GUATEMALA – MINING REGULATION
Guatemala, officially the Republic of Guatemala, is a country in Central America immediately south of Mexico and also sharing a border with Belize, Honduras, El Salvador, and the Pacific and Caribbean oceans. It covers an area of 108,890 km2 and has an estimated population of over 15 million people, making it the most populous state in Central America. Its capital is Nueva Guatemala de la Asunción, also known as Guatemala City. The Guatemalan economy is particularly reliant upon agricultural products, including coffee, bananas and sugar. For many decades, its mining industry was challenged by an internal civil war that ended in the mid-1990s.
Since the mid-1990s, exploration has taken place in the mining sector and new discoveries have been made. Today, the mining sector is growing in importance and one of the major participants in the sector is Goldcorp and its offspring, Tahoe Resources, which operate the Marlin (gold) and Escobal (silver) Mines, respectively. The country also has potential for copper, cadmium, antimony, nickel, lead, zinc, limestone, barite, bentonite, sulphur and marble. Guatemala is the third largest producer of antimony in Central and South America, with only Bolivia and Mexico producing greater quantities. Guatemala also produces industrial minerals, primarily for domestic use, including gypsum, barite, talc, feldspar, salt, limestone, clays, sand (including silica sand) and gravel.
PRINCIPAL LEGISLATION AND REGULATOR
The Mining and Energy Ministry (MEM) is the main regulatory body, responsible for monitoring and supervising mining activities. The legislative framework for mining comprises the Guatemalan Constitution; Mining Law (Decree 48-97) and its regulation (Government Agreement 176-2001); along with the Environmental Protection and Improvement Law (Decree No. 68-86). Pursuant to its Constitution, all minerals belong to the state (Art.121.e, Constitution). While the Mining Law regulates the licensing of mines and quarries, petroleum products fall outside of the law.
GRANTS AND MINERAL TITLE
Any person or entity, national or foreign, is entitled to mining rights. Article 12 of the Mining Law states that the principle of “first-come / first-served” applies. As well, a mining operator with either a Reconnaissance or Exploration Licence takes precedence in obtaining Exploration or Exploitation Licences, respectively. The Mining Law provides for the following permits in order to carry out mining activities:
- Reconnaissance Licences: granted for an initial period of six months, which may be renewed for a further six months. Licences may cover an area ranging from 500 km2 to 3,000 km2. Reconnaissance activities must start within a period of 30 days of grant.
- Exploration Licences: granted for a period of up to three years, and renewable twice for a fixed term of two years each, with a 50% relinquishment requirement in each renewal. Exploration Licences may not exceed 100 km2 and work must commence within the first 90 days. A mitigation study is one of the requirements for conducting exploration work. Mitigation studies are technical reports that describe the biological, physical, and socio-cultural characteristics of the local setting and identify protection and mitigation measures.
- Exploitation Licences: granted for a maximum term of up to 25 years, renewable for another maximum period of 25 years, over an area of up to 20 km2. The disruption of mining activities for more than three years results in the revocation of the licence. Exploitation licences may be refused under the Mining Law, particularly as a result of third party opposition, albeit the extent to which the government may act arbitrarily is uncertain.
Transfers require the prior approval of the government and no criteria are set out to guide the circumstances in which approval may or may not be granted. In 2014, Guatemala proposed an increase in the royalty rate to 10% to try to address a budget deficit (see Decree 22-2014). As stated by one foreign participant in the sector, this change reflects a certain political immaturity on the part of the government and certainly immaturity in the administration of the minerals sector.
The holder of an Exploitation (or Exploration) Licence is obliged to submit an annual work report to the Mining Directorate. Additionally, surface fees and/or royalties if required must be paid. An environmental impact study is necessary to conduct exploitation work, which must be approved by the National Commission of the Environment (CONAMA)(Art. 20, Mining Law). Once an Exploitation License is issued, operations leading to the development of the deposit must begin within 12 months. According to Article 77 of the Mining Law the holder of a permit has the right to access surface land via an easement. In relation to private land compensation must be paid to the owner or occupier for damages or prejudices caused; if compensation cannot be agreed, any party may refer the matter to a judicial court or to arbitration. Where a landowner is opposed to an easement, the matter may also be referred to a civil court.
See Guatemala – Environmental Regulation.