Amendment could give Guatemala's government 40 percent stake in mining

June 28, 2012

A proposal for the reform of 55 articles of the Constitution of Guatemala including a proposal for the government to acquire up to 40 percent of companies that exploit natural resources in the country was introduced by President Otto Perez Molina.

The current constitution of Guatemala states, “It is declared of public usefulness and necessity that there be technical and rational exploitation of hydrocarbons, minerals and other non-renewable resources. The state will establish and facilitate conditions for their expropriation, exploitation and marketing.”

In a list of proposals published in the newspaper Prensa Libre, Perez Molina said he wants to amend Article 125 of Guatemala's constitution to add the following paragraphs:“The state may be the owner of up to 40 percent ownership or equity of any company that exploits natural resources."

"A law on state involvement in the exploitation of natural resources will regulate what corresponds to the state for concessions for natural resources and, if applicable, what must be provided as capital."

"The state will have the right to acquire up to 40 percent of companies which exploit natural resources either existing ones or in the circumstance where capital is increased or if they decrease their participation.”

Guatemala’s indigenous population is increasingly at odds with the government’s approval of mining licenses for international companies and major mining projects which aboriginal peoples feel infringes upon indigenous land rights.

Advancing the nation’s economic development while also respecting indigenous rights is considered to be a formidable challenge for the Perez Molina Administration.

Guatemala’s Ministry of Energy and Mines has proposed amendments to the country’s Mining Act including changes to 30 articles and two other initiatives now being discussed in the country’s Congress. Those changes include legislation to formalize the country’s current system of voluntary royalty payments, increase royalties on mining companies, and establish a mining fund to distribute income from mining royalties to local governments, and requiring community consultation prior to the granting of a mining license. Mining Minister Erick Archila Dehesa stressed the need to modernize laws dating back 15 years through a comprehensive analysis with the mining laws of other nations.



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