Banning Metal Mining in Guatemala

Abstract

Metal mining is unsustainable for Guatemala and its harms insurmountable for its people. Guatemalans who oppose metal mining have been fighting for decades domestically and internationally against the environmental degradation and other human rights abuses from metal mining activities in the country with little to show for their efforts. The State is too weak and corrupt to offer much hope for reform. Guatemala requires extensive governance reforms to become the type of strong democracy capable of reaping the potential benefits of metal mining in its territory. This is a long-term project. Most Guatemalans opposed to metal mining already know this, and the struggle is largely to ban all metal mining in the country. However, the prospect of a ban is elusive, in part because the country may face liability from investors affected by the ban. This Article presents the best case for a metal mining ban while exploring alternatives to minimize the investor liability costs to the country. First, the Article recommends that Guatemala exercise its sovereign right to adopt a law banning all future metal mining concessions. Second, Guatemala should rely on existing domestic laws to close the metal mines and mitigate the substantial damages resulting from these activities. Under either approach, Guatemala is likely to face investor liability in the millions and perhaps lose future investment in the country. This Article offers Guatemala suggestions for defending and mitigating these costs by relying on comparative studies of similar actions taken by Costa Rica and El Salvador.

Keywords: Guatemala, extractive industries, environmental justice, indigenous rights, international arbitration, indirect expropriation, metal mining

JEL Classification: K32, K33