1996-2017 Salvadoran General Mining Laws and Amendments

The current legislative framework for mining operations in El Salvador, including those owned by transnational corporations, began with the enactment of the Mining Law in 1996, four years after the end of a 12-year civil war (OCMAL et al., n.d.). In 2001, this law was amended to, among other things, reduce the level of royalty rates required to be paid by mining companies from 4% to 2% of profits from mineral exploitation, with 1% allocated to the municipality in which the operation takes place and 1% allocated to state (Alterinfos América Latina, 2006). 

Following the enactment of the Mining Law, several pieces of legislation were passed setting out environmental standards for various development projects, including mining operations. These laws included the Environmental Law passed in 1998 and amended in 2007, and the Law on Regional Planning and Territorial Development, passed in 2011 (OCMAL et al.). In 2004, El Salvador entered into the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), which governs foreign trade and investment relations between the United States and El Salvador as well as other Central American countries and the Dominican Republic (SICE-OAS) (See the Legal Action entitled, “2006-2016 Pacific Rim International Investment Arbitration against El Salvador", for information relating to an arbitration commenced under DR-CAFTA against El Salvador in relation to the authorization of mining concessions). 

The Mining Law classified mineral deposits as metallic and non-metallic, and granted the state the authority to issue exploration and exploitation licences or concessions to entities seeking to extract these minerals. This law works in conjunction with the Environmental Law, which sets out criteria for the regulation and management of land use and, in formulating development plans, requires the central government and municipalities to follow guidelines issued by the Ministry of the Environment and Natural Resources (MARN). These guidelines must also be followed where these authorities grant permits for the establishment of industries and commercial activities (among other things) that involve risks to health, human well-being, and the environment (OCMAL, et al.). Moreover, the Environmental Law regulates procedures for Environmental Impact Assessments (EIA) and requires public consultation prior to the approval of EIAs (Ibid). For more information regarding the regulatory framework for the approval of mining concessions, please refer to "Legislación Minera en el Derecho Comparado: Los casos de Chile, Ecuador, Perú, Guatemala, and El Salvador" referenced below (Spanish only). 

In the context of the El Dorado mining project the "public feedback and community consultation processes" provided for under the Mining Law and its regulations was criticized for only giving communities "ten days to respond to [a] single copy of a complex and confusing 1,400 page [EIA] report" (Spalding, 2014). 

Moreover, between September 2005 and February 2008, representatives of the ARENA government and Pacific Rim El Salvador, a wholly-owned Salvadoran subsidiary of Pacific Rim Mining Corporation, met to discuss amendments to the Mining Law. The proposed amendments related to legislative requirements for the consent of surface land prior to a company being granted approval for subsurface mining. This requirement impeded the company's ability to proceed to the exploitation phase of the El Dorado project. The company's position was that it was not consistent with ownership practices enshrined in the Salvadoran legal system. The proposed amendments were submitted to a joint Environmental and Economic Commission of the Legislative Assembly in November 2007. A new commission was established in January 2008 to review the draft amendments, receive submissions from stakeholders, and provide recommendations to the Legislative Assembly. Ultimately, the proposed amendments, including the specific language proposed by the company, were rejected by the Legislative Assembly (ICSID Award, paras. 6.53-6.124. See also IISD, 2017 and Broad, 2015)  

In 2009, the company started an international investment arbitration proceeding against El Salvador for damages arising from alleged delays in the authorization of exploitation licences and, what the company characterized as, an unlawful de facto moratorium on mining. The arbitration was dismissed in 2016, with the company ordered to pay El Salvador's legal costs of US$8 million (See the Legal Action entitled, “2006-2016 Pacific Rim International Investment Arbitration against El Salvador", for more information). 

In 2017, the Legislative Assembly passed a law prohibiting metallic mining in El Salvador. This law revoked all provisions in the Mining Law relating to metallic mining (el país, 2017). See the Legal Action entitled, “2017 El Salvador passes Legislative Ban on Metallic Mining” for more information.