South American Silver wins arbitration case vs. Bolivia

Bermuda-based South American Silver was awarded a US$28mn settlement in its arbitration case against Bolivia after the state seized a silver deposit, the second case the Andean country has lost this year.

An arbitration tribunal at The Hague ruled in favor of a US$18.7mn payment plus US$9mn in interest for the 2012 expropriation of the company's Malku Khota silver-indium-gallium project, Denver-based parent company TriMetals Mining said in a statement.

The company, which had sought US$307mn in payment for the deposit, now valued by Bolivia at US$8bn, said it may appeal as it deemed the settlement insufficient.

"We are disappointed at the outcome of the international arbitration process and especially with the quantum of damages awarded to South American Silver, which we consider insufficient and are still evaluating," CEO Eric Edwards said in the statement. "We expected a more properly reasoned, just and fair outcome and an adequate amount of compensation as opposed to simply awarding amounts invested or 'sunk costs' resulting from Bolivia's illegal conduct."

Bolivia, which has seized assets from dozens of companies including South American Mining, Glencore, Quiborax and Jindal Steel, has had to pay US$800mn in arbitration suits filed by 14 companies to date, according to the attorney general's office.

World Bank arbitration court Icsid ruled in favor of a US$48.6mn award to Chilean company Quiborax in May for the expropriation of its Salar de Uyuni ulexite concession in 2004.

President Evo Morales, who set out to tighten the state's grip over the economy by nationalizing dozens of companies since first taking power in 2006, hailed the ruling as a victory, claiming Bolivia's lawyers prevented the company from receiving a US$385mn settlement.

"We salute the success of our team in the legal defense of the state's interests in the Mallku Khoita case," Morales wrote via Twitter. "The arbitration tribunal ruled we were 100% right in the process with South American Silver."

Morales, who plans to run for a fourth consecutive presidential term in 2019, has pledged US$48.6bn in mining and infrastructure investments over the next five years, but his government is struggling to line up financing as private investment has slowed.