The High Cost of Legal Uncertainty

One year after the suspension of operations at the El Escobal mining project in Guatemala, the company is still waiting for a definitive judicial decision from the Constitutional Court.

Wednesday, July 4, 2018

In May 2018, the Legal, Environmental and Social Action Center of Guatemala (Calas) filed an appeal for legal protection, arguing that the Ministry of Energy and Mines had not carried out the necessary community consultations before authorizing the licenses. 

A month later, the Supreme Court of Justice granted the protection to Calas, and as a result, operations at the mine have been paralyzed since July 5 of last year. 

Despite the uncertainty, representatives from the company are not considering permanently closing the mine for now. Andrés Dávila, communication manager at Minera San Rafael, explained to Prensalibre.com: " ... At no time have they taking into consideration its closure or opting for a process within the Free Trade Agreement with the United States, possibly, if warranted by a resolution that was contrary to the operation, then a measure like that could be considered. But at this moment the position of all shareholders is to continue with the operation to continue the process and wait for the Court to decide."

According to estimates made by the San Rafael Mine, during the year of paralysis the country has failed to receive about $255 million and the government has lost about $54 million from lost taxes and royalties. 

In relation to the final decision by the Constitutional Court, which could allow the mine to operate again, the article reports that " ... According to the spokesperson from the CC, Santiago Palomo, the case is still under analysis in that Court and he mentioned that when the corresponding ruling is issued it will be announced, mentioning that it is the only statement that can be given on the matter."

See history of the project.

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More on this topic

Mine Suspension and Future of Investments

July 2019

Although in Guatemala the right to operate the El Escobal mine was granted in law, the project has been suspended for two years, making future investments in the country unviable.

The disadvantages for Minera San Rafael's operations date back to 2017, when in May of that year the Guatemalan Center for Legal, Environmental and Social Action (Calas) filed a protective action, arguing that the Ministry of Energy and Mines had not conducted the necessary community consultations before authorizing the licenses.

San Rafael Mine Still in Limbo

February 2018

Industrialists are demanding that the Constitutional Court rule on the request for legal protection that was granted in favor of an environmental group and which is keeping the mine's operations in a state of paralysis.

The project has been paralyzed since an environmental organization filed an request for legal protection against the mine, arguing that the Ministry of Energy and Mines did not carry out the necessary community consultations before authorizing the licenses. 

Situation Worsens at San Rafael Mine

January 2018

After seven months of suspended operations, the company that operates the Escobal mine in Guatemala has announced that it is making 250 workers redundant.

The company interrupted its activities after the Supreme Court of Justice granted an injunction to the Legal, Environmental and Social Action Center (Calas), in July 2017, after denouncing that the Ministry of Energy and Mines had not carried out prior community consultations..

Another Mining Company Suspended in Guatemala

July 2017

Minera San Rafael will have to cease operations after its two operating licenses were suspended as a result of a writ of protection granted by the Supreme Court of Justice to an environmental group.

Prensalibre.com reports that "... The licenses for El Escobal, approved in 2013, and Juan Bosco, in 2012, are suspended and as a consequence, the San Rafael mine must stop its operations. The extraction plants whose licenses are now invalid are located in Mataquescuintla, Jalapa, and Nueva Santa Rosa, Casillas, and San Rafael Las Flores, Santa Rosa."

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