Friday, April 15, 2011

Bolivia to nationalise Silver mines?

A Zero Hedge article caught my eye this morning as I checked overnight news. Apparently Bloomberg is reporting that Bolivia is nationalising their Silver mines:
Two weeks ago the precious metals space was closely following the fate of Sumitomo's San Cristobal mine, where a long strike had paralyzed work at the world's third largest producer of silver and sixth-largest producer of zinc. While the strike was eventually resolved with concession to the domestic workers, a far more troubling report from Bolivian daily La-Razon states that Bolivia's president Evo Morales is now planning on expropriating zinc, silver and tin mines sold off by previous governments. Bloomberg reports that "Morales will announce a decree May 1 to “dismantle the privatization model,” said Nicolas Fernandez, a spokesman for state mining company Corp. Minera de Bolivia, known as Comibol. "The government is recovering all the privatized companies,” Fernandez said today in a telephone interview from La Paz. “When the decision is taken, Comibol will be ready to manage these mines.”" Among the contracts to be affected are those with Glencore International AG, Pan American Silver Corp., and most importantly, Coeur d’Alene Mines Corp., which is operator of the San Bartolome mine: the world's largest pure silver mine. Notably San Bartolome and Sumitomo's San Cristobal "account for about 83% of the nearly 1.1M tons of fine silver Bolivia produced in 2009, according to Mining Ministry data" according to The Gold Report. If indeed this news is proven true, and we will know for sure in 16 days, looks for the price of silver to spike considering about 1.33 million kilograms of silver was produced in Bolivia 2009, according to the U.S. Geological Survey: an amount which will likely fall off a cliff following the utter chaos that is unexpected nationalization. ZH
Pan American Silver Corp and Coeur d’Alene Mines Corp both saw large falls in their share price on the news:

  

If a nationalisation of their mines takes place it may see a rush of investors looking for politically safe countries to invest in, so I wouldn't be surprised to see Australian Silver stocks get a boost from this.

Gold and Silver surged last night with Gold closing at US$1475 and Silver above US$42.

BB.
Disclosure: Positions held in Gold & Silver. Not investment advice. Do your own research.

3 comments:

  1. As I understand it from this week's fun clubs:

    1. The BRICS are dumping the US dollar
    2. The US Growth is being downgraded to +1+% where unofficially it is at ~ minus 3++%??
    3. Is the Law going to prosecute Geithner / Bernanke / Paulsen?
    4. Are the G&S shorts done? Is this weekend meeting their last desperate shot? Is the end here? ;-)


    Oh Dear...

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  2. Have you checked out BSM as a silver play?
    Their current production which is in ramp-up phase should produce 1m ounces pa at no cost after base metal credits, and there Silver tailings phase which is currently in DFS stage should produce a further 2m Ounces pa, again with no cost after Gold credits.
    Current EBIT after current ramp up is estimated at $40M pa for Phase 1 only.
    Market Cap around $80M

    nevcop from hotcopper

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  3. Thanks nevcop, will have a thorough look soon. They are on my watchlist, but can be tricky to keep track of them all. Cheers, BB.

    ReplyDelete