The world’s second largest primary silver mine has been shuttered at least temporarily. Tahoe Resources’ somewhat controversial Escobal mine in Guatemala is to be closed for perhaps three months – possibly for longer – while court hearings are under way. In a statement to shareholders, Tahoe says that the Supreme Court of Guatemala has issued a provisional decision in respect of an action brought by the anti-mining organization, CALAS, against Guatemala’s Ministry of Energy and Mines (‘MEM’). The action alleges that MEM violated the Xinca Indigenous people’s right of consultation in advance of granting the Escobal mining license to Tahoe’s Guatemalan subsidiary, Minera San Rafael. The provisional decision is in respect of a request by CALAS for an order to temporarily suspend the license to operate the Escobal mine until the action is fully heard.
Tahoe is putting a brave face on the decision, but problems may run rather deeper given a long running dispute over the mine and opposition to it. Escobal has effectively been closed for a month already due to a blockade of the main access road by protestors. Guatemala has not proved to be a particularly mining-friendly nation and there are accusations of irregular dealings by the company over the award of the original mining license, as well as over dealing with mine opponents in the past including a serious shooting incident involving mine security personnel.
On the other hand, Escobal is a very significant revenue producer for the country and has single handedly moved Guatemala up from an ‘also ran’ to the world’s 11th largest silver producer and Escobal to the world’s second largest individual silver producing mine, after Fresnillo’s Saucito mine in Mexico, according to the latest figures from The Silver Institute. There could thus be some strong financial pressures to get the mine back into operation.
This post was published at Sharps Pixley
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