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Banning Metal Mining in Guatemala

Banning Metal Mining in Guatemala

Raquel Aldana & Randall S. Abate 

Metal mining is not big business in Guatemala. It generates less than one percent of the country’s gross national product and employs less than one percent of the official workforce in the country. The metal mining industry has also been in decline since 2012, and a significant subpart of the industry will disappear completely in a matter of decades when all of the gold, silver, and other metals have been extracted.

For such a small industry, metal mining represents a giant problem for Guatemala. Metal mining has generated chaos in the country and provoked ire among many within and beyond its borders. Metal mining in Guatemala is controversial for significant reasons. First, at an alarmingly quick pace, metal mining is destroying much of the country’s beautiful environmental resources. Second, this destruction is occurring largely without the consent of the affected communities—both indigenous and non-indigenous. For these communities, the few benefits—mostly in the form of jobs with higher wages for some of the local residents—pale in comparison to the short-term and long-term harms. In the short term, residents in metal mining communities are disturbed by noise; sickened by contamination; impoverished by reduced water supply and food production; divided by conflict even among friends and family; and criminalized and physically harmed during protests. In the long term, water depletion and contamination linger, mountains and landscapes disappear, and the jobs and monies that mines brought dissipate. The affected communities—and the entire country as a result—are left with an even bleaker future than prior to exploitation, literally and figuratively.

These environmental and human rights harms alone justify a rejection of the industry in Guatemala. The disdain for metal mining, however, lies exactly in the reasons for its presence in the country. Why is an industry that represents such an insignificant economic investment and with such destructive characteristics allowed to operate in the country? The answer is cynical but tragically true. Metal mining makes a great deal of investment sense to the foreign investors and shareholders and to the economic elite and self-interested politicians who profit from it. In turn, as a struggling democracy with weak laws and institutions, but strongly favorable investment laws and practices, Guatemala is the ideal host for the continuation of corporate practices that are senseless and destructive. 

This same assessment of metal mining in Guatemala applies across the region and globally, particularly in developing nations with similar democratic and social struggles. It also applies to several other types of industries that extract natural resources or cheap labor for global consumption. Unlike Guatemala, however, some of these nations are stepping back and instituting important reforms to limit or ban certain types of mining. There are important lessons in these reforms for Guatemala.

This Article proposes recommendations for managing Guatemala’s metal mining problem. It proceeds from the premise that metal mining is a bad investment for Guatemala, at least in the short term. Metal mining is never a sustainable practice for any country because metal is an exhaustible and non-renewable natural resource and its extraction is inherently toxic and destructive. There is a legitimate argument that metal mining may be necessary for development and that it could be done in ways that significantly reduce the harms to the environment and communities. This Article does not address whether or how Guatemala might choose to engage in metal mining in the future. Rather, it asserts that Guatemala is ill prepared to implement a metal mining regime that makes sense for the country at this time. Guatemala is now grappling—in good ways—with significant and visible democratic problems. For the first time in the near decade of the United Nations Commission against Impunity’s (CICIG) operation in Guatemala, its investigations are finally exposing the shameful and cynical acts of corrupt politicians. Not a single Guatemalan is surprised by the dirty secrets the CICIG’s wiretaps and secret recordings revealed. Several high-level officials resigned following the revelations, including the Vice President and the President who now face criminal charges for their acts of corruption. This alone represents remarkable progress for Guatemala. 

These potentially monumental transitions in Guatemala, however, do not guarantee real and sustained reforms in the country. Today, nearly 20 years after the signing of an ambitious peace agenda, Guatemala is nowhere near a strong enough democracy as it needs to be to manage metal mining in order to minimize harms and maximize benefits for its citizens. Much needs to happen first, including electoral reform, eradication of deep inequality, greater transparency in public spending, and tax and social spending reforms. This Article addresses the primary concerns that pertain to mining: reforming the 1997 Mining Law; the need to regulate water and the consultative process; and the need to improve transparency in tax collection, public spending, and social investment, particularly as it relates to the mining industry. These reforms must occur in tandem with the broader and systemic reforms already mentioned if metal mining is to be successful. Until then, Guatemala should consider banning metal mining in the country. This course would not be unchartered territory in the region. Other nations, with Costa Rica as one of the best examples, have paved the way. 

Banning metal mining in Guatemala, even if temporarily, will likely face fierce opposition from investors and potentially from Guatemala’s important trading partners. Guatemalans would be right to be concerned about two possible negative consequences from the decision to ban or limit metal mining: (1) companies already holding exploration and exploitation licenses could sue in international tribunals or foreign courts for millions alleging expropriation; and (2) Guatemala could damage its relationship with Canada, the United States, and other potential trading partners and international economic institutions. This Article addresses strategies and defenses for banning mining in Guatemala in response to expropriation claims in international tribunals. Also, it proposes standards and norms that arbitrators should apply to resolve these claims. As to the second concern, the potential impacts on trade and investment might be exaggerated and overstated. Guatemala nonetheless should explore alternatives for sustainable development that would be better for the country in the long term. Costa Rica’s ecotourism industry serves as a model for Guatemala in this regard. 

Part I of this Article explains the nature and scope of the metal mining industry in Guatemala. It also examines the environmental, health, property, and social impacts of metal mining and discusses the unbalanced costs and harms of the industry under Guatemala’s status quo. Part II documents the challenges and gaps in the existing domestic and international legal frameworks that attempt to regulate metal mining activities in Guatemala. Part III proposes an incremental model for Guatemala to address its metal mining problem. First, this Article recommends that Guatemala exercise its sovereign right to adopt a law banning all future metal mining concessions. Second, Guatemala should rely on existing domestic laws to close the mines in order to mitigate the substantial damages resulting from these activities. Under either approach, Guatemala is likely to face investor liability in the millions, and perhaps lose future investment in the country. This Article offers Guatemala suggestions for defending and mitigating these costs by relying on comparative studies of similar actions taken by Costa Rica and El Salvador.

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