Mining In Bolivia: Exploring The Country's Rich Natural Resources

Mining has been a dominant feature of the Bolivian economy and politics since 1557. Silver mining in Bolivia played a critical role in the Spanish Empire and the global economy during the colonial era, particularly in Potosí. By the 20th century, tin mining had become the central element of Bolivian mining, with wealthy tin barons playing a significant role in national politics. Bolivia has a long history of tin mining and was once the world's leading producer of this metal. However, the industry faced several challenges by the early 1980s, including high production costs, inaccessibility of ores, and declining international demand. The international tin market crash in 1985 significantly impacted the country's mining sector. Today, Bolivia still produces a variety of minerals, including silver, zinc, lead, tin, and gold, with gold production experiencing a massive increase in 1988, boosting the sector's recovery.

Silver mining in Potosí

Potosí, the capital of the Bolivian state of the same name, is one of the highest cities in the world at 4,090 m (13,420 ft) above sea level. It was founded as a mining town in 1545 or 1546, when Bolivia was part of the Viceroyalty of Peru. The city is located at the foot of the Cerro de Potosí mountain, also known as the Cerro Rico ("rich mountain"), which is thought to be made of silver ore. Indeed, the Cerro Rico de Potosí is the world's largest silver deposit and has been mined since the sixteenth century.

For centuries, Potosí was the site of the Spanish colonial silver mint, and the city's historic centre, along with the Cerro Rico de Potosí, are now part of a designated UNESCO World Heritage Site. The silver mined from the Cerro Rico de Potosí was the major supply of silver for the Spanish Empire until Guanajuato in Mexico surpassed it in the 18th century. Over 200 years, more than 40,000 tons of silver were shipped out of Potosí, making the Spanish Empire one of the richest in the world.

However, this immense wealth came at a terrible human cost. Thousands of indigenous people were forced to work in the mines through the Spanish mita system of forced labour, and many perished due to accidents, harsh conditions, and mercury poisoning from the refining process. In addition, around 30,000 African slaves were brought to Potosí and forced to work in the mines, where many died.

In the late 1600s, Potosí became one of the largest and richest cities in the world, with a population of around 200,000. However, by the time Bolivia declared its independence in 1825, the silver had largely run out, and tin had become the main product of the mines. Today, Potosí remains an important mining centre and is the largest urban centre in the Department of Potosí.

Tin mining

History

The tin-mining industry in Bolivia faced a crisis in 1985 when the international tin market crashed. This led to a decline in the industry's contribution to the country's GDP, exports, and labour force. The Bolivian government responded with emergency economic measures, including massive layoffs of miners. However, the mining sector rebounded in 1988 due to a surge in gold production.

Contemporary Tin Mining

Bolivia remains a significant producer of tin globally, ranking 5th in global production in 2023. The country's tin production in 2023 stood at 18,000 Fine Metric Tons (FMT), with the principal export destinations being the Netherlands (34%), the United States (33%), and the United Kingdom (26%). The leading regions contributing to tin production are Potosí, La Paz, and Oruro.

The Bolivian mining sector employs a stratified framework for production entities, with the majority of tin production coming from the state-owned sector (58%), followed by cooperatives (41%), and the private sector (1.7%). Tin mining cooperatives are closely associated with the Bolivian Mining Corporation (COMIBOL), which provides a formalized structure for mining operations and plays a pivotal role in developing the entire mining production chain.

In recent years, the Bolivian government has increased its control over and investment in the tin sector, including the nationalization of mines and smelting facilities. The government has also prioritized the development of the lithium and potassium deposits located in the southern Altiplano's Salar de Uyuni.

Gold mining

Gold is also mined in more remote areas, such as in the village of Araras along the Brazilian border in Beni. Small-scale gold mining operations in Bolivia tend to be traditional and wasteful, and analysts have predicted that more commercial production methods, such as dredging of alluvial deposits, would help to maximise gold output.

The Bolivian government has supported the augmentation of gold reserves as a means of leveraging external finance for development projects. In 1988, the government offered a 5% bonus over the international price of gold for local sales to the Central Bank of Bolivia.

Zinc mining

Zinc reserves in Bolivia are substantial, estimated at 530,000 tons in the late 1980s. The expansion of zinc production has received growing support from the government, recognizing its strategic importance. As a result, zinc output has increased significantly over the years, rising from 47,000 tons in 1975 to roughly 39,000 tons in 1987, and then to over 53,000 tons in 1988. The construction of a new zinc refinery in Potosí was declared a national priority by the government in 1987.

Among the largest mining facilities in Bolivia is the San Cristóbal mining complex, an open-pit silver, lead, and zinc mine near the town of San Cristóbal in Potosí. Operated by the Sumitomo Corporation, this mine produces approximately 1,300 metric tons of zinc-silver ore and 300 tons of lead-silver ore per day, as of August 2010. The production and export of zinc are vital to the Bolivian economy, with zinc representing 13% of the country's economy.

Lithium mining

Bolivia has a long history of mining, dating back to 1557 when it became a dominant feature of the country's economy and politics. Silver mining, particularly in Potosí, played a crucial role in the Spanish Empire and the global economy during the colonial era. Over time, the focus shifted to tin mining, which became Bolivia's primary export by 1900.

Today, lithium mining in Bolivia is a significant sector, with the country holding an estimated one-fifth of the world's lithium reserves, mainly located in the brines of the southern Altiplano's Salar de Uyuni (Uyuni salt pan). The Bolivian government has prioritized the development of these reserves, recognizing their potential to boost the country's economy.

In 2017, the Bolivian government established Yacimientos de Litio Bolivianos (YLB), a state-owned company tasked with extracting lithium deposits and developing the country's lithium industry. YLB entered into a partnership with ACI Systems GmbH to construct plants for lithium carbonate and cathode materials production. However, YLB has faced challenges in making lithium production commercially viable, producing only 540 tons of lithium carbonate in 2021.

The process of lithium extraction is technically complex and expensive. The Bolivian government has sought foreign investment to support the development of this sector, recognizing the rising global demand for lithium among battery producers. With an estimated 9 million metric tons of lithium resources as of 2018, according to the United States Geological Survey, Bolivia has the potential to become a major player in the lithium market.

Frequently asked questions