The Great Tin Crash: Bolivia and the World Tin Market
108
The Great Tin Crash: Bolivia and the World Tin Market
108Paperback
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Overview
Product Details
| ISBN-13: | 9780906156292 |
|---|---|
| Publisher: | Latin America Bureau |
| Publication date: | 01/01/1990 |
| Series: | Latin America Bureau Ser. |
| Pages: | 108 |
| Product dimensions: | 6.00(w) x 9.00(h) x (d) |
About the Author
John Crabtree is a freelance consultant, editor, writer, broadcaster and teacher on Latin American issues. He has lived and worked in Peru and Bolivia as a journalist and analyst, and is currently based in Oxford, UK.
Read an Excerpt
CHAPTER 1
'Even the mice are leaving ...'
'We housewives are desperate because we have nothing to take home. The pulperias [company shops] are empty; even the mice are leaving because there's no food. Our husbands are going to work on nothing. All we have to eat each day is bread and sultana water [a drink made with coffee bean husks]. Our children are falling asleep at the school desks because of empty stomachs. We have had to give them even less to eat. For example, if we have some bread rolls we have to share one between three or four of us and try to sell the rest to buy other foods such as vegetables and sugar. They don't kill us with bullets any longer but through hunger. Bullets would be preferable to this.'
Miner's wife from Siglo XX
Bolivia's tin miners are facing the gravest moment yet in the history of the mining communities. Long-term crisis in the mines combined with the collapse of the world tin market threatens the very future of tin in Bolivia. At stake too, is the future of the most combative workers in Bolivia and, some argue, in Latin America as a whole. The Bolivian miners have long challenged the country's political as well as economic order, taking on the army in many a bloody battle. The fate of tin is also the fate of their political project: a far-reaching transformation of Bolivia's economy and society towards the interests of the poor majority.
The Bolivian government, headed by the conservative politician, Victor Paz Estenssoro, came to office in August 1985 committed to 'shock treatment' to solve the country's financial crisis. Devaluation, a wage freeze and an end to subsidies on food and fuel paved the way for a deal with the International Monetary Fund (IMF), enabling the country to reschedule its debt. The collapse of the price of tin further reduced government revenue, creating even more difficulties for an already crisis-ridden economy. The government has announced the 'restructuring' of the state mining company, Comibol, with massive job losses.
The miners' traditional weapon for defending their rights, the strike, is no longer appropriate. The low price of tin has destroyed their bargaining power. Strike action only releases Comibol from obligations to pay wages and hastens the demise of the industry. The miners have few weapons left to resist government policy, which since the austerity measures of August 1985 has fallen very heavily upon them.
The end of subsidised food, for instance, was a particularly hard blow for miners and their families. The government previously subsidised four basic products — meat, bread, sugar and rice — a subsidy which was worth between one-third and one-half of the miners' income. Without it, basic items of food are beyond the reach of most families. Although inflation has been reduced, the price index rose 174 per cent between August 1985 and August 1986. Some basic goods have risen even more; sugar went up 61 per cent between June and August 1986 and potatoes by 50 per cent.
Miners' wages were frozen at the equivalent of US$60 per month in August 1985; one year later they had fallen to US$43. Because their debts to the mining company are deducted each month, most miners have in fact received no cash wages for many months. These debts have accumulated, beginning with the change in salary levels in August 1985. Two advance payments were made at that time and a special Christmas payment was negotiated by the miners' union, all of which were subsequently deducted from wages. The cost of food bought at the company store is also deducted from wages and this has traditionally kept the miners in debt to the company.
However, cash alone would not solve the food problem in the mining areas. With Comibol virtually bankrupt, the company stores have almost nothing to sell. A British aid worker visited the Catavi company store in March 1986 and found the shelves empty. 'The place echoes,' she writes, 'the women standing here tell us that there has been no bread for months. Many start to cry as they explain that their husbands have received only 'stars' [indicating a negative balance] on their payslips since October after all the deductions. Most leave with their shopping bags empty.'
Most families now have to live on one meal a day of bread, bean leaves and bean and potato peelings. They drink a tea made out of boiling coffee bean husk. Nutritional levels have fallen as people feel the effects of the poor diet. Poor living conditions have exacerbated the problem. The miners' houses, which belong to the company, are falling apart; rain leaks through the rooves.
The miners have had to pawn or sell their few possessions in order to survive. Some have sought temporary farm work at harvest time to supplement their incomes. Others have tried to grow their own food, planting beans on waste ground or in small plots on hills nearby. But most mines are at altitudes of 4,000 metres where very little grows. Mineral theft, juqueo as it is known, has increased as the struggle to survive has intensified, along with more serious forms of crime and delinquency.
