Govt. Rejects Lobby For New Mining Concessions

Govt. rejects lobby for new mining concessions

BNAmericas

21st February 2007

The Honduran government has once again rejected the mining industry's requests to grant fresh concessions to companies, Santos Carvajal, the president of Honduras' national mining association, ANMH, told BNamericas.

Carvajal and other industry players met with government officials this week to lobby for the issue of concessions, only to learn that the executive branch plans to uphold a 2004 decree prohibiting the granting of new metallic mining concessions.

In 2005, congress announced it would search for a "sustainable" way to allow metallic mining through law reforms. But in January 2006, the new president, Manuel Zelaya from Honduras' liberal party (PLH), said in his inaugural address that there would be no more mining concessions, leaving only the already established mines to operate.

"I do not want to see more permits for open-pit mines in Honduras," international press quoted Zelaya as saying in the speech. "Not one more until we have the guarantees needed for the conservation and preservation of our natural wealth."

According to Carvajal, the industry is in a state of atrophy due to governmental inaction. "The government hasn't made it clear if they will allow mining in the future or not. There is no security for investments in mining, and without new concessions the four companies can't even continue to explore."

"We miners say that mining has environmental impacts, its undeniable," Carvajal added. "But the answer is not to prohibit exploration, rather to logically create methods to control the negative impacts and avoid damage."

The real tragedy, according to the ANMH president, is that Honduras has the highest mining potential of all the Central American countries.

Meanwhile, a debate is underway in congress to reform 52 of the 102 articles of the country's mining law, including community benefits.

In theory, municipalities would take part in the granting of permits. The Honduran municipal association (AMHON) must be in consensus with any reforms made to the mining law since it covers all national territory, Arnoldo Avilés, chairman of the congressional committee discussing the reforms, said previously.

"But there won't be any new investments," Carvajal said.

There are currently 5,000 people employed directly by the mining industry, which according to Carvajal means some 30,000 Hondurans depend on mining.

Producing mines in the country are few: Toronto-based Yamana Gold's (TSX: YRI) 70,000oz/y San Andrés gold mine, and US miner Glamis Gold's (TSX: GLG) San Martín gold mine, which churned out 14,981oz in the first quarter of 2006.

Other operations include Breakwater Resources' (TSX: BWR) El Mochito zinc-lead mine in Santa Barbara department, and local miner Cerros del Sur's El Corpus gold mine in Choluteca department.

The companies pay some US$200,000 annually in taxes to the federal government, according to Carvajal.