The latest statistical data released by the Bolivian government has indicated the severe impact of the coronavirus on tin mining and smelting in the country during the first quarter of 2020.

Mining in the country is conducted by the two mines owned by the state mining organisation COMIBOL, as well as smaller mines and cooperatives. The state-owned Huanuni and Colquiri mines produced some 3,366 tonnes of tin concentrate during the first quarter. Other operations produced a combined 2,489 tonnes.

Total tin concentrate production (5,855 tonnes) was down some 30% year-on-year (YoY). In late March, it was announced that mining operations in the country would be locked down due to the outbreak of the coronavirus.

In terms of refined tin production, the state smelter EM Vinto produced some 2,890 tonnes in the first quarter. This represented 73% of the total refined tin produced in Bolivia during that period. Smelters were also subject to restrictions beginning at the end of March, reducing output. Despite this, total refined tin production in the country was some 14% higher than in 2019.

However, data for the second quarter indicated a significant decline in smelter output. During the peak of coronavirus restrictions in the country, total refined tin production was 1,321 tonnes. This was a decline of nearly 66% quarter-on-quarter and 69% YoY.

Weak demand and lower production in the first half of 2020 saw exports of refined tin from Bolivia fall some 31.7%. 5,171 tonnes of tin were exported from Bolivia in 2020, compared to 7,574 tonnes exported across the same period in 2019. Of the total exported in 2020, EM Vinto sold 3,759 tonnes: some 73%. The United States was the most significant destination, taking 40% of the metal by value.

Our view: Even without coronavirus restrictions, it is estimated that mined tin production in the country would have been significantly lower than in 2019. Based on 2019 annual production, it is estimated that the mine closures removed around 900 tonnes of tin concentrate from the market. Total production would therefore have been around 6,900 tonnes without the lockdown, some 1,500 tonnes lower than in 2019. We expect official Q2 data to show an even greater decline in mine production due to the continued and longer-lasting lockdown measured imposed.

For refined tin production, however, coronavirus-related closures appear to have held back forecast growth.

In Q1, it is estimated that the smelter closures removed roughly 550 tonnes of refined tin from the market. Had the smelters not been forced to close, total Bolivian production in the quarter could have been some 4,400 tonnes, an increase of around 31% YoY.

In Q2, continued closures prevented production of around 2,600 tonnes of refined tin. Yet even with this potential production, smelter output would have still been some 7% lower YoY.

Overall H1 refined production, however, could have increased by some 9% YoY without lockdown restrictions. This is a significant difference compared to the real 32% YoY decline seen in H1 2020.

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A view of Cerro Posokoni, Huanuni’s mining area.

The Cerro Posokoni area, which was historically exploited by artisanal miners, has been a point of contention between Comibol, and its subsidiary EM Huanuni, and the local people. Comibol have lost up to US$ 420,000 through lost production after protests at the mine earlier this month by local residents seeking jobs. However, “there are no more jobs”, Comibol CEO Zelmar Andia said in a statement, “there isn’t a single worker vacancy at Huanuni.”

Comibol have recently invested into a new processing plant, Lucianita, and tailings dam at Huanuni. These will help to double processing capacity to some 3,000 tonnes/day, according to the company. At Comibol’s other mining unit, Colquiri, a contract has been secured to begin construction of another processing plant. The new plant, with a capacity of around 2,000 tonnes/day, aims to double output. This new processing unit will work alongside the one currently operating; one will work to reprocessing tailings, while the other will process new ore, according to the manager of EM Colquiri, Sabino Arando.

Our view: Production from Comibol’s only smelter, Vinto, saw a second consecutive year of declines in 2018. Refined tin production fell 10% in 2018, from 12,637 tonnes to 11,369 tonnes. While maintenance affected output in 2017, it is thought that long-term issues with the ageing infrastructure at both Colquiri and Huanuni are beginning to impact tin production. Although the company are beginning to tackle these issues, the Lucianita processing plant encountered issues during start-up tests in January, delaying full deployment.

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Junior miners accelerate toward production

Alphamin’s Bisie mine is one of the projects that are closest to production, scheduled for Q3 2019. On 8 April, Alphamin announced that they had raised US$ 12 million in capital through a private share placement. Although Alphamin had assured investors in December that cash reserves were sufficient until production at Bisie, the recent change in mining method has driven up costs. Announced last November, the switch from sublevel caving to cut and fill means that more development must be completed ahead of the demand for ore, hence the increased capital cost.

