Guatemala off limits to miners, analyst says

Uncertainty and weak government have placed Guatemala off limits to mining companies, Raymond James analyst Chris Thompson told BNamericas.

The suspension of an operating license for Tahoe Resources' Escobal mine (pictured) in July has shown the country to be a very difficult jurisdiction to operate in, Thompson said.

The supreme court decision to suspend the license followed a legal challenge by social and environmental local NGO CALAS, which said indigenous communities were not consulted. Tahoe has denied the claim.

While the license was reinstated in September, operations at the silver-lead-zinc mine remain suspended due to a roadblock. The company's export permit has not been renewed.

"Operators have to be very sensitive about community and NGO influence in Guatemala," Thompson said in a telephone interview.

"It's very much off the cards for companies that are looking for new opportunities in Central America.

"If you are an operator in Guatemala, like Tahoe is, heightened focus now is on diversifying production out of Guatemala. The problems are opaqueness, uncertainty and a weak government."

Activities have also been suspended at Kappes, Cassiday & Associates' Tambor gold project following a legal challenge by CALAS.

Both the Escobal and Tambor challenges relate to rules requiring companies to conduct prior consultations with indigenous people under International Labour Organization Convention 169.

"Convention 169 is aimed at securing dialogue, not paralyzing projects and irreversibly damaging the economy," Guatemala's committee of agricultural, commercial, industrial and financial industries (CACIF) said in July.

Goldcorp is in the process of exiting from Guatemala, with the closure of its Marlin gold-silver mine this year and the sale of its Cerro Blanco gold project to Bluestone Resources in June.

It is unclear whether political and legal uncertainty in the country affected Goldcorp's decisions at its Guatemala assets, which reflect a wider divestment of non-core assets.