Guatemala’s
largest nickel mine paid just £1.4m in compulsory royalty taxes
during its first four years of production. The opencast Fenix mine
belongs to the Bronstein family and is run by their Swiss-based
Solway group. Solway benefits from Guatemala’s low nickel royalty
rate, which is calculated at just 1% of all the revenues made from
selling the unrefined ore it digs out of the ground. Recent
proposals to increase rates to 15%
were
not implemented. The privately owned company is controlled by a
family trust. The ownership structure is obscured by an offshore
network that ranges from Cyprus to Malta, the British Virgin Islands,
and St Vincent and the Grenadines.
An
analysis of Solway’s filings with the country’s mining ministry
helps to explain why its contribution is so low.
Solway’s
extraction business, Compañía Guatemalteca de Níquel (CGN), digs
the ore out of the ground. Its sister company, Pronico, also owned by
Solway, operates a refinery at the Fenix site, and after buying the
ore from CGN, turns it into ferronickel. CGN
is the company that pays the compulsory royalty tax. The price at
which it sells to Pronico determines its revenues, and therefore how
much the Guatemalan treasury receives. In 2017, the most recent year
on record, filings show Pronico paid an average of just 36 quetzals
(£3.70) per metric tonne of untreated ore. At its lowest, the price
paid by Pronico has been less than the cost of digging the mineral
out of the ground, Solway concedes.
Fenix
is the focus of claims about water and air pollution, and fears of
political corruption. Their diggers work night and day, felling trees
and excavating 2.6m tonnes a year. As its quarries expand, hundreds
of families in the surrounding Mayan villages fear eviction, and the
loss of the environment that sustains them. Dozens, sometimes
hundreds of trucks a day carry ore and ferronickel away to the
Caribbean port of Santo Tomás de Castilla.
“Many
people have died on the road,” says Manuel Choc, from the
settlement of El Paraíso, “The trucks run them over and often they
don’t stop. Many people. Someone died just over there. The drivers,
they do nothing. But God, he knows.”
Guatemala’s
supreme court ruled in February that local people had not been
properly consulted when the Fenix licence was renewed in 2006, under
previous owners.
Many
people do not trust the company, or the few government studies that
have been produced, believing the state is prepared to prioritise the
needs of industry over their own. The people have an expression: the
mine, they say, is “eating the mountain”. With
Solway planning to dig for the next two decades, the communities say
they are in peril. Some
don’t
appear on any official maps. In the eyes of the authorities, they
simply do not exist. Last
year the head of El
Gosen village
was
abducted and then jailed. During his absence, his people were evicted
from land which Solway says they were squatting.
Tensions
in El Estor escalated in March 2017, when a red stain spread across
the lake. The fishermen blamed the refinery. their unions decided to
picket and blockade the road to Fenix. Witnesses say that at 2pm on
27 May, police first launched teargas, then opened fire. The
fisherman Carlos Maaz Coc had picked up a stone. He was shot in the
chest before it left his hand. The police fled the scene, after
wounding another demonstrator, leaving Maaz’s body on the ground.
El
Estor’s parish priest, who was three metres away from Maaz when he
saw the police open fire, is horrified by events.
“It
is the modus operandi of many companies to impose fear, calling you a
delinquent…and it seems that the strategy has worked for them,”
says Padre Ernesto Rueda Moreno. “The union is completely
overshadowed.”
The
mine pressed the public prosecutor to take legal action against the
demonstrators. The head of the fishermen’s union was eventually
detained by police in Puerto Barrios prison. His deputy was held
there for a year and is now on bail. Arrest warrants were issued for
two indigenous journalists working for Prensa Comunitaria, Carlos
Choc and Jerson Xitumul.
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