Despite this issue, Bisie is approaching full production, with the processing plant now fully commissioned. Bisie is expected to produce 9,600 tonnes of tin concentrate per year and remains one of the highest-grade deposits in the world, with an initial life of mine of 12.5 years.

Aus Tin Mining, who recently began mining at its Granville East project, have also seen investment into new mine supply. The company has received $ 450,000, also through a private share placement, with the potential for another $ 750,000 via a share purchase plan. The company announced that this investment would be utilised to move the Taronga project into Stage 1, which consists of a 340,000 tonne trial mine with the Northern Zone Ore Reserves along with a pilot processing plant. In total, the Stage 1 operations are estimated to cost around $ 3 million.

Established mines to get new lease of life

Comibol, the Bolivian state-owned miner, has finally signed a contract to expand the processing plant at its Colquiri mine. A contract was originally announced with Bolivian company Ziegler back in 2016, although there have since been a total of four unsuccessful bidding rounds, as well as the most recent successful round.

The three-year deal was awarded to the Bolivian construction firm Carlos Caballero, with a total investment of US$ 72 million. The new concentrator plant, with a processing capacity of 2,000 tonnes/day, aims double output at Colquiri, where 3,753 tonnes of tin, and 15,233 tonnes of zinc, were produced in 2017 according to Comibol.

Our View:

With growth in global refined tin demand likely to accelerate in the coming years, mine production will have to increase significantly to keep up. Although production world’s largest tin concentrate producers, Indonesia and China, are likely to remain stable in the next year, mining in Myanmar looks set to decline as mining costs increase. New sources will need to come online to make up for the loss in tin concentrate from Myanmar.

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Production declines in 2017 were thought to primarily be the result of maintenance work to replace the refractory brick lining inside the smelter’s Ausmelt furnace. However production in 2017 and 2018 has also been affected by underlying issues with concentrate supply due to reliance on ageing infrastructure at the two state-owned mines, Colquiri and Huanuni. In addition, in April 2018 an explosion at the state-owned Huanuni mine, which killed 10 mine workers, caused the mine to close briefly. Huanuni is still plagued theft of ore, which has had a major impact on production in recent years. It is possible that customer procurement decisions also affected Vinto’s output in 2018, with Apple halting purchases from the smelter earlier in the year with some other consumers following suit.

On the back of the poor production figures, the smelter posted exports totaling US$ 229mn in 2018, according to Ramiro Villavicencio, general manager of Empresa Metalúrgica de Vinto (EMV). In 2017, local sources reported that revenue for EMV totaled US$ 255mn; the price of tin has compounded the ongoing supply issues, falling from a high of US$ 21,910 on 29 January 2018 to a low of US$ 18,400 on 28 November 2018.

Our View: Vinto will find it difficult to boost output until upgrades to processing infrastructure at Huanuni and Colquiri are successfully implemented. Huanuni, which supplies the Vinto smelter, relies on the aging Santa Elena processing plant and has recently been struggling to maintain output. Although official figures are yet to be reported, Huanuni management figures had previously forecast tin production in 2018 to fall short of the target of 8,000 tonnes by some 30%. Construction of a more modern processing facility was completed in late 2014, but the Huanuni Mining Company has had issues getting the plant operational. The “Lucianita” processing plant has encountered problems after beginning start-up tests this month. Although the mill has only been operational for a week, widespread problems have been reported, including electrical failures and issues with water systems.

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The 2,000tpd plant will be built by the Bolivian company Ziegler and will double processing capacity at the mine, which currently treats 900 to 1,200tpd of tin and zinc ore, at recoveries of above 75%. The project has been funded by the US firm Nalex International by way of a ten-year loan. The Ministry of Mining has previously suggested that the new plant will allow an increase in production to just less than 7,500 tonnes of tin and 40,000 tonnes of zinc each year.

Bolivian President Evo Morales, who attended the signing, stated: “We trust the company will meet its commitments… We hope to be here celebrating the new Colquiri plant in three years’ time.” Comibol also opened the US$12M, 2km, Blanca Norte ramp at the site, which provides ore haulage trucks with access to the mine.

ITRI View: The government has indicated that it plans further upgrades to Colquiri with Morales pledging additional funds for development; ITRI has previously learnt that following construction of the new facility, the existing ore dressing plant may be optimised for treating tailings from day-to-day operations and from the tailings ponds, where tin content is estimated at some 0.5% Sn. Total production from Colquiri in 2015 totalled 4,229 tonnes of tin and 15,700 tonnes of zinc.We anticipate that total mine output in Bolivia will grow steadily in the medium term to long term, as a result of ongoing expansion projects in the Bolivian tin industry, including the planned new plant at Colquiri.

