The Supreme Court of Guatemala has issued a provisional decision with respect to an action brought by the anti-mining organization, CALAS, against Guatemala’s Ministry of Energy and Mines (MEM), alleging that MEM violated the Xinca Indigenous people’s right of consultation in advance of granting the Escobal mining license to Tahoe Resources’ Guatemalan subsidiary, Minera San Rafael. The provisional decision suspends the Escobal mining license of Minera San Rafael while the action is being reviewed by the court, even though no Xinca representative or community is currently participating in the CALAS lawsuit against MEM.
Tahoe said it was not a party to the action commenced by CALAS and did not previously have standing to make submissions to the court in respect of the provisional application. Tahoe will now take all legal steps possible to have the ruling reversed and the license reinstated as soon as possible, including immediately appealing the decision to the Constitutional Court.
The Guatemala Supreme Court is the initial trial court in Guatemala for constitutional actions filed against MEM. Appeals from these decisions are heard by Guatemala’s Constitutional Court. Based on a prior ruling by the Constitutional Court involving consultation obligations with respect to a large natural resource project, Tahoe believes that its operating license should remain in effect while any additional consultation is completed. Accordingly, it said it intends to both appeal the decision to the Constitutional Court and ask for the Supreme Court to reconsider its provisional ruling.
Tahoe believes all consultation obligations relating to the permitting of the Escobal license were met. The last official census shows the San Rafael community to be 98.6% non-indigenous and with no Xinca community presence. Despite the fact that the Escobal mine is not located in or impacting any indigenous communities of Guatemala, the company understands that MEM held a consultation process that complied with the requirements set forth in ILO Convention 169.
Tahoe estimates the Constitutional Court could rule on the appeal within two to four months. It will seek to have the license reinstated during this period.
“We are extremely disappointed in the court’s ruling, suspending the license, because we believe that there are no indigenous communities affected by Escobal’s operations,” said Ron Clayton, president and CEO of Tahoe Resources. “We are acutely aware that an adverse ruling could have a significant adverse impact on our shareholders, partners, employees, vendors and community populations, as tax and royalty payments, along with purchases of operating supplies will be suspended during any period that the mine is not operating.”
The company’s preliminary second-quarter results include the production of more than 4 million ounces (oz) of silver, more than 110,000 oz of gold, revenue of greater than $200 million and an estimated cash balance of more than $165 million. The company said there are no significant inventories of concentrate on hand.