although different industries, the GOB plans to model the
state-run mining company Comibol after the state hydrocarbons
company YPFB. Minister Dalience told the Ambassador he is
willing to meet with him or his staff anytime and even
offered to go to Washington to explain the GOB’s new mining
policies. End Comment.

GOLDBERG