Modifications made to the law after its approval in early 2013 could discourage investments for this year.
The conditions that the industry expected this year are different to those of 2013, as international prices of precious metals have dropped and the changes made to the law passed in early 2013 could discourage foreign investment planned for this year.
The growth of the metal mining sector and the framework provided by a new mining law have generated interest from foreign companies.
Up until October 2013, the share of mineral products in exports of general merchandise was $232.7 million, equivalent to 7%. This, and the adoption of a new mining law last year, has attracted interest from foreign investors who have set their eyes on Honduras.
Representatives of companies in the sector and investors will meet from 2 to 5 March in Canada in order to take part in the business conference.
The Prospectors and Developers Association of Canada (PDCA) has organized since 1932 the Annual Mining Convention which is attended by companies involved in the industry of mining exploration and exploitation in various countries.
The El Venado Mine has shipped its first cargo of iron oxide, more than 40 thousand tons, bound for China.
According to Henrique Ayala, manager of the consortium that runs the mine, this will be the first of many shipments which will be sent over the 20 year life of the mine.
Based on recent average prices of Honduran exports of the product ($43.80), the shipment will be worth about $1.7 million.
Investors from China, England, Peru, Brazil, Canada and the USA are waiting for the outcome of the general election before risking investing in mining projects.
Laprensa.hn reports: "The long wait for the country to have a mining law that is in line with the current situation has had an impact on the arrival of new investments, all of which are dependent upon the results of the November general election to define their situation ".
President Porfirio Lobo announced that he will veto the Development Promotion and Public Debt Restructuring Act.
"We have reviewed the law and we have taken the decision to veto it and return it to Congress for them to make their observations," said Lobo.
According to the president, "mining companies have not paid royalties to the state for eight years, but they will have to under the new Mining Law and in order to achieve this the regulations on this legal ruling are about to be published," reported Proceso.hn.
The tax rate for domestic and foreign investors in mining has increased from 3% to 6%-7%
"Between six and seven percent was the amount finally passed in Congress, at the time of the approval MPs in the National Congress were determined to raise the tax rate, resulting in companies paying even more now than specified in the original project ," said the chief of the Department of Natural Resources and Environment (Serna), Rigoberto Cuellar.
84 applications for exploiting iron oxide are awaiting the implementation of the Law on Development Promotion and Public Debt Restructuring.
One example of the country's potential is the company Five Star Mining, which according to the Central Bank of Honduras (BCH), between 2010-12 exported 2.4 million tons of iron oxide to China.
Laprensa.hn reports: "With respect to other exploited metals, iron oxide is one of the "non-metallics" that has experienced growth over the past three years, going from $8.4 to $60.7 million in exports".
The so called "Mortgage Law" in Honduras is causing alarm to mining companies who hold unproductive concessions.
According to an article in Elheraldo.hn in a meeting with representatives from the U.S. Embassy in Honduras, "The leadership of the National Association of Metal Mining Companies in Honduras (Anamimh) has formalized its position against the applicability of the Law on Development Promotion and Domestic Debt Restructuring, because it is a threat and an attack against the local mining industry and deserves to be vetoed by President Porfirio Lobo. "
Companies from several countries are waiting for regulations on the new Mining Act in order to exploit the nation's mineral potential.
According to the Minister of Geology and Mines, Aldo Santos, the regulations could be ready in late August. He explained that after that date the Honduran Institute of Geology and Mines will respond to all of the concession applications it receives.
President Lobo intends to sell around 280 active mining concessions which are currently unused.
Elheraldo.hn reports: "The Law of Public Debt Restructuring deals with the sale or disposal of idle state assets, including projects in the area of natural resources, mining, energy and telecommunications."
According to president Porfirio Lobo, any concession must comply with the provisions of the recently adopted General Mining Law and then one of three routes pointing to the so called "mortgage law " must be defined in order for a concession contract to be awarded.
Transnational oil and mining companies are taking states to international arbitration where "they get money that they did not even invest."
So says Manuel Perez Rocha, coordinator of the Network for Justice in Global Investment in Washington, who explains that when a Latin American state suspends exploration or exploitation permits, multinationals always manage to extract profits from international courts, particularly the International Centre for Settlement of Investment Disputes (ICSID).
A government commission has traveled to China to negotiate direct sales of iron oxide from the Agalteca mine.
This was stated by Santos Gabino Carvajal, president of the National Association of Metal Mining in Honduras (Anamimh), who in a meeting with Aldo Santos, chief of the Directorate for the Promotion of Mining (Defomin), explained that the idea is to send in directly iron oxide mined in Agalteca in Francisco Morazán.
The regulation allows surveys to determine if there is evidence of mineral deposits anywhere in the country, except in specifically excluded areas.
The General Mining Law, approved in January by the Honduran Congress, became effective upon publication in the official newspaper of the Republic, La Gaceta.
According to this law, the exploration stage should be governed by the Manual of Good Mining Practices, which has to be reviewed periodically to keep it updated.
Congress has approved a new mining law which eliminates all tax shields for mining companies.
For seven years the country has had an incomplete mining law, as in 2005 the Supreme Court struck down 13 items of this legislation, among which were items relating to the collection of taxes on mining companies.
Laprensa.hn reports that "In the new mining law, it is specified that any exploration awards for non-metallic mineral and gems or precious stones will last a maximum of two years, counted from the date of concession award. Regarding metals, the concessions will be for a maximum of five years counted from the date of award. The basic points of the legislation say the in no way will the mining authority grant mining concessions or benefits, if the corresponding concessionaire does not have an environmental license, issued by the appropriate authority. "