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  • GDP, US$bn: 21.4
  • GDP per capita, US$: 2,352.4
  • Population, mn: 8.1
  • Inflation, CPI ave: 2.7
  • FX, LCY/US$: 22.9
  • Budget Balance, % of GDP: -2.8
  • Mining GVA, US$bn: 0.1
  • Mining Industry Value, US$bn: 0.2
Regulatory Risk Rating
46
0
100
Score: 46
Substantial Risk
One must remember that Honduras suspended mining activities for seven years following a constitutional ruling that the previous mining law was unlawful; the principal problems with the prior code related to a lack of community agreement to mining activities; it not surprising, therefore, that this modern legal work has attempted to ensure that there is a high level of engagement with local communities. Nevertheless, regardless of the reason and the past, the end result is a defective mining code that does little to assure the miner of security of tenure.

Corruption Potential Index

Score: 25
Very High Corruption Potential

Corruption Risk Index

Score: 59
Moderate Corruption Risk

Regulatory Risk Rating

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Environmental Overview Commentary plus sign

HONDURAS ENVIRONMENTAL REGULATION

 GENERAL

Honduras, officially the Republic of Honduras, is a republic in Central America. The country is bordered to the northwest by Guatemala, to the southwest by El Salvador and to the south by Nicaragua. It also has a small border with the Pacific Ocean and a long border with the Caribbean Sea. Honduras spans an area of about 112,492 km² and has a population exceeding eight million. Honduras is a mountainous country, with the exception of the northern Ulúa and Aguán river valleys on the Caribbean Sea, and the southern coastal area.

Honduras has several different types of forests, including a substantial rainforest, which harbours a great biodiversity of plants and animals. It is estimated that within Honduras there are about 8,000 plant species, about 250 reptiles and amphibians, 700 species of birds and 110 mammal species, distributed in various ecological regions of Honduras, and some species which are yet to be discovered and catalogued. The rainforest of Honduras comprises 30% of Honduran territory and is known as Biosphere Reserve Río Plátano. Because of its importance, this reserve was added to the list of sites of World Heritage by UNESCO in 1982 and is considered by some experts as the lungs of Central America; in 2011 UNESCO added the site to the World Heritage List in Danger, in an effort to protect and preserve the area, which is under threat due to activities including illegal logging, poaching, and land occupation by drug traffickers. The fauna of the region is diverse and includes ocelots, tapirs and monkeys.

PRINCIPAL LEGISLATION AND REGULATOR

An environmental impact assessment process (EIA) was introduced in 1993 following the approval of the General Environment Law (GEL) (Decree No. 104-93) and the Environmental Impact Assessment Regulation (1994). Subsequently, this latter regulation was replaced by Reglamento del Sistema Nacional de Evaluación de Impacto Ambiental, Ministerial Agreement No. 189-2009 (“EIA Regulation”). The Environmental Regulation (Ministerial Agreement No. 109-93) is also relevant as it, among other things, details the responsibilities of the various governmental agencies in the sector.

The Secretariat for Energy, Natural Resources and the Environment, or Secretaría de Estado en los Despachos de Energía, Recursos Naturales y Ambiente (“SERNA”), is the ministry responsible for Honduras’ energy, environmental and natural resources policies. SERNA has several departments: Dirección General de Control Ambiental (“DECA”), Centro de Estudios y Control de Contaminantes (“CESCCO”), Dirección General de Biodiversidad (“DIBIO”), Dirección General de Recursos Hídricos (“DGRH”), Unidad de Servicios Legales (“USL”) and others. DECA reviews and approves Environmental Impact Studies (EISs) submitted by mining companies.

EIA PROCESS

Article 5 of the GEL indicates that projects, industrial facilities or any other public or private activity, susceptible of polluting or degrading the environment, natural resources and cultural heritage of the nation, must be preceded by an EIA that would prevent or mitigate the possible negative effects. Article 78 indicates that natural or legal persons, public or private, that wish to do any work or activity susceptible to alter or seriously impair the environment, including natural resources, are obliged to report it to the competent authority and prepare an EIA. Included within these activities are mining projects and “any other activities capable of causing severe damage to the ecological balance.” Such work may not be executed without an environmental licence following an environmental assessment (Art. 79).

The environmental licence is granted following a series of steps, which are well laid out in Article 24 of the EIA Regulation, and include:

  • Categorization of the project (as Category 1, 2, 3 or 4);
  • Initial environmental evaluation and assessment of the significance of impact;
  • Payment of the fee for the promulgation of the environmental licence;
  • Publication in a newspaper of a notice detailing the project, its location and intent to request an environmental licence;
  • Submission of an application with the relevant impact assessment instruments;
  • Review of the documents and environmental assessment; and
  • Decision to grant or not grant the requested Environmental License.

 

Article 30 of the EIA Regulation outlines the various categories of project with Category 1 being low impact, Category 2 – moderate, Category 3 – high-impact, and Category 4 – very high potential impact. Mega development projects are included in Category 4 and it is likely that mining projects would be found to be within this category, whether mega-projects or not (Article 4.31 of the EIA Regulation indicates that mining projects may be classified as mega-projects). For Category 4 projects, an EIS is required and the review of an EIS will take place within 60 days, unless the project is a mega-project in which case the period is 80 days (Art. 35, EIA Reg.) The EIS must be submitted with the help of a consultant team that is registered in the Registry of Environmental Service Providers. The environmental licence is valid for two years and then must be renewed (Arts. 60 and 61, EIA Reg.)

