MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Guatemala

Key Data

Population:14,099,032 people Area:108,889 km2 Density:129 people / km2 Demographics:Mestizo (mixed Amerindian-Spanish) and European 59.4%,
K'iche 9.1%,
Kaqchikel 8.4%,
Mam 7.9%,
Q'eqchi 6.3%,
other Mayan 8.6%,
indigenous non-Mayan 0.2%,
other 0.1%
Mineral Resources:silver, gold GDP:$74.6 billion GDP per capita:$5,293 GINI:55.1

History

Guatemala is the biggest Central American state in terms of population size [1]. Despite a large mining  potential, given its varied and abundant mineral deposits, the mining industry has been historically limited due to the civil war and related conflicts which lasted from the mid 1960s to the mid 1990s. In 1997 following the Peace Accords, changes were made to the mining code, including in particular a 6% to 1% decrease in royalties paid to the State. Along with a less turbulent socio-political context, these changes set off a remarkable upsurge in mining development by foreign companies [2].

Often located in the poorest and most indigenous areas, these foreign developments have not always been easily accepted by local populations, sometimes sparking intense and passionate reactions, as can be best illustrated by Goldcorp’s Marlin Mine. Since the project began in 2005, indigenous Mayan community groups have mobilized to shut down the mine alleging negative health impacts, human rights violations and environmental damage. Noise about the Marlin Mine has been traveling all throughout Guatemala and many communities across the country have since then raised their voice and fought against mining developments in their surroundings, over lack of adequately conducted consultation processes, concerns about health and environmental damages, or simply fears that the mining project in question would turn into a replication of the Marlin Mine.

Mining Characteristics

Guatemala is a resource rich country, where large deposits of gold, silver, copper, cadmium, antimony, nickel, lead, zinc, limestone, barite, bentonite, sulphur and marble can be found.

According the latest available official data of the Ministry of Energy and Mining in Guatemala, there were in 2007 322 permits for mineral mining [2]: 8 recognition, 163 exploration, and 151 exploitation permits. More than half of these concessions, are concentrated in the mountainous areas in four departments: in the west San Marcos (17) and Huehuetenango (15), and in the east of Alta Verapaz (16) and Izabal (19).

Economic Context

The economy of Guatemala depends especially on agriculture (coffee, sugar and bananas being important export crops) and manufacturing [1]. Although the country is the biggest economy of Central America and a medium-income country, the social development indicators are very low. According to the 2011 data, Guatemala (131st out of 187 countries in the world ranking), has among the lowest Human Development Indices in Latin America and the Carribean; only Haiti scores worse in the region (158th) [3].

Representing roughly 3% of GDP, the Mining sector however has not been of tremendous historical importance in the economic growth of Guatemala [4], [5]. In terms of domestic production, agriculture and manufacturing for instance have been much more significant industries. In fact, along with El Salvador and Honduras, Guatemala is one of the weakest tax collector in Latin America and the world [6].

In part due to the relatively recent discovery of new metal deposits, and in part due to the increase in gold prices (which increased by 50% between august 2010 and september 2011) the industry has been increasingly performing better in the last couple of years. In fact, according to the Ministry of Energy and Mines, the industry is booming. The Guatemalan association of mine, quarry and processing companies, estimates that the industry will invest 2.37 billion dollars in the period 2010-2016, pay 280 million dollars in taxes and royalties, and generate some 16,000 direct jobs [7].

