Mining Debate in Guatemala Rages On

Mining Debate in Guatemala Rages On
Written by Danilo Valladares
Thursday, 16 February 2012 09:00

(IPS) – “No one will pay for the damages when work at the mine has
finished,” says María del Rosario Velásquez, who lives in a town near
the Oasis mine 100 km southeast of the Guatemalan capital.

The Canada-based Tahoe Resources company plans to extract gold, silver,
zinc and lead from the mine.

Velásquez is not so sure that the mine will bring benefits to her
hometown, San Rafael Las Flores. But she is sure of the risks that it
poses to the environment.

“We know it will cause a great deal of pollution, which is why we are
opposed to this project. The only one here benefiting from this is the
mayor,” she told IPS.

Anti-mining sentiments flared up again in Guatemala after the new
right-wing president, retired General Otto Pérez Molina, signed a
“voluntary agreement” on Jan. 27 with the extractive industries business
association, to increase royalties paid by the companies. The deal will
be in effect until an amended mining law is passed by Congress.

In the accord, which is non-binding, the industry agreed to increase
royalties from one to five percent for gold mining, from one to four
percent for silver, and from one to three percent for metals like
nickel, lead and zinc.

But the royalties paid by quarries extracting lime, cement, marble and
stone – which also cause environmental problems in this impoverished
Central American country – will remain unchanged at one percent.

Pérez Molina says the increase in royalties, which according to the
government’s estimates will rise from 53 million dollars a year to
between 80 and 93 million dollars, is a major achievement.

However, not only is the increase voluntary, but the agreement states
that it will not be applied if international prices drop below 975
dollars per ounce for gold (the current price is 1,730 dollars) or below
16 dollars per ounce for silver (now at 33.70 dollars).

Environmentalists, universities and local communities opposed the
agreement, arguing that the debate on the activities of the mining
industry must go beyond the issue of royalties and take into account
questions such as natural resources, the environment, the development of
local communities, and what real benefits the industry brings to the

Velásquez says her community will see no benefits from the rise in
royalties to be paid by the mining industry, which on the other hand
“will definitely cause us harm.”

Raúl Maas at the Rafael Landívar Jesuit university’s Institute of
Agriculture, Natural Resources and the Environment told IPS that mining
of precious metals like gold and silver should be suspended in the
country “because the conditions are not in place for it to be adequately
carried out.

“The activities of this industry should be based on three basic
criteria: they should be sustainable, profitable, and socially and
environmentally responsible,” he said. “But in the case of Guatemala,
only the second one is met.”

The expert said the voluntary agreement on mining royalties is not
sustainable “because there is no law to enforce it. At any rate, these
discussions must go beyond whether we charge royalties of five, six or
seven percent.”

Maas said Guatemala needs to decide what kind of development it wants.
“But the environmental impact of mining is an issue that has not been
addressed, and the clean-up of damaged areas is not included in the
current mining law.

“Our institute is calling for a ‘national environmental pact’ on these
issues, because mining activity undermines the access of communities to
a strategic resource: water.”

The mining industry is booming in Guatemala, with revenues soaring from
nine million dollars a year in 2004 to 522 million dollars in 2010,
according to the Ministry of Energy and Mines.

The Guatemalan association of mine, quarry and processing companies,
GREMICAP, estimates that the industry will invest 2.37 billion dollars
in the period 2010-2016, pay 280 million dollars in taxes and royalties,
and generate some 16,000 direct jobs.

But environmentalist Magalí Rey told IPS that “the mining of precious
minerals should be suspended until we have a decent law and society has
participated in a debate on the implications of and earnings from the

“In order to support continued mining activity in this country, the
people should be consulted in a referendum on whether or not they agree
with this activity,” she said.

The activist said the voluntary agreement on royalties “makes a mockery
of the Guatemalan people” and argued that its only aim is to “whitewash
the companies’ image, so mining activities will be accepted.”

Rey clarified that it is necessary to make a distinction between
different kinds of mining. “Gold mining is not the same as iron ore
extraction,” she said.

“In 80 or 90 percent of conflicts over mining at a global level, gold is
involved,” she said.

To boost its economy, Guatemala should pursue alternatives like
ecotourism, the activist argued. “We are rich in living cultures and
biodiversity, we are a country blessed with wealth in these areas, but
we are tearing it apart.”

Natalia Atz with the Ceiba Association, a community development NGO in
Guatemala, told IPS that her organisation is concerned that the views of
local communities on mining activities in their areas are not being
taken into consideration.

“In this country, 58 community referendums have been carried out since
2005 to ask people if they are in favour of mining activities in their
areas, and in every single case the response was a rotund ‘no’ – but the
government has ignored them,” she said.

“The damages to water sources, and deforestation caused by the mining
companies are not compensated by five percent royalties. They should
take into account the opinions of the people and promote local
development and productive projects,” the activist maintained.

Meanwhile, Mario Marroquín, with the association of extractive
industries, GREMIEXT, has said that although no legislative reforms have
been carried out to increase royalties, “the entire mining sector is
committed to the agreement and to making the voluntary payments,
starting this year.”

The new royalties are similar to the rates paid by companies in Peru and
Brazil, and the revenue will mainly go towards “improving the quality of
life of communities near the mines,” the businessman said.

He also pointed out that the industry pays other taxes, such as income tax.

“The idea is not only to contribute to improving state revenues, but to
guarantee the sustainability and competitiveness of the industry,” he said.


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