South American Violence Threatens Foreign Silver Mines

Violent protests against South American Silver Corporation in Bolivia have prompted Bolivian president, Evo Morales to consider nationalizing the firm’s holdings. Headquartered in Vancouver, the company’s mining concession in Bolivia is in danger of being revoked, although no decision has yet been made by the Bolivian government.

South American Silver describes its property as “one of the world’s largest silver, indium and gallium deposits,” attesting to holdings that contain rare earth metals, in addition to valuable silver ore.

Bolivia, despite having copious natural resources’, including gas and oil, is the poorest nation in its region. Morales, the country’s first president of native descent, says he wants to encourage foreign investment, but feels Bolivia needs control over corporations and resources.

Demands for South American Corp. to exit Bolivia have come in the form of hostage taking by Bolivian farmers. Bolivia is one of many mineral-rich South American countries experiencing unrest from the populace, who feel that they have not benefited from mineral development in their homelands.

New Argentine Regulations Decrease Profits for Foreign Mining Companies

In 2011, Argentina came in tenth among global silver producers. Other Central American nations, like Chile and Peru rank much higher in silver production, as Argentina’s mined resources are still marginally developed.

Individual provinces in Argentina have the right to regulate the resources maintained within their own jurisdictions. Newly proposed legislation could cause problems for foreign companies who take the initiative to develop resource projects.

A case in point is the province of Chubut, where zoning is being undertaken to allow open pit mining. Unfortunately, the Argentine government and native resource companies will benefit greatly from the new laws, while foreign concerns have not been consulted and will not fare as well. Heavy taxation, large royalty payments and increased export duties may cause outside mining interests to shy away from Argentine resource development.

Environmental laws taking effect in Argentina may further limit precious metals exploration. The National Glacier Act is designed to protect glaciers for agricultural and tourism purposes, but could effect mining in the process.

Foreign Mining Companies may Exit Bolivia Due to Leftist Government Policies

Canada’s Prospectors and Developers Association estimates that approximately twenty Canadian mining companies operate in Bolivia. Canadian companies join other foreign business enterprises, finding it more difficult to operate there, due to new government policies being instituted by Bolivian president, Evo Morales.

Morales’ leftist regime has been operating in Bolivia since 2006. The Bolivian government has recently made the decision to nationalize the Colquiri tin and zinc mine, owned by Glencore International PLC. The move has led precious metals mining concerns, like Orvana, who operates the Don Mario gold, silver and copper mine in eastern Bolivia to fear that they may be next. The fear is legitimate, since new constitutional changes in the country will require mining companies to become joint operators with the Bolivian government.

Some mining companies are not waiting around for the other shoe to drop, but others continue to operate normally amid rising hostilities between independent Bolivian mining cooperatives and foreign mining enterprises.

Singapore Exempts Investment Grade Precious Metals from 7% Tax

The Asian Republic of Singapore is a major world financial center where the economy continues to grow at a rapid rate. The Goods and Services Tax, or GST is a mechanism by which the government of Singapore taxes imports and supplies of goods and services. Precious metals have long been subject to this 7% tax, but loosening of regulations will exempt investment-grade silver, platinum and gold from the tax, effective October 2012. Currently, paper financial instruments, like stocks and bonds enjoy the same exemption.

Silver and gold coins, wafers and ingots must meet stringent quality and quantity standards in order to qualify for exemption.

Repeal of the GST for precious metals is expected to boost Singapore’s reputation as one of the most welcoming locales for business transactions. Other measures are also being introduced to ease cash flow and relax compliance requirements for local qualifying precious metals refiners and consolidators. A favorable taxation structure and low levels of corruption already place Singapore at the top of the worldwide investment list.

India Supplies Pakistan’s Enormous Appetite For Artificial Jewelry

So-called “artificial” jewelry” may be made from pure silver, two-percent silver, brass, copper, 18-carat gold, and either artificial or semi-precious stones. Popular artificial jewelry items include bridal sets, earrings and bangle bracelets. Pakistan’s sale of these items is regulated by the Small Traders of Artificial Jewelry and General Merchant Association.

According to the Association, imports of artificial jewelry constitute more than one billion dollars in Pakistani currency. Recent surges in precious metals prices and deteriorating law and order in the country account for the rise in consumption of artificial jewelry over articles made from pure metals and more valuable gemstones. Pakistani women are drawn to the jewelry for reasons of style, safety and price.

Pakistan, which used to produce most of the artificial jewelry that it consumed, is now importing large amounts from India. Security concerns, high energy prices and government negligence are cited as reasons for the production shift. Analysis of projected artificial jewelry consumption in Pakistan is also driving increased demand.