The company hospital in Catavi has no medicines; it has been known to turn away women who have arrived to give birth and people have died from lack of attention. 'You die quicker in the hospital than at home', said a miner interviewed by a Bolivian human rights organisation. 'People no longer want to go into hospital because they've no confidence in it anymore. Specialists have left because Comibol offers such low salaries. There are no drugs and the only prescriptions given are for tranquillisers. Worst of all is the food, it consists of watery soup with a few noodles. The workers prefer home remedies to those of the hospital.'
For most of 1986 many miners, with broken helmets and worn out boots, continued to work despite their empty stomachs and the deteriorating conditions in the mines. They hoped to show that Comibol could be saved (see chapter 5). Comibol and the government, on the other hand, were preparing for closures. There was no investment in basic spare parts for machinery and frequent delays in supplying diesel to keep the mines working. The following report of conditions in Siglo XX appeared in the Bolivian newspaper, Aqui (3-9 May 1986):
Seventy per cent of the engineering workshop is out of action for lack of spare parts. There are no tools nor the most basic materials. You only have to visit the tunnels in the Beza section or Block 4 to feel how unbreathable the air is and fill your lungs with the thick dust which causes so much sickness in the mine.
'There is no air in here. A compressor has broken and there's no wire to repair the winding mechanism. Look at my mask. I only changed it a moment ago and it's already full of dust. The alarm isn't working. When we explode dynamite, we have to shout a warning ... Apart from that, we don't have machines and tools. There are no spare parts.'
'What can we work with?' asked another miner. 'No brother, you cannot do with your hands what should be done by machines.' 'And you cannot work on an empty stomach', said another. 'Men are fainting in the mine with hunger. We don't have medicines for them and often there are no wagons to take them out of the mine. You just have to wait and let them recover by themselves ... How can we produce without food?'
The labour force in the mines is now greatly reduced. Those over 60 were forced to retire early in 1986 and voluntary retirement offered to those between 50 and 55. Many married women employed by Comibol also lost their jobs, including doctors, nurses and teachers. Gradually, increasing numbers of miners, encouraged by government offers of redundancy pay, opted to leave the mines on their own accord. Morale became very low in the face of increasing hardship. 'The situation' a miner from Huanuni told a journalist in May, 'is desperate and disastrous, there is such total demoralisation amongst the workers that lately production has fallen 50 per cent.
By August 1986, the total workforce had fallen to 19,000. One-third of Comibol's workforce had either left or been removed from their jobs. By the end of the year an estimated 18,500 Comibol miners and other personnel had handed in their voluntary resignations. Priority has been given to funding redundancy payments. As Comibol has no funds for such purposes, money has been taken out of the 'Social Emergency Fund' created with support from the United Nations and originally intended to generate new sources of employment through reactivating the productive sectors of the economy. In September, the government proposed putting more funds into the redundancy programme, but the FSTMB rejected its offer. Many miners went on hunger strike in a bid to secure a better deal. Agreement was reached between the FSTMB and the government in January 1987. Workers dismissed since the 1985 tin crash will receive US$35 for every year they have worked in the state mining industry (the miners had demanded US$750). There would also be bonus payments of US$1,500 to help miners 'relocate'. These figures are grossly inadequate for miners who have given years of service to Comibol and will do little to ease the misery of those losing their livelihoods (see box below). Many still doubt the ability of the government to find the redundancy money they have promised.
The future for miners who leave their jobs is bleak. Redundancy payments will only pay off debts or buy a few basic necessities. When the miners leave the mines, they must also leave their company house and their children must leave the company school. There are few prospects of work in Bolivia for a redundant miner. The Central Bank put unemployment at 20 per cent at the end of 1985. The COB estimated that open unemployment for 1986 will be nearly 30 per cent. Others suggest that real unemployment may be as high as 50 per cent. A total of 30,000 workers (including 8,000 Comibol employees) lost their jobs between August 1985 and August 1986. Most of these people will join the thousands of Bolivians who today live in conditions of absolute poverty (see box on page 15).
The government talks of 'relocating' miners who have lost their jobs, which means finding them work in other mining ventures or in colonisation programmes in tropical areas. However, no colonisation schemes have actually been implemented. Much infrastructural investment would be needed to provide services for the people in the areas concerned. A miner from Siglo XX described his situation:
What are those of us who leave going to live off in the towns? Our redundancy money won't last long. Our only option is processing cocaine paste and perhaps gold mining, but without any of the basic services we are used to, such as health care and education. None of us have our own houses, and the company will throw us out. We only have a few belongings and some of these are pawned.
Some of the miners have headed for the towns, some back to the countryside around the north of Potosi and Cochabamba from where many ofthem originate and still have relatives. Others have headed for Chapare, seeking work treading coca leaves (see box on page 21). Many, such as this miner from Huanuni, are leaving the country:
There's no point in staying in the mines any longer. The government has stopped all subsidies in the pulperias, frozen our wages and restricted overtime. I'm also going to leave, but I shall go very far away where there are better standards of living and more jobs, like Argentina. Two weeks ago, nine families from Huanuni went there. Because in our country there are no guarantees of anything, and the future is very uncertain.
