AN OVERVIEW OF RECENT

CHANGES IN MINING LAWS

AND SOME ECONOMIC
IMPLICATIONS
ASIES

Presented to the Honourable

Diane Ablonczy, PC, MP
Minister of State

Mining

definitions in Guatemalan law

Current law:
Extraction of rocks, minerals or both in order to make them

available for industrial, commercial, and other uses.(Art. 6).

New law :
Extraction of rocks, minerals or both, in order to make them

available for industrial, commercial, and other uses carried

out in rational and technical way, using the economic
benefits in a sustainable and distributive manner, for
extended periods of time and aiming to revert environmental
damages caused in the process.

Mining in the Guatemalan Constitution

Guatemalan Constitution:
Declares public utility and necessity, the technical and

rational exploitation of hydrocarbons, minerals and other

nonrenewable natural resources. (Art. 125)
President Prez Molinas recent proposal to ammend the

Constitution made changes to this article.

Under this
proposal, Artculo 125 gives the State the right to acquire up
to 40% of any company that exploits natural resources. (New
proposal does not include this ammendment).

PROPOSED
AMMENDMENTS TO
MINING LAW

Mining law reforms

A new set of reforms to mining law (Decreto 48-97)

is to be presented to Congress in the near future.

These reforms include:
Social aspects
Institutional strengthening
A State mining company
Environmental considerations
Technical aspects
Financial aspects
Final considerations

Mining law reforms

Social aspects
Information

and communication
development
councils
(Consejos
Municipal):

with
de

municipal
Desarrollo

Before the issuing of an exploration or exploitation license, MEM

and MARNA are required to make a presentation to the

municipal development council of all municipalities in which the
project is located.
Informing local governments at a municipio and departamento
level is a new addition. This is consistent with the requirements
of ILO Convention 169.

Training programs
Social responsibility
Health studies

Mining law reforms

Financial aspects

New tax rates similar, and yet competitive, with

those of other Latin American countries.

No tax exemptions for mining activities.
In the past some mining companies have been
able to benefit from Ley de Maquila y Fomento de
las Exportaciones Decreto 29-89, receiving an
income tax exemption. This will not be possible
any more as this practice goes against the interest
of the State.

Mining law reforms:

Financial apects
The

1997
reforms
reduce mining royalties
from 7% to 1%. New
reforms call for a higher
mining royalty rates
with
different
percentages
for
different
minerals.
An
earlier proposal
by ASIES
suggested:
Base Metals 2%
Precious Metals and stones
3%
All others 1%

Proposed

mining
royalties are as follows
:
Construction materials 1%
Ornamental rocks for 2%
Non- metals 3%
Base metals

3%
Precious metals 5%
Precious stones3%
Semi-precious stones 5%
Rare earths 10%
Other 3%

Mining law reforms

Insititutional Strengthening

Creation of the Guatemalan Mining Fund. This

institution will ensure that 55% of mining

royalties are channeled to the strengthening of
local governments.
Mining royalties will be payed on a monthly
instead of yearly basis.
Surface cannon: will be Q.1,000 per unit and will
be received by MEM yearly. Units are defined
differently for each kind of license and may range
from 3 units per km2 to 12 units per km2.

Mining law reforms

Insititutional Strengthening

Creation of the Guatemalan Mining Fund. This

institution will ensure that 55% of mining royalties

are channeled to the strengthening of local
governments.
Mining royalties will be distributed as follows:
35% Local governments
20% Other local governments in the same

departamento
40% Central government
3% Ministerio de Energa y Minas (MEM)
2% Ministerio de Ambiente y Recursos Naturales (MARN)

Mining royalties will be payed on a monthly instead

of yearly basis.

Royalties are not well understood

And people do not see any improvement as a result

How much do you agree with the phrase
As a result of mining, there has been more
work by the local government.

How much do you agree with the phrase

As a result of mining, there has been more
road construction.

Base: 720 weighed cases (Top 2 boxes / bottom 2 boxes)

Royalties are not well understood

Most people do not even know the meaning of the

word
Could you please tell me what the word
Regala means?

(After explaining what it is). Do you know the

percentage that is payed to the local and
central government.

Base: 720 weighed cases (Top 2 boxes / bottom 2 boxes)

Mining law reforms

Environmental considerations
Mining companies will be required to pay for all

damages caused to individuals.

Mining companies will be required to buy
insurance and as well as compliance bonds to
ensure that any environmental or property
damage is payed in full.
Fines will become incremental. Penalties for first
offences might be low, but will increase with the
second and each subsequent offence.

MINING IN THE
GUATEMALAN ECONOMY

Mining as a percentage of GDP

From 2001 to 2010 mining has contributed an average of
Q.3,309.0 million and about 1.3% of GDP.

Fuente: elaboracin propia con informacin del BANGUAT.