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ITRI understands that the new 2,000 tpd plant will be used to treat tin and zinc ore from the mine while the existing ore dressing plant will be optimised for treating tailings from day-to-day operations and from the tailings ponds, where tin content is estimated at some 0.5% Sn. The existing plant is currently processing some 1,200 tpd of tin and zinc ore, with a maximum capacity of 1,300 tpd. The Ministry of Mining has suggested that the expansion will allow an increase in production to just less than 7,500 tonnes of tin and 40,000 tonnes of zinc each year. For comparison, total production from Colquiri in 2015 totalled 4,229 tonnes of tin and 15,700 tonnes of zinc.

The necessary financing has already been obtained, with the US financial firm Nalex having agreed a US $ 75 million loan for the construction of the plant with the Ministry of Mines and the Colquiri leadership in October 2015. The agreement includes a 3 to 10 year grace period and an interest rate of 2.9%.

Empresa Minera Colquiri made profits of just over US $ 5 million in 2015, despite the fall in tin and zinc prices during the year, compared to a combined total of US$ 43.6 million in the previous three years. US$ 40 million of this has been reinvested into construction of a new underground vehicle access ramp, equipment, ventilation and exploration. Economic mineralisation at the mine is understood to be plentiful, with mine officials stating that unpublished tin reserves complying with JORC standards are capable of sustaining current production levels for a minimum of 16 years.

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The executive secretary of the mine workers union at Colquiri, Orlando Gutiérrez, revealed the information as part of a profit warning for the current financial year. He stated that total profits in 2014 were US$ 20 million but were expected to be far below that in 2015, despite the implementation of cost saving measures to ensure an acceptable profit margin is maintained for the operation. The official also stated that there is now peace between the salaried miners who work on behalf of the state and the co-operative miners who operate the higher levels of the Colquiri mine, following a dispute in June.

The company is also lobbying the Ministry of Mining to invest $ 100 million in 8 planned projects to improve production and increase known mineral resources. This includes the acquisition of a 2,000 tonne capacity concentrator plant. Other projects include construction of a new tailings dam, a new water processing plant, and implementation of a diamond drilling exploration program.

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ITRI View: Whilst the larger Bolivian state-run tin mine, Huanuni, recorded losses in the first half of the year and has been subject to urgent cost cutting measures. The Colquiri mine has remained profitable despite the lower tin price and its finances are healthy. The two mines produced a total of 12,361 tonnes of tin in 2014 and both are under pressure to increase production, although this will largely depend on the willingness of the central government to continue funding investments in the two mining operations over the coming years.

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The cooperatives have stressed that they are not in conflict with the EMC, but they have declared a state of emergency in defence of their mining areas. La Razon reported that a recent attack on the air system of the mine, using dynamite and compressed air, caused US$ 300,000 worth of damage. The President of the The National Federation of Mining Cooperatives (Fedocomin), Federico Escobar, has warned that demonstrations and protests are possible should a resolution not be reached, which could include roadblocks during the visit of Pope Francis to the country in July.

Bolivian tin mine production in Q1 totalled 4,654 tonnes of tin-in-concentrate. This represents a rise of 21% compared to Q1 2014 but a 13% decrease compared to the previous quarter. However, tin production from the state-owned operations at Colquiri and Huanuni has fallen 21% from the last quarter to 2,783 tonnes. The current low tin price has affected the Huanuni mine in particular, which reported a US$ 4 million loss in the first quarter of 2015 and has announced a series of cost-cutting measures to regain profitability. It is likely that the ongoing dispute at Colquiri has affected production.

The sustainability of Bolivian production has also been questioned; a preliminary Mining Sector Development Plan, prepared by the Bolivian Ministry of Mines, has highlighted a lack of investment in development of tin reserves by Comibol and mining cooperatives as a medium and long term problem in maintaining levels of tin production domestically.

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The conflict that prompted the nationalisation flared up again at the start of September. Miners, who remain at odds over who has the right to exploit the richest part of the mine’s resources, have been blocking highways and staging protests since 1 September, paralyzing operations. Under the decree that rescinded Glencore’s contract, an independent cooperative that had mined one area of the site was allowed to continue working there. Colquiri’s unionized mine workers accused the independent miners of violating the terms of the state takeover, which was agreed by both sides, and called for them to be barred from the site.

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