Guatemala introduces sweeping mining law reforms

Guatemala introduces sweeping mining law reforms

Guatemala’s Union of Extractive Industries says it will not support sweeping reforms to the nation’s Mining Act, which include permanent royalty increases and the creation of a state mining company.

Dorothy Kosich –

25 June 2012

RENO (MINEWEB) – The Ministry of Energy and Mines (MEM) has introduced amendments to 30 articles of the country’s Mining Act, one of which would require 147 companies with operating licenses to pay new royalty rates.

The amendments would also replace a voluntary agreement signed earlier this year between the mining industry and Guatemala’s President Otto Perez Molina which increased the royalty rate on gross revenue by 400%. Gold and silver companies now voluntarily pay 4%, while base metals pay 3% and industrial minerals remained at 1%.

As a result the state is expected to reap royalties between Q600 million (US$76.38mn) to Q700 million (US$89.11mn) this year, up Q500 million (US$63.65mn) more than previously paid by Guatemala’s mining industry.

The legislation also proposed the creation of a state mining company to possibly encourage government participation in Guatemala’s mining and oil projects.

The MEM amendments would also establish a mining fund to distribute incomes from royalties including 35% to the community where the mine is located and 20% for the remaining communities in the department in which the mines operate.  Guatemala’s Ministry of Social Development will get 20% of the royalties, the fund for national disaster emergencies 20%, and MEM and the Ministry of the Environmental and Natural Resources would receive 3% and 2%, respectively.

The legislation would also create a national system of mining information, as well as regulations for the reclamation of abandoned mines in Guatemala.

The MEM also proposes a crackdown on illegal mining in the country including the disposal of materials and chemicals in rivers.

A Mining Council, chaired by the Ministry of Energy and Mines, would be convened to develop a vision plan for mining both at the local and national levels. Council members would include the Ministry of the Environment and Natural Resources, the Ministry of Planning and Programming for the Presidency, a representative of the mining sector association, the Union of Extractive Industries (Gremiex), and a representative of the National Association of Municipalities.

However, Gremiex issued a statement, stating that the organization does not support the reform submitted by MEM because mining companies have not had a chance to review the contents of the legislation.

Gremiex said they were surprised that the MEM submitted reform measures to the Mining Act without reaching a consensus with mining and exploration companies.

Among the mining and exploration companies doing business in Guatemala are Goldcorp’s Marlin operation and Radius Gold’s El Tabor gold mine.


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