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Viewing cable 06LAPAZ1101, MUTUN TO PROCEED; PROBLEMS WITH NEARBY PROJECT

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Reference ID Created Released Classification Origin
06LAPAZ1101 2006-04-21 17:18 2011-08-25 00:00 UNCLASSIFIED Embassy La Paz
VZCZCXYZ0013
RR RUEHWEB

DE RUEHLP #1101 1111718
ZNR UUUUU ZZH
R 211718Z APR 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 8953
INFO RUEHAC/AMEMBASSY ASUNCION 5784
RUEHBO/AMEMBASSY BOGOTA 3074
RUEHBR/AMEMBASSY BRASILIA 6937
RUEHBU/AMEMBASSY BUENOS AIRES 4180
RUEHCV/AMEMBASSY CARACAS 1480
RUEHPE/AMEMBASSY LIMA 1444
RUEHME/AMEMBASSY MEXICO 1688
RUEHMN/AMEMBASSY MONTEVIDEO 3733
RUEHQT/AMEMBASSY QUITO 4122
RUEHSG/AMEMBASSY SANTIAGO 8665
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEHC/DEPT OF INTERIOR WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LA PAZ 001101 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/AND LPETRONI 
ENERGY FOR SDAY AND SLADISLAW 
COMMERCE FOR JANGLIN 
TREASURY FOR SGOOCH 
 
E.O. 12958: N/A 
TAGS: EMIN EINV ECON PGOV BL
SUBJECT: MUTUN TO PROCEED; PROBLEMS WITH NEARBY PROJECT 
PROMPT HOSTAGE TAKING 
 
REF: A. LA PAZ 439 
 
     B. 05 LA PAZ 3771 
 
1. (SBU) Summary: GOB officials recently announced that 
bidding on the rights to develop Mutun, one of the world's 
largest iron ore deposits, would proceed as planned; this 
satisfied a long-standing demand of local leaders, but 
problems with a nearby project have generated conflict. 
Civic activists in Puerto Suarez, a small town on the 
Brazilian border, took three Bolivian ministers hostage late 
April 18 and demanded that the GOB support a Brazilian 
company constructing a nearby pig iron facility.  The 
hostages were released unharmed the following morning, but 
the incident embarrassed the GOB and called into question its 
ability to respond to the needs of poor Bolivians.  End 
summary. 
 
2. (U) GOB officials announced April 19 that international 
bidding on the rights to develop Mutun, a deposit containing 
an estimated 40 billion tons of iron and magnesium, would 
proceed as planned, momentarily alleviating fears of yet 
another delay.  Postponements in December and February 
(reftels) delayed firms' submission of bids until May 20, on 
the understanding that the GOB would use the extra time to 
revise existing bid protocols and modify the joint venture 
contract signed with the winning bidder.  GOB officials have 
yet to announce changes (and may decide not to change 
anything) but have now declared their intent to move ahead. 
 
3. (U) The announcement satisfied a long-standing demand of 
local leaders, but problems with a nearby project have 
generated conflict.  Civic activists in Puerto Suarez, a 
small town on the Brazilian border 500 miles from the city of 
Santa Cruz, took the Bolivian ministers of planning, mining, 
and economic development hostage late April 18 and demanded 
that the GOB support Brazil's EBX Siderurgica, an iron and 
steel company constructing a nearby pig iron facility.  GOB 
officials have questioned the firm's legitimacy, accused it 
of operating without environmental permits, and suggested it 
may have violated Bolivian law by attempting to operate too 
near Bolivia's border with Brazil (the Bolivian Constitution 
prohibits foreign firms from owning land or mineral deposits 
within 50 kilometers of any international border).  EBX 
representatives have said the firm is legally incorporated 
and has all necessary permits, denying any wrongdoing. 
 
4. (U) The three ministers were released unharmed early April 
19, but Puerto Suarez community leaders immediately initiated 
indefinite strikes and road blockades, vowing to "radicalize" 
their actions if the GOB fails to meet their demands.  Civic 
activists accused GOB officials of threatening the 1,500 jobs 
associated with the pig iron facility and criticized the 
government for failing to recognize the region's development 
needs. 
 
5. (SBU) Comment: The hostage taking clearly embarrassed the 
GOB and called into question its ability to respond to the 
needs of poor Bolivians.  Community leaders in a remote small 
town not only joined the ranks of teachers, health workers, 
transport unions, and others in pressing their demands for 
jobs and higher living standards, but also escalated their 
tactics by briefly holding cabinet members hostage.  The 
GOB's weak response added to the picture of a government 
struggling to fulfill its promises to the poor.  End comment. 
GREENLEE