Positive Environment News

FEATURE - Central America Mining Curbed by Local Opposition

Date: 13-Jul-06
Author: Mica Rosenberg

High fuel costs and collapsing nickel prices mothballed the project in 1980 but a mid-sized Canadian miner, Skye Resources Inc., says it is on track to dust off the creaky turbines and conveyor belts and will begin ferro-nickel production again in 2008.

Nickel has made a comeback, with prices setting new record highs, supported by critically low stocks, while demand looks strong with Chinese stainless steel mills, major users of nickel, boosting production.

But with local opposition hampering exploration and mining projects, Central American countries may never know the true scope of their mineral resources.

Skye Resources' Fenix project, named after the mythical bird that rises from smoldering ashes, is one of the few big mining projects planned in Central America, a region often avoided by miners who fear regulatory uncertainty, security problems and indigenous rights complaints.

Jorge Garcia, Guatemala's deputy mining minister, says local opposition has reduced the number of licenses for metal exploration in the country from 740 to 315 just in the past two years.

But at least 200 exploration projects are needed to find one profitable deposit, he said.

"During the armed conflict companies couldn't explore for minerals in the interior of the country," he said, referring to the country's 36-year long civil war, which claimed over 200,000 mostly Mayan lives and ended with peace agreements in 1996.

"Now there is no armed conflict but because communities in general oppose new exploration, we may never know what resources the country actually has," Garcia told Reuters.

Over a dozen Maya Q'eqchi' communities live within the 96 sq mile (248 sq km) area covered by the Skye's exploration license near the town of El Estor on Lake Izabal, which drains into the Caribbean sea via the Rio Dulce, the Sweet River.

While Skye says it will only mine on a fraction of the territory, many Indians worry they will be kicked out and fear contamination of the surrounding lush forest and lake, which is rich in fish and home to the manatee, the endangered fresh-water mammal.

The people have tried to say no to mining through dialogue but if the company wants to force its way in, they may react by burning machinery," said Cristobal Caal, a local Q'eqchi' farmer. "There could be loss of human lives."

Last year, one Mayan man died protesting the construction of a gold mine now up and running in the western department of San Marcos.

"Definitely companies have had problems getting permission from communities to explore for minerals in their territory," said deputy minister Garcia.

"Undoubtedly some companies that had their eyes on Guatemala have started thinking about South America or other regions where there are not such high levels of conflict around mining," he said.


The story in Guatemala is however repeated throughout the region.

In Honduras, where companies dig for gold, silver, lead and zinc, the government suspended new exploration concessions while Congress discusses banning open-pit mining all together.

President Manuel Zelaya, who assumed power in January, supports such a move, which the industry says would mean the end of mining in Honduras. Metal exports generated US$114 million in revenues in 2005.

"The scene in Honduras for investment and mining companies is totally clouded," said Gabino Carbajal, the president of the national mining association. "If open pit mining is prohibited, mining will disappear in this country."

Potential gold and silver mines in El Salvador have also met opposition, with activists comparing modern day companies to gold-hungry Spanish conquistadors who plundered Latin America more than 500 years ago.

The only extraction license in the country is held by the US-based Commerce Group Corp. for its San Sebastian mine in the eastern department of Morazan, which could hold over 1.5 million ounces of go

© Thomson Reuters 2006 All rights reserved

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