CHAPTER 2How mineral commodity markets work
The following describes the visit of a Bolivian miner, Higon Cussi, to London:
His first London visit is to the place where the permanent link between Bolivia's poverty and our wealth is forged — on the floor of the London Metal Exchange ...
Higon is amazed. He can't see any tin. 'I imagined that they would show samples — not that they would just do it by talking.'
Christopher Green ... a director of the London Metal Exchange, explains to him just how it works. 'Instead of passing over pieces of metal we pass over pieces of paper. These are documents of title to tin which is kept in warehouses.'
'But all this shouting about prices', says Higon, 'takes no account of the human effort which goes into the production of the metal.'
'The price is determined by the international conjunction of supply and demand', explains Green kindly. 'Members here will be aware of the hardship that goes into the production of tin. But this market is just one process in the long chain of bringing metal to where it is needed.'
'I still think that the human contribution should be given more importance, so that the workers are given a fairer price.'
'That doesn't come into the calculation of the price. This is made by the international conditions ruling in the tin market overall.'
New Internationalist, January 1984
Mineral commodities, of which tin is an example, are produced in widely differing countries all over the world. At one end of the scale is the rich USA, a producer of many minerals, which has been extensively explored for new and cheaper supplies. There, production takes place using the most modern methods and workers are well paid, by international standards. Communications are good and machinery and energy sources are readily available. Workers have access to a plentiful supply of consumer goods.
At the other end are the poor countries of the third world, in particular those who are heavily dependent on the foreign exchange earnings from a single mineral product — such as bauxite, which is used to produce aluminium or, in the case of Bolivia until recently, tin. Although in some places the most modern technology is imported, in general conditions are very different from those in North American mining. One striking result is that workers mining the same metal can have hugely different standards of living. Cornish tin miners, for instance, earn far more than those in Bolivia. Both, however, are at the mercy of the world tin crisis.
The crash of the tin market is creating human tragedies around the globe and nowhere more so than in Bolivia. Behind this crash are apparently 'impersonal' market forces, whose victims, however, are amongst the poorest countries and the most impoverished of the world's workers.
The nature of these 'impersonal' forces is not obvious to anybody outside the specialised world of metals. Easily visible phenomena such as the London Metal Exchange, volatile prices and a general idea of supply and demand by no means tell the whole story. Behind them is a complex system of interactions. These include, for instance, the geological conditions in every mine and the variety of possible mining methods for individual mines, each with a different cost and yield. Similarly, there are a wide range of uses for the mineral, again with a variety of techniques and possibilities of substitution of one material by another. This complex system is barely comprehensible even to fulltime market analysts. This is because the market is not specifically the physical place of the London Metal Exchange or even the internationally linked groups of traders and brokers. The market is the whole network of underlying technical factors and all the people making local decisions in relation to them.
Free market economists argue that individual producers or consumers do not need to understand all this. It is only necessary that all producers know their own costs of production (or, for consumers, how much they have to spend) and the price which the market determines. The rest of the information has been distilled from the network of interactions into one number: the price. For such economists, it is impossible to design a better system. If change occurs, either it will do so smoothly (if everyone behaves normally) or, if there are sudden changes, then it is best to leave well alone and let the market do the organising.
This view ignores the fundamental nature of capitalism: an urge to change which was unknown in any previous economic system. By forever revolutionising the means and methods of production, capitalism seeks constantly to expand. Each individual entrepreneur in search of higher profits provides a small part of an overall dynamic. The application of scientific knowledge and techniques and the constant reorganisation of economic life are fundamental. Booms and slumps — sudden changes — are an accompanying feature of the system.
In mineral commodity markets, for example, change is built into the process in a very fundamental way. Old mines become exhausted or their production costs rise as more difficult geological conditions are encountered. New technology, economic recession and shifting patterns of consumption all change demand. The costs of adjusting to these uncoordinated changes are left to lie where they fall, and are usually borne by the weakest in society. The system is fundamentally wasteful of the resource which lies at its very foundation: human beings.
(Continues…)
Excerpted from "The Great Tin Crash"
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Copyright © 1987 Latin America Bureau (Research and Action) Limited.
Excerpted by permission of Practical Action Publishing.
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Table of Contents
Map of Bolivian tin mining areas, iv,
Bolivia — statistical profile, 1,
Introduction: The great tin crash: tin miners carry the can, 4,
1 'Even the mice are leaving ...', 14,
2 How mineral commodity markets work, 23,
3 The story of tin, 38,
4 Bolivia and tin, 57,
5 Bolivia: the end of the tin era?, 83,
Conclusion: From Geevor to Siglo XX and the lessons of the great tin crash, 92,
Selected bibliography, 103,