ON March 29, the Legislative Assembly of El Salvador passed what activists are hailing as a “landmark” law that essentially bans all forms metallic mining in the small Central American country. The ban on mining has been brewing since 2007, when the Catholic Church, which wields formidable political influence in the country, took a stance against mining.
The following year, the right-wing Salvadoran government at the time canceled the exploration permit of the Canadian mining company Pacific Rim (absorbed by OceanaGold in 2013), prompting the mining firm to take the government to the International Center for Settlement of Investment Disputes (ICSID) in Singapore.
Two successive leftist governments in El Salvador maintained the exploration moratorium, and in October 2016, ICSID dealt a blow against OceanaGold (who inherited Pacific Rim’s case), ruling the company must pay the government $8 million in legal costs, which it has so far not done.
On March 28, the day before the mining ban was passed—by an overwhelming majority vote of 69 to 15—ICSID hit the mining company again, ordering it to pay interest on the back payments dating back to October. Political analysts have suggested that ICSID’s rulings probably helped to encourage the government to impose the mining ban.
El Salvador is not a treasure trove in terms of potential mineral wealth, but it does have some amount of gold and silver; the northern part of the country lies within a “gold belt” that stretches from Nicaragua to Guatemala. Pacific Rim guessed there might be as much as five million ounces of gold in the tract it was granted a permit to explore in 2002; but by 2008, when the first moratorium was imposed, it had yet to find an area with a high enough concentration of gold to make building a mine worthwhile.
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