MAC: Mines and Communities

Mining Authorities Confront Environmental Protests - Central America

Published by MAC on 2006-06-28
Source: BNAmericas

Mining authorities confront environmental protests - Central America

BNAmericas FEATURE

28th June 2006

In the second week of June, several non-governmental organizations (NGOs), including ecologists and rural dwellers in Central America, reactivated a campaign to protest development of mining projects, citing risks to the region's biodiversity.

Protests were organized in countries including Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica, based on the argument that multinational companies have obtained lands with assistance from the government but without consulting communities.

BNamericas spoke with mining authorities in each of the affected countries to learn their
reactions.

GUATEMALA

In spite of protests, mining operations in Guatemala continue to develop without any setbacks and licenses continue to be awarded in accordance with the law.

"If they abide by the law it is our responsibility to award licenses," Fredy Gálvez, Guatemala's mining director told BNamericas.

Faced with anti-mining protests, Guatemalan authorities have worked to reach a consensus between the energy and mines ministry and groups looking to change mining legislation.

"As the mining ministry, in Guatemala we work with a high-level commission that was named to propose modifications to the mining law. The product of this commission will be discussed by the national congress," he said.

"We hope that the congressional energy and mines committee respects the agreement and that its ruling on the consensus will be favorable," he said.

Reno-based Glamis Gold (NYSE, TSX: GLG) operates the Marlin gold mine in Guatemala where 2006 output is targeted at 620,000oz.

HONDURAS

In Honduras, Gabino Carvajal, president of the national mining association (ANMH), said that protests are "absolutely negative in terms of new mining investments and in terms of the future of companies in the nation."

"We don't know what the [government's] decision is but the first official reaction we have is that they won't award concessions or environmental permits so no one will be able to mine in the country," he said.

Planned investments in the country which required exploration permits are moving on to other countries, "because of the government's indecision regarding support for the industry and the creation of so many obstacles, making it impossible to allow mining activity," he said.

Peter Hughes, chairman of Honduras' mining promotion board (Defomin), agrees that
exploration investments in the country have fallen.

"Some companies are selling their rights in some areas, which indicates that there are companies leaving the country," said Hughes.

In the short term, companies will not wait for a positive response, given the interference from international NGOs and the government's negative attitude, according to Carvajal. "For now, we hope that the issue settles down but at this point it is really complicated," he said.

In Honduras, Toronto-based Breakwater Resources (TSX: BWR) operates the El Mochito project. In the first quarter of 2006, El Mochito produced concentrates containing 23.1Mlb (10,478t) of zinc, 5.6Mlb of lead and 429,368oz of silver.

This year, the company expects to drill close to 40,000m to confirm the extent of the El Mochito mineralization.

In addition Entremares, a subsidiary of Glamis Gold, works the San Martín gold mine.

EL SALVADOR

"What we see is that the situation entails conflict, not just for the country, but also for the region, in this case Guatemala, Honduras, and El Salvador," said Silvio Ticay, head of geology and chemistry at El Salvador's mining directorate.

To slow the effect of anti-mining protests, the government has created a number of miners forums, where it was recently discovered that the environmental movement is being supported by foreign organizations.

In response, Ticay explained that the government is working "on proposing a new mining law that involves not just aspects of integral development for communities where projects are located, but one that considers the environmental issue as well."

The government is also looking for advice from countries with developed mining industries and which have mining models demonstrating what can be done in the sector and how the models are benefiting communities, said Ticay.

"We are currently creating reference terms to contract an advisor that will give us a diagnostic of current mining, to define all the players that are involved, and to be able to
determine how mining policy is going to be directed," he said.

Vancouver-based Pacific Rim Mining (TSX: PMU) operates in El Salvador. In mid-June it announced that an updated resource estimate at its El Dorado project had increased measured and indicated resources to 1.22Moz of gold equivalent thanks to results from its South Minita deposit.

The company will continue drilling on targets within the El Dorado concessions, on the nearby Santa Rita discovery and on the early-stage Zamora project, all in El Salvador.

Toronto-based company Intrepid Minerals (TSX: IAU) is also exploring its San Jacinto gold prospect in the country.

NICARAGUA

Another country that has felt strong opposition to mining development from municipal authorities and environmental NGOs is Nicaragua.

"We are aware that they work in very close collaboration," said Carolina Castellón, director of the country's national geological resources administration Adgeo.

"This type of protest has paralyzed a good part of the mining concession-granting process. It has had a negative effect," she added.

In response to this situation, natural resources authority DRN, which Adgeo depends on, has carried out community workshops and is working more closely with the communities to properly provide them with information.

"We have made a number of efforts and we will keep doing that because we still have a grave problem, which despite these activities, we have not been able to alleviate," the official said.

The entity also hired a consultant service to establish parameters so that, when municipal authorities oppose awarding a mining concession, there are more specific criteria to justify the opposition instead of simply saying that they are against it or that it is an environmental issue, Castellón explained.

In May, Canadian miner Glencairn Gold (TSX: GGG) acquired the producing La Libertad gold mine in Nicaragua, which in 2005 produced some 34,000oz. The company aims to increase production to some 45,000-55,000oz/y and maintain that level for 6-7 years. Glencairn also has the Limón gold mine in the country.

COSTA RICA

Upon taking control in 2002, Costa Rica's President Abel Pacheco announced that his government would not award licenses for open pit mining because of the negative environmental impact of such activities and the subsequent effects on the country's growing tourist industry.

There are currently no protests in Costa Rica, "but this isn't to say that there won't be opposition," said Katia Chacón, communications manager for the company Metales Procesados, a subsidiary of Toronto-based Glencairn Gold.

Glencairn (TSX: GGG, Amex: GLE) is developing the Bellavista gold project in Costa Rica.

"It's a level-headed opposition. It's good that they present [opposition] and that it's always in accordance with the law," she said.

In Costa Rica, legislation has established a strict audit on behalf of several state organizations, such as the mines authority, the technical environmental unit (Setena), the environmental ministry, and the environment and energy ministry (Minae), according to Chacón. "This way there is no chance that things can go badly," she said.

But after making the decision Pacheco recognized that two gold mining projects had already acquired rights and could continue mining: Bellavista and the Crucitas gold project, belonging to Industrias Infinito, a subsidiary of Canada's Vannessa Ventures (TSX.V: VVV).

By Harvey Beltrán
BNamericas.com

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