Guatemala's US$572mn Cerro Blanco gold project faces complex outlook

The US$572mn Cerro Blanco gold project in Guatemala, owned by Canada's Bluestone Resources, is facing uncertainty as environmental protests resurge and a new government changed policy priorities.

Bluestone Resources was created in 2017 with the purchase of Cerro Blanco and the Mita geothermal project. Cerro Blanco is a near-surface high-grade gold deposit, hosting an estimated 3.1Moz in M&I resources. A feasibility study showed it could produce over 300,000oz/y during an initial useful life of 14 years.

The mine has a 20-year history, during which attempts to extract gold and silver via underground methods yielded little success, motivating Bluestone to request a new mining permit for an open pit operation.

The previous government authorized the permit shortly before its term ended in January, despite warnings from environmentalists that operations could contaminate local water supplies and pollution could even reach El Salvador.

In a January statement, Bluestone said the environment and natural resources ministry (MARN) “approved the environmental permit amendment for the Cerro Blanco gold project to change the mining method from the existing permitted underground development to surface mining development.”

Bluestone also said the energy and mines ministry (MEM) updated the project's approved mining license via a resolution to reflect the permit modification requested in November 2021 and the change to open pit mining.

But after President Bernardo Arévalo took office on January 15, the new authorities indicated they would have to verify the authorization given by his predecessor Alejandro Giammattei less than a week before his term ended.

“Guatemala is a complicated country in itself. We already have the Escobal precedent because the government did not convene the prior information consultation and all [the procedures] required under the ILO standard,” independent mining consultant Martín Carotti told BNamericas.

“I also think that what adds to the issue of this project is that it is not a mine in production, it’s a very advanced exploration project that’s much easier – in quotation marks – to cancel even if millions of dollars are lost... than a project which is in production like Cobre Panamá was,” he added.

MEM also announced in late January that it will review all recent mining licenses in response to national and international complaints about corruption and other illicit activities.

Deputy environment minister José Rodrigo Rodas confirmed in mid-April that administrative actions will be started to annul the update of Cerro Blanco's environmental instrument and hence the environmental license of the project in Asunción Mita, Jutiapa, near the border with El Salvador.

One day after the announcement, a Salvadoran anti-mining alliance asked Guatemala's environment ministry to revoke the update of the environmental impact study.

“The most advanced project that threatens to contaminate the Lempa river basin is the Cerro Blanco mine, owned by Canadian company Bluestone Resources. Environmental organizations alert the authorities that open pit mining is one of the most polluting industries on the planet and lethal to human health,” the NGO, known as Mesa Nacional Frente a la Minería Metálica de El Salvador, said in a statement published on social media.

A protest against Cerro Blanco took place on the border of lake Güija in El Salvador on April 19.

News agency EFE reported that 10 boats with about 300 environmentalists from El Salvador, Guatemala and Honduras protested that day against the mining project which, according to the participants, would contaminate the Lempa river, the longest in Central America.

They claimed more than 50 areas of mining interest are located in the El Trifinio protected area, which the three countries share, and that mining would contaminate the shared basins.

When asked about how this situation affects Guatemala's investment climate, Carotti responded that “you have to really want to get into Guatemala. It’s a complex country, it’s a complicated country.”

He added that “aside from that, there is a particular ingredient here, which is that a project that was considered for underground production sometimes cannot be done. Now they want to eventually make it open pit. And what really determines whether something is open pit or underground is nature and how the ore is.”