Miners in Guatemala to pay ten times more royalties
Guatemala’s President Otto Perez Molina has approved a new rule passed by the Congress last week that rises taxes to transnational miners operating in the country from 1% to 10%.
The change to the country’s 20-year-old mining law is just one of the major reforms recently introduced by the current government. Under the new regulation all miners will see their bill increase tenfold, except for nickel and jade extractive companies, which will only pay 5% and 6% respectively, local El Periódico reported (in Spanish)
Canadian junior Firestone Ventures (TSX-V:FV), which owns a zinc-lead-silver project in Guatemala, said in a statement there already is a growing group of affected entities that are joining forces to legally challenge the 2015 national budget, where the changes to the mining law were included.
Another company unhappy with the measure is Vancouver-based Tahoe Resources (TSX:THO) (NYSE:TAHO), which said last week it was “actively engaged in discussions with the Guatemalan government, business interests and community leaders about the ramifications of the proposed legislation.”
Analysts say Tahoe’s Escobal silver mine has the potential to become one of the world’s largest producers of the precious metal.
Perez Molina has defended the measure, saying they are necessary to balance the country’s budget, adding that his government won’t expropriate stakes in natural resource companies or take a stake in those already in the country.
But the president of the Extractive Industries Union (Gremiext), Mario Orellana, said the decision was “political move” taken “without considering its full consequences” and warned it may force a few to close operations and/or halt projects and projected investment, El Periódico reported.
Such an effect would be quite unwelcome by Guatemala, a country still healing from a 36-year civil war, from 1960 into the mid-90s. Poverty is widespread and deeply entrenched, particularly in its rural areas, which make up 51% of the population.