Mining as a percentage of total

Mining as a percentage of total exports has grown steadily since
exports
2002. During 2011mining reached an all-time high of 13.8%.

Fuente: elaboracin propia con informacin del BANGUAT.

There are three kinds of licenses: prospecting, exploration, and

exploitation. The highest percentage of licenses is for non-metallic
minerals.

Fuente: elaboracin propia con informacin del Ministerio de Energa y Minas.

Mining contribution to State finances

In GTQ

Ao

2006

2007

2008

2009

2010

2011

Royalties
(Central
government)

5,095,393

10,284,812

10,938,081

14,608,363

20,736,483

35,795,372

Royaties (local
governments)

4,668,151

8,323,570

10,946,768

14,545,625

20,736,483

35,795,372

Surface cannon
(exploitation)

1,409,029

2,190,504

1,286,865

1,326,725

1,206,350

1,323,053

Surface cannon
(Exploration)

1,913,951

1,652,577

2,063,118

1,101,075

1,021,862

572,666

185,040

7,111

60,000

598,320

63,700

62,400

598,000

9,100

6,500

7,800

10,407

265,218

90,172

484,492

249,635

109,434

279,780

366,469

55,349

261,399

85,051

90,387

131,683

280,689

125,971

223,116

118,819

32,256,700

45,040,148

73,698,133

Surface cannon
(prospecting)
Signature
bonus
Extensions
Interests
Fines

Total

13,545,49
23,197,655 26,630,162
2

Royalties from mining and oil

extraction

Fuente: elaboracin propia con informacin de la SAT.

1/ Cifras al 31 de agosto 2012

Taxes payed by activities related to

mining
2011 Thousands of GTQ.Actividad Econmica
EXTRACCIN Y AGLOMERACIN DE CARBN DE
PIEDRA

ISR

IVA
IVA
Domst Importacio
nes
ico

ISO

DAI

Timbres Otros

Total

29.8

64.6

8.3

7.3

1.2

1.3

0.9

113.4

EXTRACCIN Y AGLOMERACIN DE LIGNITO

0.0

EXTRACCIN Y AGLOMERACIN DE TURBA

1.5

1.5

0.3

0.5

1.0

4.4

6.3

10.3 57,406.3

20,780.2

3,612.8 83,644.1

721.7

618,742.2

EXTRACCIN DE MINERALES DE HIERRO

EXTRACCIN DE MINERALES METALFEROS NO
FERROSOS, EXCEPTO LOS MINERALES DE
URANIO Y TORIO
EXPLOTACIN DE OTRAS MINAS Y CANTERAS
EXTRACCIN DE PIEDRA, ARENA Y ARCILLA
EXTRACCIN DE MINERALES PARA LA
FABRICACIN DE ABONOS Y PRODUCTOS
QUMICOS
EXTRACCIN DE SAL
EXPLOTACIN DE OTRAS MINAS Y CANTERAS,
NO CLASIFICADAS EN OTRA PARTE
TOTAL POR IMPUESTO

452,566.
8
-

0.04

0.04

800.4

814.6

1,640.9

1,082.8

188.1

8.4

115.4

4,650.6

7,775.9

201.8

682.3

25,435.2

6,845.8

0.03

51.2

40,992.3

745.9

5.6

203.5

1,425.1

109.5

2.0

22.2

2,513.8

16,281.6

3,545.8 10,776.0

15,323.2

4,085.7

17.6

89.4

50,119.4

478,200.
7

4,642.7 70,719.4

64,053.8 14,843.1 83,674.5

1,005.3

717,139.4

Taxes payed byExplotacin de minas y canteras

as a total of Government revenue.

Fuente: elaboracin propia con informacin de la SAT..

Tax exemptions on imports

IN thousands of GTQ.Activity

Tax payers

IVA
Importacione
s 2010

DAI 2010

IVA
Importacio
nes 2011

DAI 2011

Extraccin de
minerales
metalferos no
ferroso, excepto
los minerales de
uranio y torio

4,755.1

755.5

299.0

10.8

Explotacin de
otras minas y
canteras, no
clasificadas en
otra parte

10,331.7

2,150.0

7,986.7

865.8

Total
3
15,086.8
2,905.6
Fuente: Elaboracin en base a informacin de la SAT.

8,285.7

876.6

Jobs in the mining sector

Workers registered in Instituto Guatemalteco de Seguridad
Social (IGSS) for mining activities during 2000 2012.
On the average, this is 0.30% of the workforce.

Fuente: elaboracin propia con informacin del BANGUAT.

AN OVERVIEW OF RECENT
CHANGES IN MINING LAWS
AND SOME ECONOMIC
IMPLICATIONS
ASIES

A presentation for the Honourable

Diane Ablonczy, PC, MP
Minister of State