Guatemala Pushes for Reforms to Current Mining Law (Dialogo)

Canada’s Goldcorp operates the Marlin mine in San Ixtahuacan, Guatemala

Several Guatemalan congressmen are pushing to reform their country’s controversial mining law in a bid to prevent further clashes between mining companies and local residents.

The move comes after the government declared a state of emergency in four townships east of Guatemala City in May, following several days of violent protests at a silver mine, which left two people dead.

The current mining law was approved in 1997, but some politicians and academics say it’s outdated. Even though various attempts have been made to modify it, the law still remains in its original form.

Last October, the Ministry of Energy and Mines presented Guatemala’s Congress with a proposal of 34 modifications to the current law, which included social, economic and environmental reforms. However, Congress has not yet approved the proposal, and the conflict between mining companies and local residents continues to intensify.

“The current mining law is not considered efficient, and reforms have always been necessary,” said José Miguel de la Vega, Guatemala’s vice-minister of mining and hydrocarbons. “The proposal will not only allow for technical mining and reasoning from the point of environmental protection, but it will also strengthen the control mechanisms and taxation by the state towards the mining companies.”

Mining has become big business in Guatemala in recent years, now accounting for 2 percent of GDP. However, the country’s current mining law states that companies only need to pay 1 percent of their profits to local communities, which has led to clashes with municipalities and heavy criticism from international pressure groups.

In January 2012, the Minister of Energy and Mines, Erick Archila, implemented a Voluntary Royalties Agreement where mining companies were encouraged to boost the percentage of profits they pay to both the surrounding communities and the state.

ImageGoldcorp, Guatemala’s largest gold mine, produced 382,400 ounces of gold in 2011, earning it $607 million. The company voluntarily signed the agreement, which meant that it paid an extra 5 percent in royalties.

“This is important progress, as other nations like Peru and Mexico receive less or no royalties [from mining]. With the proposed reform, giving royalties will no longer be a voluntary agreement, it will be the law,” de la Vega said.

The proposed reforms include providing communities with more information about projects before mining licenses are approved, granting the government the power to suspend or impose fines for illegal exploration, and increasing taxation on mining companies.

“It is very important the royalties are distributed directly to cover drinking water, environmental cleanup, health services, education and community infrastructure,” said de la Vega.

Guatemala currently receives 200 million quetzales ($25.5 million) from the mining industry. However, that number is projected to nearly double in the future.

“Goldcorp continues to support the government’s efforts to enact a new mining law, which we believe will create a rational and transparent framework for doing business in the country,” said a Goldcorp spokeswoman.

Even though Guatemalan President Otto Pérez Molina presented the reforms again this year, it’s not yet clear when they’ll actually be made. Constitutional changes require a two-thirds vote in the 158-member Congress where the president’s Partido Patriota holds 63 seats. “Congress has its own work schedule,” said de la Vega.

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