Community challenges facing miners in Guatemala step up

Thousands of residents expressed opposition to Bluestone Resources’ Cerro Blanco gold project in Guatemala, in a further sign of the challenging community relations environment faced by mining companies in the country.

In an informal referendum on Sunday – rejected as illegitimate and flawed by Bluestone and the energy and mines ministry (MEM) – 88% of about 8,500 respondents voted against a mining operation “that impacts resources and the natural environment” of Asunción Mita, Jutiapa department, the nearest town to Cerro Blanco, local daily El Periódico reported.

While its validity is questionable, the poll shows anti-mining campaigners remain present and active in the Central American country and are ramping up efforts to block the project – with the support of at least some local residents.

The vote was conducted as Guatemalan authorities evaluate an environmental permit amendment submitted by Bluestone to reflect the shift to an open-pit approach, rather than underground as previously envisaged.

Vancouver-based Bluestone said in June it expects a decision by end-2022.

The sensitive timing of the vote may be deliberate, aimed at ratcheting up pressure on authorities to reject the application or delay their decision.

Bluestone’s shares slumped following the poll, closing at Cdn$0.52 on Tuesday, compared to the previous Friday’s close of Cdn$0.69.

HISTORY OF CONFLICT

Guatemala has a long history of mining-related social conflicts, which have halted or suspended mines and projects.

Local protests and injunctions by anti-mining NGO Calas resulted in suspensions at the country’s three main foreign-owned mining operations.

Two – Pan American Silver’s Escobal silver-lead-zinc mine and Kappes, Cassiday & Associates’ (KCA’s) Tambor primary gold operation – have been suspended for a number of years.

While Solway Investment Group has restarted mining at its Fénix ferronickel mine following a temporary suspension, the company has continued to face protests, prompting President Alejandro Giammattei to impose a 30-day state of siege in El Estor, Izabal department, late last year.

BLUESTONE RESPONSE

Bluestone said the referendum was organized by a “biased” commission made up solely of anti-mining advocates, which also counted the votes.

Illegal and irregular activities were also observed during the poll, Bluestone said in a release, with a number of votes believed to have been cast by people living outside the area of influence of the project.

The referendum – which is not legally binding - was conducted despite a ruling by a Jutiapa department judge that it be suspended, the company added in a release.

“This referendum is clearly unconstitutional and filled with irregularities,” CEO Jack Lundin said, adding that Bluestone’s goal is to develop and operate Cerro Blanco in an environmentally and socially responsible manner, and provide employment in local communities.

“We at Bluestone do not believe the results of this referendum reflect the overall community sentiment toward the project,” Lundin added.

PROJECT BENEFITS

Bluestone has also drawn attention to the potential benefits for local communities from development of Cerro Blanco.

The US$572mn project, which is due produce 2.6Moz gold over a 14-year mine life, is expected to contribute US$1.8bn to the Guatemalan economy through wages, local purchasing, taxes and royalties, and employ up to 1,100 people during construction, the company said in June.

These benefits could help win over residents.

"We see risk to the permitting timeline; however, [we] believe Cerro Blanco's merits from an employment and tax perspective will eventually triumph," Cormark Securities analyst Nicolas Dion said in a note.

But another industry analyst, who asked to remain anonymous, told BNamericas that the “damage has been done” from the referendum, despite the fact it is unclear how many votes were from residents of the town.

Bluestone will need to keep working to address community challenges at Cerro Blanco, which will be an ongoing problem, the analyst said.

MINISTRY STANCE

As well as a direct threat to Cerro Blanco, the referendum and anti-mining activities pose a broader challenge to Guatemala’s government, and MEM’s aims to promote growth in the sector.

Tackling negative perceptions of the industry was highlighted as a key plank of a proposed regulatory overhaul in the country, outlined by MEM minister Alberto Pimentel last year.

The proposal – based around six main pillars – aims to unlock mining’s potential, which could see the sector grow to 5% of GDP from less than 0.5% currently.

The ministry said it was impossible to recognize the validity of the results of the referendum, given that decisions over mining projects fall under the remit of the central government and that a court had ordered the poll be halted.

Any mining license in Guatemala will only be granted in “strict compliance” with the constitution, the mining code and international conventions, MEM said in a release.

OTHER ASSETS

While KCA is pursuing an international arbitration claim relating to the suspension of Tambor, a consultation with indigenous communities around Escobal is advancing.

A review and pre-consultation have been completed, with the formal consultation now underway, which will be followed by verification by the supreme court, according to a new corporate presentation by Pan American Silver.

Solway said in a release that it is introducing a new human rights policy, following United Nations guidelines.

The company launched a board-level investigation earlier in 2022 following media reports claiming it had covered up environmental damage and engaged in corrupt practices, which Solway denied.