Caribbean & Central America - May 2024

Guatemala’s environment ministry is moving to shut down a gold mine as part of a wider re-evaluation of the sector, the latest move signalling uncertainty for miners in the region.

On 19 April Guatemala’s environment ministry (Marn) announced that it was seeking to cancel the environmental licence for the Cerro Blanco gold mining operation in Jutiapa department in the southeast of the country. Five days before he left office in mid-January, former president Alejandro Giammattei (2020-2024) had authorised Canadian owner Bluestone Resources to turn Cerro Blanco from an underground into an open-pit mine.

Giammattei’s successor, President Bernardo Arévalo, has said he would safeguard natural resources and promised a temporary moratorium on mining as part of efforts to meet the demands of indigenous communities, and wrangling over Cerro Blanco comes after minister for mining and energy Víctor Hugo Ventura said he would revise all recent decisions on mining exploration, exploitation, and export licences, citing corruption in the sector. 

It also follows a December 2023 ruling from the Inter-American Court of Human Rights (Corte-IDH) [EB-24-01], which said that the state of Guatemala had violated indigenous rights by allowing nickel mining on land in El Estor municipality, Izabal department, where members of the Maya Q’eqchi’ community ‘Agua Caliente’ have lived for centuries. The court ordered Guatemala to adopt new laws on indigenous land rights, which are expected to have implications for other mining projects in the country and the region more widely. 

The mining sector in the sub-region was also shaken by Panama’s moratorium on new mining concessions in November 2023, followed by the decision to shut down the massive Cobre Panamá copper mine following nationwide protests [EB-23-12]. Environmental groups celebrated, but the economic costs will be steep: the mine was the single largest private investment in the country, it accounts for some 5% of the country’s GDP, and the shutdown is a major blow to the country’s hitherto investor-friendly image.

However Panama is just the latest Central American nation to impose a mining ban: Costa Rica’s ban has been in place since 2010 and survived a court challenge in 2021; Honduras declared the end of open-pit mining in the country in 2022; and El Salvador made a similar move in 2017.

Nonetheless, it appears El Salvador’s Nayib Bukele, who was re-elected president in February and is due to take office in June, may be angling to revoke the ban, despite fierce opposition from environmental activists. A January 2024 fact-finding mission by the Institute for Policy Studies (IPS), a Washington-based progressive think tank, heard from several organisations that there are strong signs that the Bukele administration wants to restart mining. Sources cited by IPS say that Bukele has asked about the prospects of restarting mining, as well as suggesting that the current secret negotiations of a free trade agreement (FTA) between El Salvador and China includes the possibility of investment in the mining sector. 

IPS adds that in 2021 the economy ministry “included in its strategic goals, the regulation of mining”, and that the Bukele government has joined the Intergovernmental Forum on Mining, a global forum for governments, and requested that it conduct an evaluation of the mining sector in the country. IPS highlights that Bukele has also passed a law to create a new directorate of hydrocarbons, energy and mines that includes metallic mining, despite it being prohibited in the 2017 ban.

IPS also flags up subsequent actions by the government which seem to be “installing administrative capacity for the reintroduction of mining”. It notes that in the 2023 budget the executive allocated US$4.5m to modernise the mining and energy laws, and 2024 budget projections reveal that the government plans to add 140 staff members to the directorate of hydrocarbons, energy and mines.

It adds that land licensed to mining companies prior to the ban was sold last year to Agricola San José, an anonymous company that ostensibly purchased the land for the purposes of farming in an area that is classified as El Salvador’s least arable land. A high-profile case involving five environmentalists that played a key role in the mining ban, who are facing charges that rights groups say have been fabricated by the government, is also adding to suspicion that Bukele is planning to reverse the ban.

While miners are keeping a close eye on the situation in El Salvador, in neighbouring Nicaragua, President Daniel Ortega continues to oversee a massive expansion of the sector.

Most recently, the government authorised two concessions to Chinese firm Thomas Metal SA in Villanueva municipality, Chinandega department, on 25 April. Two days prior, it also authorised a mining concession spanning over 36,600 hectares (ha) to Chinese owned company Nicaragua Xinxin Linze Minería Group SA in the municipalities of Siuna and Mulukukú, in the indigenous North Atlantic autonomous region (Raan). This follows announcements last year of another concession of two lots awarded in the Raan to a Chinese company Zhong Fu. 

This expansion has drawn opposition, with rights groups complaining about environmental and social damage as concessions are being granted in protected indigenous territory. In March a United Nations report concluded that the government had been repressing political opposition in the affected areas in order to further economic control over the autonomous region and expand gold mining, which is a key source of revenue.

Washington has also recognised this, and it applied economic sanctions to the gold sector in October 2022 as part of efforts to pressure the Ortega government over human rights and democracy. Nonetheless, the sector has continued to grow: as of 1 March 2024, mining concessions had been awarded in 23% of Nicaraguan territory. The fact that recent concessions have been granted to Chinese firms is likely linked to deepening relations with Beijing, with links between the two nations strengthening rapidly since they established diplomatic ties in late 2021. 

As mentioned previously, China is also rumoured to be linked to Bukele’s reappraisal of El Salvador’s mining ban, and there is a possibility that Beijing’s hunger for resources could also mean that Honduras comes under pressure to revoke its own ban on new concessions as part of negotiations with China over an FTA, which started in July 2023.

Protests

While both Bukele and Honduras’ President Xiomara Castro would risk igniting protests if they revoked the bans on mining, the promise of more investment or loans from Beijing in return for access to mineral resources could prove attractive to governments struggling with fragile public finances and infrastructure deficits.