Honduras - Committee To Push For State Participation In Mining Companies

HONDURAS

Committee to push for state participation in mining companies

Harvey Beltran, BN Americas

7th July 2006

Honduras' congressional mining committee plans to present changes to the mining reform bill currently under discussion, proposing that the state hold up to 50% of shares in mining companies operating in the country.

"We became concerned [about the bill] and so will propose some changes to the mining law in order to suggest that the state hold shares in mining companies," mining committee chairman Arnoldo Avilés told BNamericas.

The bill had aimed to ban open pit mining outright. Under the new proposal, the state would be able to hold 10-50% of each mining project, depending on project location, the amount of investment, total size of the exploration area, and the type and quantity of mineral, said the lawmaker.

Just days ago, Avilés said his committee would push to outlaw future open pit mining licenses. Now his position is to allow mining development, "but we are going to be stricter," he said.

To this end, Avilés plans to negotiate with Cardinal Óscar Andrés Rodríguez, who has spoken out against mining.

In February, Cardinal Rodríguez demanded approval of the mining law in a sermon, arguing that silence from the administration could lead to concession approvals without the proper scrutiny.

SUSPENDED CONCESSIONS

Currently 100 applications for mining and exploration licenses are on hold at the natural resources ministry (Serna) "while congress is approving reforms to the mining law," a Serna official said.

The mining bill is in its third and final debate in Congress.

REFORM

Among the major changes that could be approved in the reform bill is a move to increase the municipal tax on export revenue from 1% to 2%. The bill also foresees a 0.5% additional charge on export revenue that would help finance social development funds for use in communities around mining projects.

In addition the mine operator would have to hold an open consultation process with the community before moving on to the development phase.

Now the bill would also include state participation. "We'll see if, with this change, we will be able to allow open pit mining under stricter conditions," said Avilés.

Operations in Honduras include Toronto-based Yamana Gold's (TSX: YRI) 70,000oz/y San Andrés gold mine, as well as US miner Glamis Gold's (TSX: GLG) San Martín gold mine, which produced 14,981oz in the first quarter of 2006.