Mining Companies Fret Over Bolivia Plan

Barrick bought a stake in the Reko Dig copper-gold project in Pakistan for $100 million in February from Antofagasta PLC, a Chilean mining group.

When CEO Greg Wilkins went to Islamabad in connection with that project, Munk said, he was received by both Prime Minister Shaukat Aziz and President Pervez Musharraf.

Although the company's assessment of opportunities in that country is still in the early days, Wilkins said Barrick would be "very interested" in more projects there, despite challenges posed by the presence of al-Qaida in some of its regions.

Speaking at a mining conference in Peru last week, Pierre Lassonde, president of Denver-based Newmont Mining Corp. and chairman of the World Gold Council, also expressed concerns about Bolivia.

"Looking at what's happening in Bolivia, Ecuador and in Venezuela, I think one has to be nervous. This is every foreign investor's nightmare, that you invest billions of dollars and all of a sudden you find that your investment has been nationalized," he told reporters in Lima.

One senior official at a Canadian mining company, who did not want to be named, said the moves by Morales, compounded by what he called the endless harassment by environmentalists and bribe demands by Latin American officials, make Bolivia an increasingly unpleasant prospect.

However, Paul Zdebiak, vice president of the Canadian gold exploration firm Eaglecrest Explorations Ltd., sees the recent moves by Morales as political grandstanding that will cool down. His Vancouver-based firm has invested $25 million in the last 14 years in gold exploration in northeastern Bolivia and it intends to start drilling soon.

"He's beating his chest and saying he's going to be Robin Hood, robbing from the rich to give to the poor," Zdebiak said. "But after a while, he just cannot isolate Bolivia from the international world when it comes to investing, because Bolivia is the poorest country in (South) America."

Morales was elected in January with a mandate to help the working people, who often resent the multinational companies which have invested $3.5 billion in the landlocked nation.

Scott Lamb, vice president of investor relations for U.S.-based Coeur d'Alene Mines Corp., the world's largest publicly traded silver producer, said the events in Bolivia would not deter the company's mining project there, having budgeted $135 million in a project that hopes to produce 8 million ounces of silver a year. So far, only $35 million has been spent.

"We're certainly mindful of the political situation in Bolivia, but the mining industry in that country has a history that goes back hundreds of years and the understanding and respect of the mining industry is ingrained in the culture," Lamb said.