Half a million miners stand between Bolivia and a critical minerals rush
Rodrigo Paz, Bolivia’s first investor-friendly president in more than 20 years, wants global miners to extract the nation’s copper, gold, silver and other critical mineral deposits. Almost half a million local miners stand in his way.
The cooperatives that represent those miners are one of the country’s most formidable political forces, representing as much as 8% of the workforce and half of Bolivia’s mineral extraction. They have exploited the country’s mineral riches with little oversight and regulation for decades, and repeatedly brought governments to heel through protests that effectively shut the country down.
But Paz is undeterred. “Why do we want to be poor if we have everything we need to become a highly developed country?” he said, referring to the mineral potential of Bolivia, whose export revenues pale in comparison with those of neighboring Peru and Chile.
His challenge was laid bare in May, when thousands of cooperative miners barreled toward the presidential palace in La Paz, some hurling sticks of dynamite. Eventually, the first non-socialist government in decades had largely yielded to the miners’ demands for greater access to fuel, explosives and new areas to dig. Tensions resurfaced in July, when infighting among rival cooperatives forced officials to abandon plans for a rare summit bringing together local and state miners with private firms to chart the industry’s future.
“You can’t just rub them out,” said Tom Larsen, chairman and CEO of Eloro Resources Ltd., a Toronto-based explorer looking to develop a large silver-tin discovery in Bolivia. “They’re a big contingent in the Bolivian fabric.”
A full-blown overhaul of Bolivia’s nationalistic mining laws would erode many privileges enjoyed by cooperatives. So Paz’s government, already reeling after unrest earlier this year, is instead pursuing more incremental changes. It plans to submit targeted amendments to Congress, including allowing private firms to partner with cooperatives, strengthening development rights for explorers and easing taxes, an official said. In parallel, it’s working on a broader rewrite of the mining code to modernize the industry and improve legal certainty.
“The transition toward making Bolivia a safe place for investment must come through rules and laws, but it also has to involve inclusion of different social sectors,” Paz told Bloomberg’s Wall Street Week in May.
There are signs that Bolivia’s reputation as a destination for only the most risk-tolerant investors is starting to change. Existing private operators are weighing expansions and say they’ve been approached by prospective new entrants. Dozens of junior explorers are considering investments if the government follows through on the planned reforms, the official said. Bringing back global mining heavyweights will be much harder, requiring Paz — less than a year into his five-year term and eligible to seek re-election — to unwind decades of legal and political risk without provoking the powerful cooperatives.
“There are companies quietly looking at things right now,” said Quinton Hennigh, a veteran geologist who heads the Canadian firm that acquired Bolivia’s San Cristobal open-pit from Sumitomo Corp. in 2023. “But it’s predicated on these fundamental changes.”
Success would bring desperately needed export revenue for an economy mired in its deepest crisis in decades while creating a new source of minerals from antimony to zinc as governments around the world race to diversify critical supply chains.
The miners
It’s people like Óscar Chavarría who have the power to make these changes happen.
From his office in Potosi, home to Cerro Rico — the mountain whose silver financed the Spanish Empire — Chavarría leads one of Bolivia’s largest cooperative mining federations. The movement expanded dramatically after the collapse of the state mining industry in the 1980s, and today ranges from subsistence miners to sprawling, loosely regulated commercial operations.
“Potosi should be like Dubai,” Chavarría said. “It should be a marvel, but the wealth that comes out of here just leaves,” referring to the widely held belief among Bolivians that politicians allow foreign companies to strip the country of its natural resources.
Chavarría, like Paz, is right to think there’s much more money to be made. Bolivia shares the same mineral-rich Andean belt as Chile and Peru, hosts the world’s second-largest identified lithium resources and remains a top-10 producer of silver, tin, zinc and lead. Its reserves recognized by the US Geological Survey alone have a gross in-situ value of roughly $75 billion at current prices.
Decades of under-investment and limited exploration have left much of its geological potential underdeveloped or untouched. Economic geologist Osvaldo Arce estimates mineralized areas cover roughly three-quarters of the country and says resources could ultimately prove at least twice current estimates. He calculates projects already at advanced stages could attract about $3 billion in investment while adding more than $1 billion a year in exports.
But the spread of informal mining, community unrest and weak legal protections have deterred foreign investment. Major miners including Glencore Plc and Newmont Corp. have exited the country, while state intervention has at times been more direct: In 2012, Bolivia revoked concessions held by Canada’s South American Silver Corp. No major mine has entered production since 2007, leaving output increasingly reliant on aging operations. Exploration spending lags regional peers, while mineral exports of roughly $5 billion remain a fraction of neighboring Chile’s.
The government hopes to revive a model largely abandoned under former President Evo Morales, allowing cooperatives that hold mining rights to partner with companies capable of providing financing, exploration, technology and modern processing. Such arrangements could unlock deposits that cooperatives cannot develop alone while giving miners access to better equipment, higher productivity and stronger environmental and safety standards.
“The state has the challenge of taking cooperatives toward greater production, sophistication and sustainability,” said Pablo Ordóñez, a Bolivian lawyer who advises mining companies.
The need for change is visible inside Cerro Rico itself.
After nearly five centuries of mining, the mountain is honeycombed with thousands of tunnels and scarred by roughly 150 sinkholes. Authorities have closed sections of the UNESCO World Heritage site as engineers struggle to preserve its iconic conical shape while cooperative miners continue chasing the remaining silver veins.
