Guatemala to seek 2-year moratorium on new metal mining

GUATEMALA CITY, July 10 Wed Jul 10, 2013 2:17pm EDT

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GUATEMALA CITY, July 10 (Reuters) - Guatemala President Otto Perez will ask the country's congress on Wednesday to impose a two-year moratorium on new metal-mining licenses in an effort to calm tensions in mostly indigenous communities that have opposed to the industry.

"We are bringing a bill to congress in which we declare a two-year moratorium," Perez said in a speech late Tuesday night. "We are asking congress to not give any more metal-mining licenses."

In May, Guatemala's government declared an emergency in four towns, suspending citizens' rights to protest in an area where people died during demonstrations against the Escobal silver mine belonging to Canadian miner Tahoe Resources Inc.

Tahoe Resources received the final operating permits in April for its Escobal mine. The company's top executive, Kevin McArthur, said he does not expect the project to be affected by the moratorium request.

Government officials said they hope the request for the moratorium will also encourage Congress to consider reforms to Guatemala's mining law, including a proposal presented last year by the country's energy and mining ministry that would hike metal mining royalties from 1 percent of a company's gross income to 5 percent.

"We hope Congress opens a great debate... so we can have a law that is in accordance with all our needs," Perez added.

For a moratorium to pass, Guatemala's 158-member Congress must approve it with a majority vote in three separate debates.

It remains unclear when those votes will be cast due to an extended backlog of pending legislation.

Last year, Guatemala's government, under pressure from industry, withdrew a proposal to acquire as much as a 40 percent stake in new mining projects.

Mining in Guatemala accounts for about two percent of gross domestic product. The country's largest gold mine, the Marlin mine owned by Canada's Goldcorp Inc, is expected to produce up to 200,000 ounces this year.

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