From 1557 to 1985, the mining industry dominated the Bolivian economy. By 1985, however, the production of every significant mineral in the country had failed to exceed the output registered in 1975. Moreover, the international tin market crashed in 1985. The mining sector in 1987 accounted for only 4 percent of GDP, 36 percent of exports, 2.5 percent of government revenues, and 2 percent of the labor force, compared with 8 percent of GDP, 65 percent of exports, 27 percent of government revenues, and about 6 percent of the labor force in 1977. Spurred by a massive increase in gold production, however, the mining sector rebounded in 1988, returning to the top of the nation's list of foreign exchange earners.

Comibol, created in 1952 and decentralzied into five semiautonomous mining enterprises in 1986, was a huge multimineral corporation controlled by organized labor and the second largest tin enterprise in the world. In addition to operating twenty-one mining companies, several spare-parts factories, various electricity plants, farms, a railroad, and other agencies, Comibol also provided schooling for over 60,000 children, housing for mining families, health clinics, and popular subsidized commissaries called pulperias. By 1986 Comibol employed more nonminers than miners.

Observers severely criticized Comibol's mining policies. Comibol took fifteen years to bring tin production to its prerevolutionary levels. In addition, Comibol failed to invest sufficiently in mining technology and existing mines, and it proved unable to open new mines. Indeed, except for the mid-1960s Comibol did not engage in exploration. In terms of administration, worker control eclipsed even technical and detailed administrative decisions.

The decentralization of Comibol under the Rehabilitation Plan reduced the company's payroll from 27,000 employees to fewer than 7,000 during less than a year. All of Comibol's mines, previously responsible for the bulk of mining output, were shut down from September 1986 to May 1987 to examine the economic feasibility of each mine; some never reopened. Comibol's mining and service companies were restructured into five autonomous mining subsidiaries (in Oruro, La Paz, Quechusa, Potosi, and Oriente) and two autonomous smelting companies (the Vinto Smelting Company and the still unopened Karachipampa smelter in Potosi), or they were transferred to ministries such as the Ministry of Social Services and Public Health or the Ministry of Education and Culture. The bureaucracy also underwent major administrative changes.

For the first time since 1952, the country's medium miners, small miners, cooperatives, and other producers, which made up the rest of the mining sector, produced more minerals in 1987 than Comibol. The medium miners consisted of Bolivian and foreign mining companies in the private sector that were involved in the production of virtually every mineral, especially silver, zinc, antimony, lead, cadmium, tungsten, gold, and tin. Nevertheless, the collapse of tin and the decline in other commodity prices in the mid-1980s also severely affected the private mining sector. Nineteen mining companies with 4,020 employees constituted the Medium Miners Association (Asociaciَn de Mineria Mediana) in 1987, compared with twenty-eight companies and 8,000 workers in 1985. Only 615 mines in 1987 were part of the National Chamber of Mining (Cلmara Nacional de Mineria), the equivalent of a small miners association, compared with 6,300 mines and 23,000 workers before the crash. Traditionally, small miners had to market their mining output through the Mining Bank of Bolivia (Bancco Minera de Bolivia -- Banin), which was also restructured after 1985 into a joint venture of private and public interests. Beginning in 1987, small miners no longer had to sell their exports through Bamin, a policy shift that boosted that group's output and foreign sales. Mining cooperatives and other miscellaneous miners made up the rest of the producers in the mining sector, although their output was aggregated with that of the small mining sector. The National Federation of Mining Cooperatives of Bolivia (Federaciَn Nacional de Cooperativas Mineras de Bolivia) served as an umbrella organization for the country's 434 mining cooperatives, 82 percent of which mined gold. Only a few of these groups, however, were officially registered with the National Institute of Cooperatives (Instituto Nacional para Cooperativas). Most cooperatives were small and consisted of individual miners organized by mine or specific mineral and using very little technology.

Bolivia's mines had produced cassiterite, the chief source of tin, since 1861. Although long among the world's leading tin producers and exporters, the industry faced numerous and complicated structural problems by the early 1980s: the highestcost underground mines and smelters in the world; inaccessibility of the ores because of high altitudes and poor infrastructure; narrow, deep veins found in hard rock; complex tin ores that had to be specially processed to extract tin, antimony, lead, and other ores; depletion of high-grade ores; almost continual labor unrest; deplorable conditions for miners; extensive mineral theft or juqueo; poor macroeconomic conditions; lack of foreign exchange for needed imports; unclear mining policies; few export incentives; and decreasing international demand for tin. Between 1978 and 1985, Bolivia fell from the second to the fifth position among tin producers.