Feasibility and Fair Business Relations?

by Potential Investor
(B.C Canada)

I am thinking of investing in a mineral processing plant in Bolivia. Here is a little background. The business will be operated and managed by Bolivians. Silver ore will be and process using a unique process at the plant to sell.

In terms of business relations, the Bolivians are coming into the business with certain skill sets:

-knowledge and expertise in the mining industry

-contacts and can draw on personal friends in industry to fill critical human resources positions

-language

-the unique process not used by anyone else (claimed by persons initiating the opportunity)

My role will be to input 100% of the money for the complete business (that's the proposal given to me). I am offered 30% of net profits after the repayment of the principal investment. The money will be used to purchase the land, equipment, ore, processing materials and wages.

It has been proposed that production would not take long (though no clear timeline has been established) and once it is up and going the principal investment would be repaid (less land and equipment) with in 4-5 months.

My questions are:

1. Is this a feasible investment given the political/economic context of Bolivia?

2. What are the legal considerations around this type of business and this investment structure?

3. Is the proposed allocation of net profit shares reasonable or fair, with consideration of 'human' resources (risk time and effort) and monetary funding (risk 100% of money)?

There are a few other concerns, but those are the main questions right now. I would appreciate any insight into these questions or the the business idea. I look forward to hearing from you.

Thank you,
Potential Investor

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Apr 19, 2011
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Bolivian Ministry of Mining
by: Anonymous

You might try contacting the Bolivian Ministry of Mining for more information on what the stipulations would be for you to be allowed to invest in mining.

http://www.mineria.gob.bo/

You could also contact the Canadian Embassy in La Paz. They may be able to provide you some opinions.

Embassy of Canada in Bolivia
2678 Victor Sanjinés Street
Edificio Barcelona Piso 2
Plaza España (Sopocachi)
La Paz, Bolivia
Mailing Address:
Casilla 10345
La Paz, Bolivia
Telephone: 591-2-241-5141
Fax: 591-2-241-4453
Email: lapaz@international.gc.ca

Apr 19, 2011
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The Government Would be Part Owner of Your Company
by: Anonymous

I could be mistaken, but my understanding is that there are now laws that state that when it comes to investment in natural resources (petroleum, gas, minerals, etc.) no foreigner may own a majority stake in the company. The Bolivian government, in representation of the people, must own at least 51% of any company investing in resources (must be the majority owner). I believe that is what I've read and heard.

Apr 19, 2011
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investing in mining in bolivia
by: Anonymous

There are a few things you may not be aware of that would probably be good to keep in mind at this point.

The general feeling among Bolivian miners (and other labor sectors) is that foreign companies are evil. They believe this because it's what the government tells them over and over again. Foreigners are just in it to get wealthy, will take advantage of Bolivian workers, just want the natural resources for themselves, Bolivia will not benefit from them, etc.

Over the past few years the current government has taken steps to severely limit private foreign investment, has nationalized dozens of foreign-owned companies, and when it comes to natural resources, this is an especially touchy point. It has carried out very vociferous campaigns to educate the public that natural resources belong to the people and the nation and greatly stresses that Bolivia is a fully sovereign nation and shall never again allow foreigners to control the Bolivian economy or politics by controlling its natural resources.

It has also taken away companies from many private Bolivian owners, especially those involving natural resources (forest concessions, mines, oil companies, and now the latest we hear is that dozens of gasoline stations will be usurped). It just simply passes a decree, sends in the military, and takes over the company.

Anyone who is a successful business person, has worked hard to achieve their success, and may have become wealthy through hard work should be forewarned that those who make money become tagged as evil traitors who are just in in to get wealthy at the expense of the Bolivian people. And their companies then become targets for nationalization.

You should also know that there is no legal security here. Written contracts mean nothing here.

Apr 18, 2011
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business opportunity in Bolivia
by: Potential investor

Mr. Baker, you comments are not very constructive or added any value insight to my question, but I thank you for your attempt anyway. My questions in no way is discounting the tremendous opportunity in Bolivia or the wonderful people there. Since I do not know the type of business and what is considered common business practice in the area, I have taken the time to ask on this forum. I would appreciate some thoughtful reflections if anyone has ideas, feedback or opinion on my post. Thank you again.

Potential investor

Apr 16, 2011
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Investment in Bolivian Mining
by: Steve Baker

Though I would love to see more investment in the Bolivian people, especially from "outside" sources, I think, if you have to ask the questions you are asking, you have no business doing this sort of thing.

Apr 15, 2011
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a new mining law coming up
by: Anonymous

I believe the Bolivian government is currently working on the details of a new mining law. It may be wise to wait until this law has passed before you make a decision as the general public does not yet know what it will entail.

In addition, even if you purchase land in Bolivia, the minerals in the land do not belong to you. Instead, the minerals are given to you under a concession agreement, even if you own the land itself. I believe this is true in the United States as well, but I could be mistaken.

Apr 15, 2011
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investing in bolivian minerals very risking
by: J.C. Miranda

Investing in Bolivian minerals or natural resorces or any kind is very risking. Miners ussually take over the mines and do work stopping when they are disagreement with the owners. The government it is taking over the mines from owners it say is getting to rich or not work the mines just have them. It will revert 4000 mines was announced today in the newsppapers, they are not operating how the government wants them operating.

http://www.elnacionaltarija.com/diario/52603

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