Political Context

The first mining investment in Guatemala by a foreign company was in 1960 when the Canadian companies INCO and Hanna mining founded the Guatemalan subsidiary Exmibal [6]. In 1965 the company received a 40 year permission for the extraction of nickel. In 1981 however, three years after the start of production the mine had to close down for political and economic reasons. Up until the late 1990s, and although the increasing demand for metals from the growing Asian economies triggered a mining boom in most countries of Latin America in the early 1990s, it is not until the late 1990s, early 2000s, that Guatemala veritably started to attract mining investments. The reason for this late start has essentially been the bloody civil war which shaked the country from the 1960s up to 1996. In 1996 the situation settled down and on May 6 The Peace Agreement was signed between the Guatemalan government, the main revolutionary party URNG and a delegate from the United Nations. The Agreements forced the government to realize significant reforms in Guatemala:  a reform of the land tenure system, of social security, recognition of the rights of Indigenous Peoples. Quite contradictorily, the peace agreement was particularly welcome by the economic elites of Guatemala who saw in it a potential for economic and political stabilization. After the signing of the agreement, a number of events were purposely organized to encourage foreign investment. Of particular interest to us are the changes that were done to the mining code in 1997, which through the creation of favorable investment and business conditions set off a remarkable upsurge in mining exploration [2], [3]. For instance, under the new law, mining royalties were lowered from 6% to 1%, foreign institutions were allowed to own up to 100% of the concession, and no import taxes had to be paid for machinery, equipment and production goods for mining.

Social Context

Guatemala is a country that is largely Indigenous. It has 24 language groups with 52 distinct languages [1]. About 40% of the population identifies itself as Indigenous and continues to wear their traditional dress and speak their own languages. Sadly, being indigenous in Guatemala also coincides with poverty, social, economic and cultural exclusion [6]. Close to 75% of the indigenous population is poor, and 28% is considered extremely poor. Geographically, indigenous communities are essentially located in the departments north and west of Guatemala City, in particular Quiché, Alta and Baja Verapaz, Sololá, Totonicapán, Huehuetenango and San Marcos, which also correspond to the poorest departments. Besides, most of the mining concessions are located in Guatemala’s poorest, and therefore ‘most indigenous’ areas. Unsurprisingly, almost all mining conflicts in Guatemala involve indigenous communities.

Given the arid climate and the local relevance of subsistence agriculture in the regions mentioned above, water consumption, contamination, and environmental degradation constitute a very common source of conflict. Interestingly however, mining conflicts involving indigenous communities in Guatemala seem to have a deeper significance, strongly reflective of the power imbalance that has always persisted in Guatemala and which was never truly adjusted after the Civil War. As the author Willems presents it [6], the struggle against large mining corporations is not merely a struggle over mining, it extends to a more general struggle for participation, representation and defense of the indigenous identity. For this reason, conflicts over mining in Guatemala have a tendency to spark heated and passionate reactions, involving protests, road blockades, and often escalating into violent disputes and sometimes leading to deaths incidents. On the other hand, locally organized consultations, discussions and active work with NGOs, alternative development projects, also constitute a common and more peaceful and structured approach to reacting against the mining industries. In the case of the Marlin Mine for instance, instead of merely resisting violently to the mine, the population of Sipacapa has stressed the necessity to initiate new types of development models, based on and promoting their own traditional knowledge, while providing alternative types of employments. On such project, focusing on the production of organic coffee bean, which are then sold collectively has been particularly successful, but lacks currently sufficient funding to operate at a larger scale and counter the mining project.

Bibliography

[1]: https://www.cia.gov/library/publications/the-world-factbook/geos/gt.html

[2]:http://www.ciel.org/Law_Communities/Guatemala/Cordaid%20Guatemala%20brochure%20UK-DEF.pdf

[3]: http://hdr.undp.org/en/media/HDR_2011_EN_Tables.pdf

[4]: http://www.oxfamamerica.org/files/metals-mining-and-sustainable-development-in-central-america.pdf

[5]: http://www.centralamericadata.com/docs/Mineria_en_Guatemala.pdf

[6]:http://catapa.be/files/Luis%20Willems_Mining%20and%20Indigenous%20Peoples%20in%20Guatemala:%20The%20Local%20Relevance%20of%20Human%20Rights.pdf

[7]: http://ipsnews.net/news.asp?idnews=106766

[8]: http://www.pbi-guatemala.org/fileadmin/user_files/projects/guatemala/files/english/PBI-mining-human-rights-guate.pdf


Timeline of Key Events

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1996
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