Bolivia to consider nationalizing embattled silver project

Mon Jul 9, 2012 8:38am IST

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* Protesters oppose Canadian firm's concession

* Morales says hasn't made a final decision

LA PAZ, July 8 (Reuters) - Bolivia will consider nationalizing Canadian miner South American Silver Corp's silver property, President Evo Morales said on Sunday, following violent indigenous protests against the mining project.

Leftist Morales, who last month took control of global commodities giant Glencore's tin and zinc mine in the Andean country, said he hadn't taken a final decision on whether to revoke the Canadian miner's concession.

"Nationalization is our obligation, I already raised the issue of nationalizing (the Malku Khota project) last year, and I told (local residents) to reach an agreement, because when they want we're going to nationalize," Morales told a farmers' gathering.

Exploration work, in which South American Silver plans to invest some $50 million, is expected to end within three years. The company describes it as "one of the world's largest undeveloped silver, indium and gallium deposits."

A Bolivian man died and at least four others were hurt as protesters occupied the property, local media reported on Friday. An increase in social unrest and anti-government protests are testing Morales, the country's first leader of indigenous descent.

Mining is also coming under fire in neighboring Chile and Peru, where many citizens feel they haven't profited from a metals-led economic boom.

HOSTAGES RELEASED

Bolivian peasant farmers over the weekend released five local South American Silver workers, who had been held to demand the company leave.

Three of the hostages were freed on Saturday in a police operation and the other two were released on Sunday afternoon, sources said. A police officer held hostage since Thursday was also freed.

"There are no more hostages in Malku Khota, the last liberations happened due to negotiations," deputy interior minister Jorge Perez told state television.

The Erbol radio network said the engineers freed on Sunday were "accused of spying and violating traditions or customs of the (local) peoples during an indigenous hearing." They were ordered to complete "a community punishment" of making 1,000 adobe bricks in under 30 days, the network said.

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