bnamericas | 17 May 2022
Miners face headwinds in Guatemala despite consultation push
Mining companies are continuing to face political and community headwinds in Guatemala, as authorities push on with consultations needed to lift suspensions that have crippled the industry in recent years.
Guatemala’s three main foreign-owned mines – Pan American Silver’s Escobal primary silver asset (in picture), Kappes, Cassiday & Associates’ (KCA) Tambor gold operation and Solway Investment Group’s Fenix ferronickel mine – have been suspended in recent years due to injunctions filed by local NGO Calas, which argued that local indigenous communities were not consulted by the energy and mines ministry (MEM) in the licensing process.
Indigenous communities are entitled to prior consultations over projects which could impact them under International Labour Organization (ILO) Convention 169, to which Guatemala is a signatory.
MEM is seeking to swiftly lift the Escobal and Tambor suspensions after successfully completing a court-mandated consultation with indigenous communities around the Fenix mine late last year. The mine restarted operations in January.
But companies are continuing to face uncertainty over the timing of potential restarts, while opponents have sought to challenge the validity of the consultation at Fenix.
At the Solway mine, residents have appealed to the constitutional court to halt operations, and claimed that the consultation should be repeated following a ruling by the court in April.
“In simple terms this [constitutional court ruling] means that the consultation with indigenous communities by MEM was conducted in an illegal way,” Rafael Maldonado, lawyer for the litigants, was quoted as saying by local daily Prensa Comunitaria.
“The litigants attended the supreme court, showing all the irregularities committed by MEM and the court decided to ignore all the action that they presented.”
But Solway said the ruling does not establish that the consultation should be held again, but only obliges the supreme court to consider an earlier application by the amparists [litigants] last year and notify them of the court’s decision properly, according to a statement sent to BNamericas by the company’s press office.
“Fenix operates legally on the basis of the license issued by the MEM on January 6, 2022,” it added.
At Escobal, MEM said in late March that it aims to finish the ongoing consultation within months, but Pan American has taken a cautious approach in its assessment of the timeline.
CEO Michael Steinmann told an earnings call last week that there is a “richer schedule” this year, with many consultation meetings planned, following delays due to COVID-19 in the last two years.
“[I am] definitely encouraged with that schedule that we see now and hopefully, COVID-19… stays in check in the world for all of us,” he added.
Pan American has kept the suspended mine on care and maintenance, investing to keep the underground part and the mill in good shape.
Any potential restart would require a few months of work, including hiring workers and replacing some underground equipment, Steinmann told the call.
Escobal was one of Latin America’s biggest silver producers, with output of around 18-21Moz/y under former owner Tahoe Resources.
MEM is also seeking to complete a new consultation which could pave the way for a restart at KCA’s Tambor gold mine by year-end.
But it remains to be seen what impact this would have on the asset as the company is pursuing an arbitration claim against the government over the suspension.
In the latest development posted on the International Centre for Settlement of Investment Disputes website, the tribunal held a hearing on jurisdiction, merits and counter-claim by video conference from February 28 to March 11.
Guatemala ranked fourth lowest out of 76 jurisdictions globally for investment attractiveness in the 2019 Fraser Institute Survey of Mining Companies but has since dropped off the list due to a lack of industry responses.