OTTAWA: South American Silver said Friday it will try to negotiate with Bolivia or seek compensation through international arbitration after La Paz expropriated the Canadian firm's silver and indium mine.
“We will continue to pursue all channels available to us,” South American Silver president Greg Johnson said in a statement.
“This action plan includes the prospect of negotiating a resolution of the situation with the Bolivian government, or, if required, the pursuit of compensation for the full value of the project through international arbitration.”
The statement comes a day after Bolivian Mining Minister Mario Virreira said a decree had been issued authorising state control of the mine located in the country's southwest.
The decision to expropriate the Malku Khota mine follows weeks of protests at the site by indigenous leaders calling on La Paz to take over the facility.
In June, farmers and mine workers, some armed with explosives, forcibly occupied the site.
One person died and several others were injured during a prolonged standoff last month that also saw protesters take a total of seven hostages, including five Bolivians employed by South American Silver. Four of the captives escaped and the others were later released.
South American Silver said it had received “numerous assurances, including a signed accord with the minister of mines” saying its concessions “were confirmed to be valid” and that the company should continue its exploration.
It also said “Bolivian ministers are on record as having recently stated...that foreign private investment would be respected and protected under the constitution.”
The company added it is “very disappointed” with the expropriation.
Bolivian officials have denied the government had ever signed an agreement with South American Silver to operate the mine, which boasts one of the world's largest untapped resources of silver and indium, a rare metal used in flat-screen LCD televisions.
South American Silver had planned to invest $50 million until 2014 into the mine, which also explores gallium deposits. A subsidiary of the Canadian firm has managed the mine since 2007.
Gallium is used in microelectronics.