POTOSí - In 1670, only two cities in the world had more inhabitants than Bolivia's Potosí: Paris and London. The Andean city had twice as many people as Madrid, whose population was about 100,000 at the time, about 50,000 more residents than Lisbon, and was roughly on par with Amsterdam, the center of the then nascent global capitalism.
What was the secret of Potosí's success? Silver – quite literally a mountain of it. Legend has it that when family meals were over, locals would throw the silverware out the window rather than bother washing it. Eventually, however, the silver ran out. Poverty settled in. It was a textbook example of an enclave economy.
Except as chance would have it, Bolivia may have an opportunity to ride that same economic rollercoaster all over again. South American Silver, a Canadian company, estimates that a deposit called Mallku Khota, located north of Potosí, contains some 230 million ounces of silver – worth about $6 billion.
In addition, the site contains some 1,481 tons of indium and 1,082 tons of gallium, valuable 'rare earth' minerals used in electronics manufacturing and modern defense systems. Mallku Khota, according to a South American Silver company report, could turn out to be “one of the biggest silver, indium and gallium deposits in the world.” The estimate is that annual production will reach more than 13.2 million ounces of silver during the first five years of production.
But first, some $50 million are needed just to quantify what and how much of the various minerals the site contains. The company faces other challenges as well, particularly in the form of local opposition. Upset about South American Silver's prospecting efforts, residents from nearby communities took two police officers hostage in May. The conflict was resolved a few days later when Bolivia's mining minster, Mario Virreira, struck a deal with community leaders. But the accord is fragile: for environmental reasons, two of the area's 46 communities continue to oppose the mine.
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