El Salvador’s president, Nayib Bukele, aims to revive the mining industry, reversing a 2017 ban due to environmental concerns, citing potential economic benefits. However, this move has raised alarms among environmental groups, fearing water pollution and ecological damage. While some locals see job creation potential, others worry about losing livelihoods. Experts caution that while the country may have valuable gold reserves, responsible extraction poses significant challenges, and negotiations with mining corporations need to be reevaluated.
El Salvador’s Controversial Mining Reversal
The president of El Salvador, Nayib Bukele, once branded the country’s 2017 decision to halt mining for environmental reasons as “absurd.” Now, in the face of sluggish economic growth, he is gradually laying out his case for reviving the industry.
El Salvador made history as the first nation to prohibit all licenses or concessions for both open-pit and underground metal mining, along with banning the use of hazardous substances such as cyanide and mercury.
In late November, Bukele took to his X account, his primary mode of communication, to announce that “studies conducted in just 4% of the potential area have identified 50 million ounces of gold, currently valued at $131.565 million. This figure equates to 380% of our GDP,” although he did not provide specific sources for this data.
He further asserted, “If we responsibly utilize our natural resources, we could transform El Salvador’s economy almost overnight,” suggesting a potential economic boon for the nation.
Environmental Concerns and Opposition
However, Bukele’s carefully curated statements have sparked alarm among environmental advocates. Approximately fifteen NGOs have organized a rally outside Parliament to voice their concerns. “Establishing a mine in the Atacama Desert (Chile) is vastly different from opening an open-pit mine in Chalatenango (northern El Salvador), where population density is high and forest reserves are scarce,” warned Pedro Cabezas, leader of the Central American Alliance Against Mines.
Antonio Pacheco, from the NGO ADES, argues that mining in the Lempa River basin, which supplies water to the capital, “poses a significant risk,” warning that “the adverse effects would reverberate throughout the territory.” Many NGOs that fought for the anti-mining law of 2017 predict serious consequences, including “water shortages and pollution.” Unlike Andean nations (Chile, Peru, Bolivia, Argentina), Central America lacks a history of mining.
Open-pit mining remains illegal in Honduras and Costa Rica (although the government has indicated a possible reversal), while Panama has imposed a moratorium on new extraction permits following public backlash against a large open-pit copper mine.
Economic Implications and Job Creation
Following his crackdown on gang violence through states of emergency and mass arrests, Bukele now faces the challenge of improving purchasing power, as over a quarter of Salvadorans live in poverty and nearly 70% are employed in the informal sector.
In the former mining area of Santa Rosa de Lima in northeastern El Salvador, opinions on Bukele’s initiatives are divided. Rubén Delgado, a 55-year-old mason, believes, “It will create jobs and benefit everyone.” Conversely, José Torres, a 72-year-old independent gold seeker, fears he may lose his already limited income, stating, “The rivers are already polluted, animals are dying, and we have nothing else here.”
Jesuit priest Rodolfo Cardenal, a staunch critic of the mining industry, argues that “the allure of gold incites excessive fantasies and insatiable greed.” He questions whether Bukele’s interests align more with the nation or with multinational corporations.
Economist Carlos Acevedo, former president of the Central Bank of El Salvador, noted that the “spectacular” figures presented by Bukele imply that the country “is sitting on a gold mine.” If the estimate of 50 million ounces of gold holds true, it could cover four times the country’s $31 billion external debt, or 85% of GDP. However, he cautions that the primary challenge lies in “extracting this gold in a socially and environmentally responsible way.” Furthermore, he emphasizes that there is no quick fix to spur economic growth, regardless of the available gold.
Another hurdle for Bukele will be to “negotiate differently” with global mining corporations, as the royalties currently negotiated during tenders remain minimal.