HONDURAN ENVIRONMENT MINISTER ON MINING: SLOW

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 000774 SIPDIS SENSITIVE STATE FOR OES/ETC and WHA/CEN STATE PASS AID FOR LAC/CAM STATE PASS USTR E.O. 12958: N/A TAGS: EMIN SENV EINV ECON PGOV HO SUBJECT: HONDURAN ENVIRONMENT MINISTER ON MINING: SLOW PROGRESS UNDER HEAVY PRESSURE REF A: 05 Tegucigalpa 765 B: 04 Tegucigalpa 1466 C: 05 Tegucigalpa 727 ¶1. (SBU) Summary: EmbOffs and USAIDOffs met with the Minister of Natural Resources and Environment, Patricia Panting, on April 6 to discuss mining issues, specifically a ban that has been in place since June 2004 on the granting of any new mining concessions in Honduras. Minister Panting defended the ban by saying it was a necessary response to the strong anti-mining pressures present in the country and presented herself as doing the best she can to support sustainable mining operations in the face of opposition from these "radical" pressure groups. She also reported that a new national policy on sustainable mining is "75 percent complete" and suggested that the ban on new concessions will remain in place only for another month or two. End summary. ¶2. (SBU) EmbOffs met on April 6 with top GOH environmental and mining officials to discuss the current ban on new mining concessions in Honduras. The Embassy was represented by EconChief, EconOff, and two USAID officers from the Office of Trade, Environment and Agriculture. The GOH was represented by Minister Panting, two other officials of the Ministry of Natural Resources and the Environment (known as SERNA for its initials in Spanish),and Jesse Maria Andraje, the head of DEFOMIN, the GOH agency responsible for mining. (Comment: Andraje has been manager of DEFOMIN for only a few months, after the previous manager, Sandra Pinto, departed under a cloud of allegations of corruption. Andraje seemed to be still getting comfortable in her new position, as she said nothing during the entire meeting, despite several occasions when Minister Panting tried to bring her into the conversation. End comment.) -------------- -------------- Background: June 2004 Decree Bans New Mining Concessions -------------- -------------- ¶3. (SBU) In June 2004, a decree issued by SERNA and signed by Minister Panting declared that no new mining concessions could be granted in Honduras until such time as a new "National Policy for Sustainable Mining" had been designed and implemented. In the ten months since, there has been no public announcement of when this policy would be released or of when the ban on new concessions would be lifted. ¶4. (SBU) The ban has had a particular impact on the gold mining company Tajo Minerales, a Honduran subsidiary of the Nevada-based Mayan Gold, Inc. Tajo Minerales currently operates three concessions in the Choluteca Department in southern Honduras. In late 2003, Tajo began the process of requesting permission to operate a fourth concession, and they believe their application was close to being accepted when the June decree forbidding any new concessions came into effect. EmbOffs have accompanied representatives of Tajo Minerales and Mayan Gold to previous meetings at SERNA, but with no resolution in sight, EmbOffs took this opportunity to raise the issue with the Minister herself. -------------- Implications for CAFTA-DR Approval -------------- ¶5. (SBU) EconChief began by thanking Minister Panting for her dinner meeting the previous week with visiting staffers from U.S. Congressmen who are undecided about CAFTA-DR (ref A) and for the other work that Minister Panting has done to support the agreement and encourage its approval. He then led into the mining issue by noting that, since CAFTA-DR approval by the U.S. Congress is still far from assured, every vote counts, and any incident that leads to U.S. Congressmen hearing complaints about the investment climate in CAFTA-DR countries needs to be taken very seriously. (The Office of Senate Minority Leader Harry Reid (D-NV) has expressed interest in the Tajo Minerales case.) ¶6. (SBU) EconChief stressed that while, of course, Honduras has not only the right but the obligation to ensure that mining activities are conducted in a sustainable way and with minimal environmental impact, a balance should be struck that allows some extraction of the country's mineral resources to be carried out. The June decree, which imposes a complete and, it has appeared, indefinite ban on all new mining activity, does not seem to strike this balance, as it sends a message that Honduras is closed to all new foreign (or, for that matter, domestic) investment in the sector. -------------- -------------- Panting: Doing the Best I Can Under Political Pressure -------------- -------------- ¶7. (SBU) Minister Panting responded with an extensive account of the strong anti-mining pressures that, in her view, have been building in Honduras over the last few years. She began by recounting the "March for Life" that took place in 2004, led by the Salvadoran Catholic priest Father Andres Tamayo, who is based in the eastern Honduran Department of Olancho (ref B). While the main focus of the March for Life was illegal logging, Panting cited it as an example of large-scale popular pressure being brought to bear on the GOH regarding environmental issues. She also mentioned the tremendous influence of Honduran Cardinal Oscar Andres Rodriguez, who has opposed mining in Honduras for environmental and social reasons and has led marches against mining operations, including those by U.S. companies (ref C). "This is a very Catholic country," said Panting, "and when the Cardinal speaks, people listen." The Minister further cited the formation of local anti-mining committees, including one in the Choluteca Department (where Tajo Minerales currently operates),as evidence of a growing opposition to mining activities in Honduras. She even expressed frustration with the tactics used by some of these groups, acknowledging that, in an open society, everyone has the right to voice their opinions but arguing that blocking off public highways, as many Honduran protests do, is a step too far. ¶8. (SBU) Those pressures, Panting implied, are what made the June decree and the ban on all new mining concessions necessary. Fortunately, she went on, progress has been made in formulating the new "National Policy on Sustainable Mining" which the decree calls for. She said this policy is about 75 percent complete and should be ready for release within a month or two. A draft is currently being shared with various interest groups for their input. ¶9. (SBU) Minister Panting also mentioned a proposed new mining law, which was drafted by anti-mining groups last year, but was quite frank in her opinion that this new law would not do anything to calm the controversy around mining in Honduras, as it was drafted by "radicals". (Comment: In this, Minister Panting was echoing statements previously made to EconOffs by the former head of DEFOMIN and by the Minister of Trade and Industry, Norman Garcia. Mining sector contacts who have reviewed the law find it so extreme that, were it enacted, a near total, instantaneous shutdown of existing and proposed mining projects would result. Fortunately, there seems to be little chance that the law as currently drafted will ever reach a Congressional vote. End comment.) ¶10. (SBU) In addition, Panting spoke favorably of the current operations of Tajo Minerales, and she was aware that the June decree has delayed the processing of their application for a fourth concession. She specifically stated that, in her opinion, the proposed new concession "is viable", giving EmbOffs reason to hope that, once the new mining policy is released and the ban on new concessions is lifted, approval of the Tajo concession could follow without undue further delays. ¶11. (SBU) Comment: "One or two months" in Honduras often means six, and with November's presidential elections approaching, Post is far from confident that a new national policy on what is, as Minister Panting correctly pointed out, a very hot issue politically, will in fact be released any time soon. We will continue to convey the message that an all-out ban on new mining activity does not seem to be the best solution for Honduras, a poor country with still untapped mineral resources lying beneath the surface. Rather, as with other controversial environmental issues including the misuse of forestry resources, the solution should be for the GOH to put into place appropriate regulations and environmental protections and then ensure adequate resources for the effective enforcement of those regulations. End comment. Palmer