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Cablegate: U.S. Mining Companies Unaffected by "Reserve"

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RR RUEHWEB

DE RUEHLP #1231 1241117
ZNR UUUUU ZZH
R 041117Z MAY 07
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 3452
INFO RUEHAC/AMEMBASSY ASUNCION 6750
RUEHSW/AMEMBASSY BERN 0134
RUEHBO/AMEMBASSY BOGOTA 4080
RUEHBR/AMEMBASSY BRASILIA 7971
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RUEHMD/AMEMBASSY MADRID 3449
RUEHMN/AMEMBASSY MONTEVIDEO 4582
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RUEHSG/AMEMBASSY SANTIAGO 9672
RUEHKO/AMEMBASSY TOKYO 0301
RUEHUB/USINT HAVANA 0298
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUMIAAA/USCINCSO MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 001231

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: EMIN EINV ECON PREL PGOV BL
SUBJECT: U.S. MINING COMPANIES UNAFFECTED BY "RESERVE"
DECLARATION

REF: A. LA PAZ 1215

B. LA PAZ 1008

1. (SBU) U.S. mining company executives told the Ambassador
May 3 that the GOB's decision to declare Bolivia's national
territory a "state mineral reserve" (ref A) would not affect
operations. According to Apex Silver Vice President Jerry
Danni, the move will leave existing mining concessions
untouched, which means the firm can move ahead with its $800
million San Cristobal silver-lead-zinc project, expected to
begin production in the third quarter.

2. (SBU) Danni speculated that the decree would have negative
long-term implications for the mining industry, as the
prohibition of new mining concessions will likely drive
potential investors away from Bolivia to neighboring
countries. According to Danni, Apex Silver will likely
cancel several ongoing exploration projects, as the GOB's
most recent move "makes it impossible" for the company to
pursue additional investments.

3. (SBU) Coeur d'Alene Vice President Jim Duff echoed Danni's
comments, telling Econoff May 3 that the prohibition of new
mining concessions will close Bolivia to new investment.
While Coeur d'Alene's San Bartolome silver project will
remain unaffected by the GOB's move, the firm has no plans to
consider additional projects.

4. (SBU) Comment: Executives labeled the GOB's May Day
announcements "relatively benign" but reiterated fears of
potentially harmful tax hikes (ref B). The possibility of
drastic change, together with proposed modifications to
exporters' ability to claim certain tax refunds, continues to
worry executives. As in the past, we will work closely with
mining company representatives and raise their concerns with
GOB officials whenever possible. End comment.
GOLDBERG

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