A GENERAL OUTLOOK OF BOLIVIAN MINING: THE NEW MINING CODE (ENGLISH VERSION)
| Jurisdiction | Derecho Internacional |
(Nov 1997)
A GENERAL OUTLOOK OF BOLIVIAN MINING: THE NEW MINING CODE (ENGLISH VERSION)
Attorney
La Paz, Bolivia
2B1. INTRODUCTION:
As of 1952, and well into the 80's, the Bolivian mining industry's main characteristic was its ownership, the State, which played a protectionist and leading rol in production.
Under this model, all regulations related to mining property were focused to guarantee a fast, easy acces by the Corporación Minera de Bolivia, COMIBOL ( Bolivian Mining Corporation) to the land's mineral resources, thus giving the Corporation a limitless operational frame, and allowing it to perform its main objective as the main source of mining production. Juridical security of private mining ownership , was indeed a secondary objective.
Prior to 1986,large mineralized, areas of the Bolivian land, were assigned to COMIBOL by the State; all these land allocations had a 5 Km security border zone (aprox 8.06 miles) within which private rights to ownership were banned.
Juridical regulations on fiscal reserves were created parallel to the Mining Code which was current at the time1 ,and which covered more than 70% of the total mineralized areas of the country, thus, private access to such territories were only available through concessional rights trough concession -contract agreements, and leasing contracts; all for limited periods of time, which were also subject to contractual, economic, technical, and financial clauses.
Such arrangements, created a high degree of management directionality, and not few corruption cases.
Under such conditions, Bolivia marches into the 80's with a negative growth rate2 , based on low investments — specially in exploration-, a growing technological delay, intensive use of labor, insufficient management capacity, a limited access to finance, and, in general, very low competitivity, which was caused at that time by high mineral and metal prices in the international market.
The fall of metal and mineral prices in the International Market, which took place at the end of 1985 , triggered the fall of the State protectionist model, and the virtual bankrupcy
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of the Bolivian Mining Corporation3 as well as a growing proliferation of hand mining activities solely under survival premises, which at the time were also highly pollution friendly.
Mining exports started to be severely undermined4 with its logical negative impact on tax revenues, which in turn undermined the economies of the metal and mineral producing areas5 ; this led to the consequent loss of legitimacy of Mining vis a vis the civil population, thus recreating the idea of mining activities as being designed to extract richness and leave pollution and poverty behind.
Facing exhaustion and unfeseability, the State's protectionist model, had to be reformed. The need of a profound structural reform in the Bolivian mining sector required the creation of a legal, institutional framework able to adapt to private investments, frontier technology, and project management, under a market economy.
2B-2 RANGE AND OBJECTIVES OF THE STRUCTURAL REFORM
The structural reform of the Bolivian Mining Sector, was aimed toward four main, fundamental objective targets: i) To remove the State from productive activities ii) to establish a new legal framework which allowed and motivated private investment; iii) to promote a mining system which would be compatible to the protection of the environment; and, iv) to alocate each state and producing areas, as well as to the State itself, with a reasonable and remunerative portion of the revenues .
In order to follow such objectives, the range of this structural reform covered: i) The restructuring of COMIBOL, thus allowing it to turn it from a productive entity, into a successful managing entity, in charge of overseeing the alocation of mining rights through agreements with national, and foreign private sectors6 ; ii) to pass a new Mining Code bill7 iii) the restructuration of mining-related service entitites, in order to produce geological and eviromental basic data which would be accesible to anyone, v) to build and create sectorial environmental norms, compatible with mining development ; and v) to establish a new tax revenue framework, which could be internationaly competitive and which could generate income for both the State and the mineral and metal production areas.
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2B-3 JUSTIFICATION.
The Congress approval of the new Mining Code of the Republic of Bolivia, has its main foundation on the need to adecuate a regulatory mining framework, to the deep changes that the nation, and the life of the nation has undergone8 , as well as the urgent need to count on a proper, effective and internationally competitive instrument to atract both national, and foreign investments in an undiscriminatory way, yet strictly abiding to the legal framework provided by the Bolivian Consitution and national laws.
The newly abolished Mining Legislation, effective since 1965 had undoubltely preserved all juridically traditional mining institutions, however it did not provide the necessary juridical and technological security to the private owners of mining rights.
In fact, the total absence of a reliable cadastre of mining concessions9 , led to innumerable cases of overimposed areas, with the logical consecuence of uncertainty of the mining rights previously acquired.
The existence of a totally obsolete system of geodesical positions and concessions based on the astronomic north, erratic topographic references, which could almost only be applied exclusively to the mountainous area of the country, could also be added to the already existing problems.
International standards such as the application of Universal Projection coordinates and the Mercator Transverse (CUTM), have been applied to demarcation procedures of mining concessions. However, these have been done only since 199110 , based on a provisional geodesical data (PSAT-La Canaoa 1956), and without proper mining cartography11 .
The measure unit of the mining concessions12 and a limit of 20.000 ownerships per concessioner, (excedentary concessions were sanctioned by the anullment of the rights), would
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often discourage prospective and explorative investments, in areas which were larger than these limits.
The existence of irregular perimeters in mining concessions, gave way to large intermediate — excedentary areas —13 which led to the frequent uncertainty of ownership rights, and were often judicially questioned.
The compulsory requirement of an initial payment for the mining privileges in order to iniciate the legal process to acquire a mining concession, provided an important inequity towards the applicant, since such privilege could not be returned in case of an unsuccesfull exploration.
Another requirement: "to prove that works were being done in the concession areas", was not only an obsololete legacy of the past — this had been well over done with, in other regional countries such as Chile during the last century — , would create: i) a ficticious acomplishment of such demand; ii) a very subjective evaluation of the situation, appraised by the government clerk in charge of such chores; and iii) the obligation of the concessioner to keep such works on their way whether the market conditions were proper or not; even in situations where production costs were higher than market values.
The multiple causes for concessioners' rights cessation14 , and...
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