CORRECTED-Bolivia moves to end protests hitting silver mines

* Bolivian gov’t seeks talks to resolve protest

* Production at Bolivia’s two top silver mines affected

* High world inventories seen compensating lost output

(Corrects output figures to kilograms instead of tonnes in
story published on Aug. 12)

By Carlos Quiroga

LA PAZ, Aug 12 (BestGrowthStock) – Bolivia’s government sought on
on Thursday to defuse protests disrupting production at three
mines, including two of the world’s biggest silver deposits
owned by Japan’s Sumitomo Corp (8053.T: ) and U.S.-based Coeur
D’Alene (CDE.N: ).

More than two weeks of protests over infrastructure in the
mineral-rich Potosi region have hurt the mainstay mining
industry in Bolivia, a major global producer of zinc, silver,
tin and lead.

Coeur D’Alene said on Wednesday its San Bartolome mine, the
world’s largest pure silver mine, had been shut down for 12
days, while Sumitomo reported its silver-zinc-lead San
Cristobal mine was forced to stop processing ore.

The combined output of the two mines accounts for about 83
percent of the nearly 1.1 million kilograms of fine silver
Bolivia produced in 2009, according to mining ministry data.

San Cristobal was the top silver mine in Bolivia producing
some 620,000 kilograms of fine silver in 2009, according to the
government data.

World silver, zinc and lead prices were not affected by
protests in Bolivia as investors focus on the U.S. economic
recovery, traders said.

Presidential spokesman Ivan Canelas said government
officials were willing to meet with protesters on Thursday,
lifting the condition that they stop protesting first, in what
was seen as a key step to end the protest.

Canelas said the government was concerned about the effect
the protest was having on the mining industry and also social
unrest in the Potosi region, where protesters have blocked
roads and the local airport, stranding foreign tourists.

According to local media reports protest leaders were on
their way to the southern city of Sucre on Thursday afternoon
to negotiate with government officials there.

TOP MINES OFF-LINE

A spokesman for San Cristobal said on Wednesday workers
were still mining ore but the processing plant had been shut
and they were not transporting mineral to Chile for exports.

“We’re deeply concerned about the continuity of our
operations,” San Cristobal said in a statement on Thursday.

Analysts say high world inventories should compensate for a
prolonged output loss in Bolivia.

“The loss of production might last for a longer time, since
protesters seized a power station and are threatening to cut
the mine’s (San Cristobal) power supply,” Commerzbank said in a
commodities report on Thursday.

“Yet the still very high inventories should be enough to
compensate for a possible longer loss of production of this
mine,” the report said.

The San Cristobal mine is the world’s third-largest
producer of silver and the sixth-largest producer of zinc,
according to Sumitomo.

Meanwhile, U.S.-based Coeur D’Alene said in a statement on
Thursday operations at San Bartolome had been temporarily
stalled due to the unrest but that it was maintaining its 2010
production guidance for the mine. [ID:nWNAB7183]

Coeur D’Alene’s local Manquiri unit, which operates the San
Bartolome mine and buys minerals from other mines, produced
some 260,000 kilograms of silver last year, the mining ministry
said.

A Glencore official has said the smaller Porco mine, which
produces silver and zinc had also shut down because of the
protests.

Glencore’s Bolivian subsidiary Sinchi Wayra controls five
small and medium-size mines in Bolivia, including Porco.

Meanwhile, the San Vicente silver mine, controlled by Pan
American Silver (PAA.TO: ) continued operating as normal on
Thursday according to local media reports.
(Writing by Eduardo Garcia; Editing by Lisa Shumaker)

CORRECTED-Bolivia moves to end protests hitting silver mines