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.)

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Background: June 2004 Decree Bans New Mining Concessions
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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.

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Implications for CAFTA-DR Approval
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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.

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Panting: Doing the Best I Can Under Political Pressure
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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