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Government to Close Many Mines and Fire Thousands

August 26, 1986

LA PAZ, Bolivia (AP) _ The government began a reorganization of the mining industry Tuesday in which most operations either will be closed or offered to worker cooperatives and half the 20,000 miners may be fired.

Bolivian mining was nationalized when Victor Paz Estenssoro was president more than 30 years ago and is being restructured now under another Paz Estenssoro presidency. His Cabinet made the decision at a long meeting that ended at midnight Monday.

More than 7,000 miners have been dismissed in an attempt to cut the state company’s huge losses since the president, now 78, took office a year ago.

A sharp decline in the world price of tin, the main ore produced in Bolivia, has had a devastating effect on the industry.

At least 5,000 miners, some with their wives and children, began a 150-mile protest ″March for Life″ from Oruro to La Paz last week in anticipation of further drastic action by the government. They are expected to reach the capital Thursday or Friday.

The miners’ union said soldiers and armored units were stopping supporters from taking food and other supplies to the marchers. No confrontations have been reported.

Mines in Oruro are among those to be closed under the new policy. Nearly all its 100,000 people are dependent on the industry.

According to the Cabinet decision, eight mines will remain open under the direction of semi-autonomous regional companies run by the government.

Nine will be offered to their workers to run as cooperatives, with $40 million in government funds and guaranteed loans available to get them started.

Seven will be closed and five of those will be explored to determine whether their ore reserves would justify reopening them in the future.

Mining Minister Jaime Villalobos cited ″deterioration in the level of production and the increase of costs added to the drop in the price of minerals″ as reasons for the government decision.

″We cannot permit the Bolivian Mining Company to continue operating at a loss,″ he said. ″To do so would be suicide for the country.″

The company exported $300 million worth of minerals in 1985 and lost $230 million, Villalobos said. Mineral exports this year are estimated at a maximum of $120 million.

Tin prices on world markets dropped last year from $5.60 a pound to less than $2.40. Villalobos said the production cost was $7 a pound.

Natural gas is Bolivia’s other major export and its value has plummeted in tandem with world oil prices.

Finance Minister Juan Cariaga said the nation’s export earnings have fallen from $1 billion five years ago to an estimated $400 million this year. Foreign debt is growing and inflation is rampant.

Paz Estenssoro said earlier this year that the illegal cocaine industry now brings more money into the country than legal exports. U.S. military support personnel are in Bolivia helping police in a campaign to eradicate cocaine laboratories.

The main cities affected by mine closings will be Oruro and Potosi, which has 80,000 people. Exactly how many miners will be fired is not clear, but the operations to be shut down employ at least half the national total of 20,000.

Whether workers at the mines to be offered as cooperatives will accept the deal also is unclear. Smelting and sale of the cooperatives’ production would be handled by the government-owned smelting company.

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