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Roman Baudzus writes --
It has been
ten days since production at San Cristobal, Bolivia's largest silver mine,
came to a standstill. Furious mine workers and their unions have demanded
that management provide better working conditions and more reliable medical
protection at the remote site, following the death of a miner early last
month. The company's management and the unions are still at loggerheads. So
far this situation has not negatively affected the world silver supply,
although as of yesterday, exports have been halted.
As data
published by the local authorities show, San Cristobal – located in the
Bolivian Andes – produced 620,000 kilograms of silver in 2009. The
mining company there is the third-biggest silver producer in the world. San
Cristobal is also the sixth-largest zinc producing mine in the world.
However, analysts at commodity markets say that even a shutdown of San
Cristobal for a couple of months would not lead to silver shortages, despite
the concerns of many investors and businesses. Since 2003 worldwide silver
production has breached production records every year. Even if problems
persist at the Bolivian mine, world production totals would be unlikely to
fall.
The
gold/silver-ratio has moved in favour of silver in
the last couple of months. A large number of investors have seen silver as
more affordable than gold – "the poor man's gold" living up
to its name. Owing to this demand, precious metals traders in the United
States and China have warned of supply shortages and bottlenecks. Many
investors are very concerned about a currency devaluation race among leading
nations. Policies pursued by the US central bank, the Federal Reserve (Fed)
are eroding confidence in the dollar, leading many Americans to buy silver.
Many Chinese are also purchasing silver as a hedge against rapidly rising
prices. Demand for silver Exchanged Traded Funds (ETFs) has increased
dramatically during the last years.
Bolivia's
president Evo Morales has urged a quick solution to
the labour problems at San Cristobal. Bolivia's tax
revenues decline by $400,000 everyday the mine
isn't operational. Morales is also increasingly
unpopular in Bolivia. In the middle of February he had to hurriedly leave the
Andean town Oruro after a furious mob set off dynamite explosions. The
protests were sparked by rising food prices combined with government plans to
end food subsidies. According to union leader Lugo, the government should
actively intervene in the dispute between San Cristobal's workers and their
management in order to force changes in managers' attitudes. Until a
resolution to the dispute is found, silver and zinc exports from San
Cristobal to the Chilean ports will continue to be on hold.
Goldmoney.com
All
data and quotes sourced from Reuters.Published by GoldMoney
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