1997-2015 Guatemalan Mining Laws and Amendments [Cerro Blanco]

The mining industry in Guatemala is governed by, among other things, the General Mining Law. This law was initially passed in 1997, following a peace process that ended the 1960-1996 internal conflict. It was criticized by some Guatemalan civil society and legal groups for creating a low royalty rate of 1% and failing to establish a robust procedure relating to, among other things, the requirements for environmental impact assessments and consultation mechanisms for directly affected communities. Criticisms were also raised regarding inconsistencies between requirements under the Environmental Protection Law and the mining licence approval process under the General Mining Law (Ardon, 2017).

In 2006, draft amendments to the Mining Law were prepared by the Environmental Commission of Congress. Initially, the amendments contemplated prohibiting companies from submitting fragmented or partial environmental impact assessments that only reported on the impact of parts or phases of a project, rather than the project as a whole. This issue was raised in the context of the licence approval processes for the Cerro Blanco project and concerns that the environmental impact of the project was not adequately considered. However, the ultimate proposed reforms contained no language regarding these types of fragmented assessments. There was no contemplation of the requirements for environmental studies, other than that mitigation studies had to be presented but did not have to be approved for the licence to be considered (Ibid).

Further amendments were made in 2012/2013, following a four year moratorium on mining arising from a successful constitutional challenge in 2008. These amendments were part of a larger constitutional reform package and purported to allow the state to become a shareholder in all companies that extract natural resources. The proposed law was upheld by the Constitutional Court following a second constitutional challenge in 2012 relating to alleged violations of the right of Indigenous peoples to prior consultation in regards to mining activities (see the Legal Action titled, “2008-2013 Constitutional Challenges against Guatemalan Mining Laws [Cerro Blanco]“, for more detail). Also in 2012, the Guatemalan government entered into agreement with mining companies establishing a process for paying “voluntary royalties” above those required by law (Plaza Pública, 2012).

In 2014, the Guatemalan government sought to increase the mandatory mining royalty rate from 1% to 10%. This increase was opposed by industry groups on the basis that it risked damaging Guatemala’s attractiveness to investors from the extractive industry. The increase was further challenged at the Constitutional Court in action brought by, among others, the Chamber of Agriculture, the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations, the head of the Congressional Legislative Bloc of the National Unity of Hope party (UNE), the Chamber of Industry, and the mayor of the municipality of San Miguel Ixtahuacán in the department of San Marcos (the location of the Marlin Mine). The action was granted in September 2015, thereby declaring the royalty increase unconstitutional (Constitutional Court, 2015).