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Mining Overview Commentary plus sign

HONDURAS – MINING REGULATION

 GENERAL

Honduras, officially the Republic of Honduras, is a republic in Central America. The country is bordered to the northwest by Guatemala, to the southwest by El Salvador and to the south by Nicaragua. It also has a small border with the Pacific Ocean and a long border with the Caribbean Sea. Honduras spans an area of about 112,492 km² and has a population exceeding eight million. It is best known for the production of coffee, tropical fruit and sugar cane, as well as for its growing textiles industry, which serves the international market.

In Honduras one can find gold, silver, copper, cadmium, lead, zinc, iron ore, antimony and coal. Silver, gold, lead and zinc, however, are the most important minerals mined in Honduras. Nevertheless, production is small relative to potential and accounts for less than 2% of the economy. The El Mochito Mine, in Santa Bárbara, is a longstanding producer of zinc, once held by Breakwater Resources of Canada and now owned by Belgium’s Nyrstar N.V. Gold production takes place at the San Andres Mine, which is owned by Aura Minerals Inc. of Canada, as well as Goldcorp’s San Martin Mine.

In 2008, the government of President Zelaya placed a moratorium on the granting of new mining licenses, following a 2006 Supreme Court ruling that over a dozen articles of the mining law were unconstitutional.  In 2013, a new mining law was passed that aimed to overcome these constitutional problems. According to miningwatch.ca, however, the new law is under fresh constitutional attack by the Honduran Institute for Environmental Law and the Honduran Center for the Promotion of Community Development, which have apparently filed separate actions in 2014 on behalf of two groups of petitioners.

PRINCIPAL LEGISLATION AND REGULATOR

The principal legislation consists of the General Mining Law of 2013 (Decree 238/2012) (GML) and its regulation, the Environmental Law (Decree 104/1993) and its regulation, and the Environmental Impact Assessment Law. Minerals belong to the state and are divided into metallic, non-metallic and gems or precious stones. Mining rights constitute a different right from the land.

The Secretariat for Energy, Natural Resources and the Environment, or Secretaría de Estado en los Despachos de Energía, Recursos Naturales y Ambiente (“SERNA”), is the ministry responsible for Honduras’ energy, environmental and natural resources policies. SERNA has several departments: Dirección General de Control Ambiental (“DECA”), Centro de Estudios y Control de Contaminantes (“CESCCO”), Dirección General de Biodiversidad (“DIBIO”), Dirección General de Recursos Hídricos (“DGRH”), Unidad de Servicios Legales (“USL”) and others. Pursuant to the GML, The Mining and Geology Institute of Honduras, or Instituto Hondureño de Geología y Minas, is responsible for granting, modifying and terminating mining rights and other mining obligations.

GRANTS AND FORMS OF MINERAL TITLE

Pursuant to Article 63 of the GML, the principle of first come / first served applies. All individuals or entities established in the country or authorised to engage in commercial activities in Honduras are entitled to mining rights. The GML distinguishes among the following mining rights:

  • Prospecting (or reconnaissance) activities: These activities are not regulated and may be carried out freely within the country (Art. 13, GML).

  • Exploration Concessions: These concessions are granted for a period of up to two years in the case of non-metallic minerals and gems or precious stones, and up to five years in the case of metallic minerals. In both cases the concessions may be extended for the same period for which they were granted. The licences are mineral specific though one can apply to include additionally discovered minerals. In order to obtain a licence, competence to undertake the work must be demonstrated.

  • Exploitation Concessions: Exploitation concessions have a duration of up to 10 years in the case of non-metallic minerals and gems or precious stones, and 15 years in the case of metallic minerals. This period may be extended based on the rate of mining and remaining reserves. A suspension of mining activities shall not exceed four years, else one must decommission the mine (Art. 28, GML). For metallic minerals, mining concessions may vary from 100 to 1,000 hectares with a maximum of 10 concessions. Non-metallic minerals and gems or precious stone concession areas may vary from 100 to 400 hectares also with a maximum of 10 concessions. Foreigners or nationals may apply for mining rights, but foreigners must have legal representation in the country (Art. 54(g), GML).

The mining operator may treat and sell recovered minerals freely, either in national or international territories. The mining concession may be transferred, but only with the prior agreement of the mining authority (Art. 60, GML).

DEVELOPMENT CONSIDERATIONS

The application for an exploitation concession must include the results of exploration to date, an investment program, a community program, and a feasibility study; the decision as to whether or not to grant the concession is made within 45 days of submission (Art. 69, GML). The GML requires a public consultation within the affected municipality(ies) in accordance with the Municipalities Act; if the consultation is negative, the mine cannot be permitted and another application cannot be made for three years (Art. 67, GML). Article 51 of the GML states that mining operators may establish easements over state land in order to develop mining activities, but prior agreement with private landowners is required for private land. An environmental licence is required in order to acquire an exploitation concession. As well, municipal operating permits are required for all activities in Honduras (See Municipalities Act, or Ley de Municipalidades (Decree 134‐90, and its regulation (Reglamento General de la Ley de Municipalidades (Executive Agreement 018‐93, Tegucigalpa, February 18, 1993)).

ENVIRONMENTAL REGULATION

See Honduras – Environmental Regulation.

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