Deymar Silvestre, now in his mid-30s, has worked inside Cerro Rico since he was 16. At the end of a shift, he gathers with fellow miners deep underground, chewing coca leaves, drinking shots of liquor and making offerings to El Tío — the horned figure miners believe both protects them from danger and guards the mountain’s mineral wealth.
“Sometimes I want to look for a different job, but there’s nothing else,” Silvestre said. Months earlier, his younger brother was killed in a mining accident.
Hundreds of meters above, Freddy Llanos surveys the mountain from a different perspective.
A former cooperative miner who now heads the Cerro Rico preservation commission at Tomas Frias Autonomous University, Llanos says generations of short-term extraction and limited reinvestment have left Bolivia consuming its mining inheritance instead of building the next generation of mines.
“That’s why we remain poor,” he said. “After 500 years, we’ve grown in a disordered way.”
Mining has shaped Bolivia since before the Spanish conquest, evolving from pre-Hispanic metalworking to the silver boom centered on Cerro Rico before tin became its dominant industry in the 20th century.
Bolivia nationalized its largest mines after a 1952 revolution, putting them under state-owned Comibol. When tin prices collapsed in the 1980s, thousands of laid-off miners occupied abandoned tunnels, giving rise to today’s cooperative movement. A 1990s exploration boom produced discoveries including San Cristobal before resource nationalism under Morales sharply curtailed exploration.
Budding partnerships
About an hour south of Potosi, the Porco district offers a glimpse of what the government hopes the future of Bolivian mining could look like.
Each morning, hundreds of miners climb onto trucks and motorcycles bound for the mountain. Some work for cooperatives. Others descend into the underground workings of Sinchi Wayra, the Bolivian unit of Santacruz Silver Mining Ltd.
When Vancouver-based Santacruz bought Glencore’s Bolivian mines in 2022, it inherited a relationship with local cooperatives that has become central to its strategy. At Porco, the company allows two cooperatives to mine parts of the mountain it no longer operates while its own employees work deeper underground.
“Our relationship with the cooperatives is essential,” said Wáscar Enríquez, the head of social management at Sinchi Wayra’s Porco mine, overlooking a mountainside riddled with cooperative tunnels.
The arrangement illustrates both the promises and pitfalls of the government’s strategy: Cooperatives gain access to employment and infrastructure, while the company reduces conflict over ground it no longer considers economic.
Yet higher metal prices can quickly reignite disputes over mining rights, and companies say invasions of concessions remain one of the industry’s biggest deterrents to investment.
“The nature of the cooperatives has been distorted,” said Sinchi Wayra Corporate Affairs Vice President Alfredo Sallés. “They’ve become like private firms run by a few shareholders who hire workers under illegal conditions and avoid taxes through loopholes. That discourages legitimate investment.”
Weak oversight and poor traceability allow ore from informal and potentially illegal sources to be mixed with legitimate production, making the system difficult to police.
There are similar dynamics elsewhere in the region. Peru’s illegal gold trade has surged, with illicit exports overtaking legal shipments for the first time.
Reform in Bolivia will require compromises, with some cooperatives voicing concerns that deeper partnerships with private companies may see them become little more than contract labor.
Instead, some cooperative leaders want the state to reclaim underused concessions from private firms and reallocate them to local miners.
“It’s not that we just go in and make money — we take risks,” said Omar Choquetilla, who heads the Potosi Kory Mayu cooperative. “People think we don’t contribute, that we don’t pay taxes. But there are deductions by law, including royalties. We do contribute.”
Renewed attention
Some companies are already positioning themselves for a potential opening.
Santacruz is accelerating one project in Bolivia and scouting for acquisitions, while also helping a handful of explorers navigate a possible Bolivian entry, said Executive Chairman Arturo Préstamo.
The government’s efforts to strengthen legal certainty and engage with cooperatives have reinforced his optimism about Bolivia, Préstamo said, while recognizing that Paz has lost some of the political capital needed to push through reforms.
Industry groups are pressing the government to strengthen protections against concession invasions, speed permitting and provide the legal certainty needed to attract larger investments.
That task is being made more difficult by soaring metal prices, said Ilse Beltran, who heads the association representing private mining companies in Bolivia. “When prices rise, informality tends to grow.”
Even if cooperatives embrace partnerships with private companies, Bolivia’s largest deposits are too capital-intensive and technically complex for their miners and will require experienced international operators capable of investing billions of dollars over decades.
Still, advisers say Bolivia is attracting renewed attention after years on the sidelines. Officials have promoted projects to packed audiences at international mining conferences, signed a critical minerals agreement with the US and stepped up engagement with Canada, Australia and South Korea. The Toronto Stock Exchange held its first investor event in Bolivia this year. While the country continued to rank near the bottom for mining investment attractiveness in the Fraser Institute’s latest survey, it recorded one of the biggest improvements in policy perception.
San Cristobal Mining Inc. is looking into an expansion in Bolivia that could more than double silver output over the next several years. At the same time, CEO Hennigh said it’s in talks with other mining companies about potentially helping them enter the country, with most of that interest emerging since Paz’s election last year.
Still, major miners are likely to wait for evidence that Bolivia can deliver stronger legal protections and a competitive tax regime, rein in informal miners, and show that reforms can withstand the country’s volatile politics. But the change in sentiment is already tangible.
“The honeymoon period has ended, but I believe he is on the right path,” Préstamo said of President Paz. “If these legal and political changes happen, we will see the major mining companies return.”
(By James Attwood and Sergio Mendoza)
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