Energy

Congress Sends A Stark Warning To Guatemala Over Corruption

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Michael Bastasch Contributor
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Federal lawmakers are asking Guatemalan President Jimmy Morales to make his country less hostile to foreign investment in the wake of a controversial court decision to shut down U.S.-backed mining project.

Lawmakers asked Morales to reform Guatemalan business laws to increase certainty for U.S. investors and cooperate with a United Nations anti-corruption commission, which he tried to expel from Guatemala last year.

Lawmakers also want Morales to address court rulings shutting down mining and energy projects in the Central American nation. The Supreme Court most recently sided with anti-mining activists and shut down a massive silver mine in the San Rafael region.

It’s issues like this that House Committee on Foreign Affairs legislators want to address. Both Republicans and Democrats on the Western Hemisphere subcommittee signed the letter to Morales.

“We are concerned that if these situations and the ongoing roadblocks to fighting corruption and impunity are not resolved quickly, it could lead U.S. businesses to take their investments elsewhere and result in job losses for Guatemalan citizens and even more migration to the U.S., which is not in either of our countries’ interests,” lawmakers wrote in a recent letter to Morales.

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The Escobal mine has sat idle since July 2017 — i.e., its 7,600 miners have been without work for months. The Constitutional Court heard an appeal in October to the Supreme Court ruling but has yet to issue a decision.

It was a major victory for the anti-mining coalition CALAS, which brought suit against the Ministry of Energy and Mines in May. Activists alleged the agency did not properly consult with the Xinca community before approving the Escobal mine’s 25-year license in 2013.

However, the government’s most recent census showed no indigenous tribes in the San Rafael region. Some Xinca natives do live in the region, but there’s no tribal authorities in the area.

The court was supposed to issue a decision within five days of the appeal, but it hasn’t. Mine-operator Tahoe Resources in the meantime has lost millions in deferred revenues and been forced to cut 250 jobs due to mine-reopening delays.

Reno-based Tahoe Resources bought the Escobal mine in 2010 from Goldcorp and began commercial operations in 2014. Tahoe’s believes the mine likely holds 389 million ounces of silver and sizable amounts of gold, lead and zinc.

Escobal produced 4 million ounces of silver and 110,000 ounces of gold in 2017’s second quarter, according to Tahoe — but it’s been shut down since July. Tahoe expected to lose $10 million for a three-month production delay — now costs are higher.

“The impact of the suspension on workers, suppliers and communities in the San Rafael region is concerning,” Tahoe vice president of corporate affairs Edie Hofmeister told The Daily Caller News Foundation in 2017.

Guatemalan law ILO 169 requires the government to consult indigenous people on major projects in tribal territory, but the Escobal situation avails government mismanagement can affect business operations.

“There is no reason to suspend operations, as the government-to-government consultation required by ILO 169 could occur while the mine keeps running. People shouldn’t lose their jobs over this,” Hofmeister added.

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