In 1545, Spaniards began exploiting a major silver deposit in the mountain later called Cerro Rico near present-day Potosí, Bolivia. The discovery quickly shifted Spanish priorities toward large-scale mining and helped turn the area into a central extraction zone within the colonial economy.
Mercury (also called quicksilver) became essential for separating silver from lower-grade ores using amalgamation methods. Deposits at Huancavelica in Peru were identified in the mid-1560s, and the colonial state moved to control this strategic resource because Potosí’s refining increasingly depended on it.
In the early 1570s, Viceroy Francisco de Toledo reorganized and expanded the mita, a forced labor draft that sent Indigenous workers to Potosí. The policy aimed to stabilize labor supply and raise silver output, embedding coercive labor extraction at the center of the mining economy.
To tighten control over silver and standardize payments, the colonial government established a royal mint (Casa de la Moneda) at Potosí. The first recorded silver coinage began in March 1574, linking mining more directly to imperial finance through minted currency.
From about 1580, large-scale refining using mercury amalgamation—paired with hydraulic mills, reservoirs, and waterworks—helped Potosí process lower-grade ore. This technological and infrastructure shift increased production capacity and reinforced state involvement in the mining system.
By the 1590s, Potosí’s silver was moving through Spanish imperial trade routes and into wider global circulation. Scholarship estimates that in 1591–1600 Potosí silver represented a very large share of the metal circulating internationally, showing how a colonial mine could influence world-scale trade and money supply.
As mining expanded, Potosí rapidly attracted workers, merchants, and officials, becoming one of the largest cities in the Americas by around 1600. This growth created a local economy dependent on supplying mines and processing silver, while also deepening social divisions between Spanish elites and Indigenous laborers.
After about 1600, output began trending downward as the easiest high-grade ores were depleted and mining had to go deeper. Flooding, higher costs, and labor pressures made extraction harder, and a growing share of the workforce shifted toward wage labor alongside the mita.
In the 18th century, Spanish policy shifted toward encouraging production as part of wider reform efforts. The traditional quinto real (royal fifth) on minerals was reduced in many places to a diezmo (one-tenth), cutting the effective tax burden and aiming to stimulate legal output and revenue.
To strengthen oversight of coin production, a major new mint building was erected in the 18th century. Construction is commonly dated from the 1750s into the early 1770s, and the rebuilt facility became a key institution for converting silver into standardized coinage under closer administrative control.
In 1780–1783, the revolt led by Túpac Amaru II began in southern Peru and spread into regions including present-day Bolivia. The uprising targeted colonial abuses tied to labor and taxation and signaled deep tension in the extraction economy that depended on coerced Indigenous work.
By the early 19th century, Potosí’s mining system was under strain from long-term depletion, costs, and political instability. UNESCO notes that activity slowed significantly after 1800, marking a clear shift away from the earlier peak era when Potosí powered colonial finance on a massive scale.
Spanish silver mining at Potosí and its colonial economy (1545–1800)