In September 2005, US mining company Apex Silver Mines Ltd. held a 100% interest in the mine and was preparing for startup. However, the company had difficulty raising funds because of country risks inherent in Bolivia, and was struggling to start operation by itself. Apex Silver contacted Sumitomo, suggesting an alliance.
“Apex Silver believed Sumitomo Corporation could provide the support that was needed both in marketing and finance, because Sumitomo had substantial experience in importing raw materials from many mines,” said Koichiro Yazaki, manager of the project. Despite the risks identified, construction of the mine had started and all necessary permits and approvals had been obtained. Sumitomo therefore decided to acquire part of the company’s interest in the mine and enter the mining business in Bolivia.
Yazaki said, “Everyone was keen to expand Sumitomo’s business, far beyond just importing raw materials.”
After joining the project, Sumitomo found the situation was worse than expected. Procurement of materials and acquisition of personnel did not go smoothly, resulting in delays in site construction. Finally, production started in August 2007, three months behind schedule.
“It was our most difficult time,” said Shinji Satake, who was involved in the project from the start. Even after production started, it took considerable time before the plant could operate at full capacity due to various problems: machinery stopped and water required for the manufacturing process ran short. “The plant worked one day and stopped the next,” said Satake. Furthermore, operating funds were being used up while production was unable to start out great. Although each issue was eventually solved, there was always uncertainty about when everything would be up and running.
Satake commented, “I was sure this mine was outstanding, a world-class mineral deposit with high potential.” His conviction became a driving force that overcame the difficulties that arose.
“The Bolivian people had a good impression of Japanese companies and people from the outset,” said Masaya Uesaki, who was in charge of negotiations with the local government. One of the reasons is that many Bolivians of Japanese descent living in Bolivia are hard-working and honest. The local residents also appreciate Japanese government aid through official development assistance (ODA), which has been used to build hospitals and schools, drill deep wells to alleviate potable water shortages which is a typical problem in the highlands, and meet other basic human needs.
Good relations with the local community certainly helped the project. While site managers sought ways to improve productivity, Uesaki was busy building relationships with people through negotiations, and strongly felt Japan had to play a central role in the project to make it successful.
The official name of the country is Plurinational State of Bolivia, and it is located roughly in the center of South America. Bolivia is approximately three times the area of Japan, with nearly a third occupied by the Andes Mountains. In this highland country, almost half of the major cities are located at elevations ranging from 2,500 to 4,000 meters.
Bolivia is rich in mineral resources, and has been known for its silver since the 16th century. In recent years, Salar de Uyuni (Uyuni salt lake) has attracted attention for its lithium, which is estimated to hold half the world’s total reserves of the mineral. Lithium is a valuable raw material for batteries to power hybrid and electric cars. Sumitomo intends to become involved in a lithium mining project at the lake.
The history of Japanese immigration to Bolivia dates back 110 years, and today more than 14,000 Bolivians of Japanese descent live in the country. In addition, Japan has provided official development assistance (ODA) to Bolivia for many years for basic human needs, including the construction of hospitals and schools as well as development of waterworks. Consequently, Bolivia and Japan have established strong diplomatic ties, which will be strengthened by the San Cristobal mine as well as projects at Salar de Uyuni.
