December 2, 2014 / 9:53 PM / 4 years ago

Guatemala industry chamber mulls legal fight to mining royalty hike

GUATEMALA CITY, Dec 2 (Reuters) - Guatemala’s plan to ratchet up the mining royalty from 1 percent to 10 percent will hurt investment in the country, a leading local business group said on Tuesday, as it considered whether to mount a legal challenge.

Late last week, Guatemala’s Congress changed a nearly 20-year-old mining law to raise the royalty scheme. Proposals to raise the royalty had failed in previous years, and such a steep increase had seemed unlikely. Guatemalan President Otto Perez has yet to sign the measure into law.

Fernando Lopez, president of Guatemala’s Chamber of Industry, said his organization was looking into whether it would legally challenge the new mining law and the 2015 budget, which would come into effect on Jan. 1.

“We didn’t know, nor were we consulted about the royalty increase approved by Congress,” Lopez told Reuters. “These changes in the rules of the game worry us because they affect investment in the country, and harm the image of Guatemala for potential investors.”

Canadian miner Tahoe Resources Inc expressed disappointment with the change, noting it came at a time when metals prices were at four-year lows.

“The company is actively engaged in discussions with the Guatemalan government, business interests and community leaders about the ramifications of the proposed legislation,” Tahoe said in a statement.

Canadian miner Goldcorp Inc, which operates Guatemala’s biggest mine, Marlin, could not immediately be reached for comment.

Mining in Guatemala, which makes up some 0.6 of the country’s gross domestic product, has been roiled in recent years by controversy and social unrest, an image the country has hoped to shake with new legislation.

In 2012, lawmakers tried to change the mining law and raise royalties, but the proposed legislation stalled in Congress.

In 2013, with anti-mining sentiment rising following a series of conflicts between miners and communities, Perez asked Congress to impose a two-year moratorium on new metal-mining licenses, but it was rejected. (Reporting by Sofia Menchu; Writing by Gabriel Stargardter; Editing by David Gregorio)

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