August 6, 2012 / 4:50 PM / 5 years ago

UPDATE 2-Guatemala steps back from mining reform plans-adviser

* Miners had opposed plan for govt stake in new projects

* Presidential adviser says could revisit plan later

GUATEMALA CITY, Aug 6 (Reuters) - The Guatemalan government is stepping back from plans to take a stake of as much as 40 percent in new mining projects, a top government official said on Monday.

Fernando Carrera, a top adviser who helped draft the reform, told Reuters the proposal would be withdrawn from a package of constitutional reforms, although it could be included in another legislative change down the track.

“We realized it was making a lot of noise internationally and we decided to withdraw it,” he said.

The proposal, part of a package of constitutional changes that include judicial and legislative reform, would have allowed the government to become a shareholder in up to 40 percent of all future mining and oil companies in the Central American nation.

Constitutional changes require a two-thirds vote in the 158-member Congress where President Otto Perez’s conservative Patriot Party holds 63 seats - short of the number required.

Guatemala’s chamber of commerce and mining industry representatives criticized the plan, saying that it could stifle investment. Initial reports of the proposal last month hit shares of Canadian miners like Tahoe Resources Inc, which is developing the Escobal project near Guatemala’s capital.

The country’s mining ministry also pushed for the removal of the proposal, which had already been postponed once, claiming that changes should be made to the country’s mining law and not to the constitution.

The ministry is writing legislation that would allow the government to create a state mining company to compete against private enterprise, a plan which it hopes to present to Congress later this month.

“The phrase ‘40 percent’ was not specific and it didn’t make sense to include it in the constitution,” Carrera said. “We decided it would be better to leave this to ordinary legislation where you can include more specific details.”

He gave no timetable for the alternative legislation.

Mining in Guatemala accounts for roughly 2.3 percent of GDP. The country’s largest gold mine, the Marlin mine owned by Canada’s Goldcorp Inc, produced 382,400 ounces of gold in 2011 generating $900 million in revenue.

“Goldcorp continues to support the government’s efforts to enact a new mining law, which we believe will create a rational and transparent framework for doing business in the country,” a Goldcorp spokeswoman said.

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