REFILE-UPDATE 1-Honduras ends mining moratorium, approves taxes

Thu Jan 24, 2013 5:12pm EST

TEGUCIGALPA, Honduras Jan 24 (Reuters) - Honduras' Congress passed a law that ends a moratorium on mining permits on the condition that the villages affected by potential projects decide whether to back them.

The General Mining Law, signed late on Wednesday night, also raises a tax on free-on-board exports, to be paid by mining companies, from 1 to 2 percent.

An additional 1 percent tax will be levied to pay for scientific investigations and a mining watchdog, while another 1 percent tax will help fund Coalianza, an organization that supports public-private partnerships.

The new bill, which received the backing of President Porfirio Lobo, will come into law once it is published in the official government newspaper, possibly within a month.

"We have an opportunity to start offering new mining permits so that industry can gain a foothold in Honduras, and the local villages will decide, in citizen meetings organized by town councils, whether they'll approve them or no," Fredy Espinoza, a congressman and member of the mining commission, told Reuters.

Gabino Carbajal, president of the National Metals Mining Association of Honduras, applauded the law and did not believe the caveat of giving locals a deciding say would be a problem.

"This law will encourage mining investment," he told Reuters. "The issue of requiring local approval is one that we think can be overcome with a well-informed population. Local people just want mines not to affect the water and the environment, and modern mining doesn't do that."

Aldo Santos, the head of the national mining development body DEFOMIN, said there had already been interest in the Honduran mining sector.

"We've received serious interest from roughly 10 mining companies who are keen on operating mines in Honduras, so we're expecting a great deal of investment in the coming years," he said, without naming the companies.

But environmental groups rejected the law, saying it threatened the countryside and water sources.

"This law will be a cause of more poverty for us and greater conflict in the countryside," said the Coalition of Environmental Networks' coordinator Pedro Landa.

Former Honduran President Manuel Zelaya, who left office in 2009, signed the previous project moratorium in 2006 after conflicts between locals and environmental groups.

Various international mining companies already operate in the country, according to the National Metals Mining Association of Honduras, including offshoots of Belgium's Nyrstar and Canada's Aura Minerals.

Honduras mines gold, silver, zinc, lead, iron ore and antimony. Mining exports generated $206.5 million in 2011, according to the National Metals Mining Association of Honduras.

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