Lawmakers in El Salvador recently voted to reintroduce industrial mining in the country, ending a 2017 landmark ban that has protected freshwater and public health.
President Nayib Bukele has advocated for the return of mining despite the unpopularity of the industry in El Salvador, arguing that it will bring in billions of dollars and create thousands of jobs.
The government will have at least 51% control over every mining project while also being in charge of oversight, causing concern from environmentalists that it will be hard to challenge projects that aren’t being carried out responsibly.
Lawmakers in El Salvador have voted to reintroduce industrial mining in the country, ending a landmark ban that was meant to protect freshwater and public health.
The law, pushed through just days before the end of 2024, gives the government control over the country’s massive gold reserves, which have gone untouched since 2017 due to a nationwide ban on extractives.
For many conservationists, this marks a major step backwards in the fight to protect El Salvador’s fragile ecosystems.
“It’s an absolutely disastrous decision,” said Luis González, advocacy director for the Salvadoran Ecological Unit, an environmental NGO. “[The mining ban] was established after years of struggle, but also because it was technically and scientifically proven that mining is an unviable activity in Salvadoran territory due to the environmental, water and population conditions.”
The law received 57 votes in favor and three against, passing just days before the end of the 2024 legislative session despite polls showing that mining is deeply unpopular in the country. Around 60% of Salvadorans think the country is unsuitable for mining and over 78% believe living near a mine to be “very dangerous,” according to one survey.
The legislative assembly voted on the mining law in late December. Photo courtesy of Asamblea Legislativa.
Mining creates a new revenue stream for the government, which has been looking to show the IMF and other international backers that the country is economically stable enough to pay back loans.
Preliminary studies of a small area of the country found approximately 50 million ounces of gold worth over $1.3 billion. Mining it could also create thousands of jobs and finance new infrastructure projects, President Nayib Bukele said in an X thread.
“We are the ONLY country in the world with a total ban on metal mining, something that no other country applies,” Bukele said in the thread. “Absurd! This wealth, given by God, can be harnessed responsibly to bring unprecedented economic and social development to our people.”
The government has the option of working with foreign companies to carry out the mining projects but will retain a majority stake while also being in charge of oversight. Critics say so much government control will make it hard to challenge projects encroaching on wildlife, freshwater sources and local communities suffering negative health impacts.
Officials who voted for the law argue that government control is designed to prevent private industry from taking advantage of El Salvador’s natural resources. The country has one major watershed, the Lempa River, that provides over 60% of the country’s freshwater. Cyanide and other chemicals commonly used in mining could lead to a water crisis if not dealt with properly.
“As a country, we don’t want to repeat the mistakes of the past, where these types of activities are left to the discretion of companies that seek profit and don’t care about the wellbeing of the people,” Deputy Elisa Rosales said in a legislative press release.
The General Directorate of Energy, Hydrocarbons and Mines didn’t respond to Mongabay’s request for comment.
Resistance to mining
Activists have been concerned for years that Bukele would reverse the mining ban.
In 2021, he created the General Directorate of Energy, Hydrocarbons and Mines and joined the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development, a group that helps countries meet their sustainable mining goals.
Last year, residents in the department of Cabañas said they’d been visited by foreigners interested in buying land. The area underwent mining exploration during the early 2000s but never broke ground.
Five anti-mining activists, known in the country as “water defenders,” were arrested in 2023 — a case that outside observers have called politically motivated due to the defenders’ leading role in getting the 2017 mining ban passed.
The defenders were also part of a resistance group during the country’s civil war, allegedly participating in a kidnapping and murder in 1989. They were found innocent last October but will face a retrial following an appeal by the Attorney General.
Protesters outside of the legislative assembly. Photo courtesy of Cripdes
“They find this case that’s super weak, and in the end, that has sort of fallen apart. No evidence, no anything,” said John Cavanagh, senior advisor at the Institute for Policy Studies, who noted that the case could be meant to silence and intimidate future anti-mining campaigns.
Bukele is one of the most popular presidents in the world, with an approval rating of around 90%. He’s eradicated gang violence and brought in foreign investment. But the unpopularity of mining may pose new political challenges for him, Cavanagh said. Unlike in neighboring Guatemala and Honduras, mining isn’t accepted as the norm by agribusiness, tourism and other sectors that would be affected by pollution.
The Catholic Church was one of the most outspoken groups when mining was banned in 2017. Ahead of the vote on the new law, the Episcopal Conference of El Salvador published a statement expressing concern about the return of mining, saying that it was in favor of economic development but not at the expense of people’s health. Cavanagh said the church could start organizing educational campaigns against mining.
Other observers said they expect communities with known gold deposits, including in Cabañas and Chalatenango, to fight back against development once it starts.
“We have to continue resisting an activity that is detrimental to the environment, to water, to the health of the population,” González said. “It’s truly regrettable, because this will further damage an ecosystem that is already damaged, already mistreated, already degraded, which will undoubtedly generate disasters in the medium and long term.”
Banner image: Protesters outside of the legislative assembly. Photo courtesy of Cripdes.
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Foreign investors in Honduras have “extraordinary privileges,” allowing them to sue the government for reforms that affect their investments, hindering public interest legislation, a recent report has found.
Honduras faces billions of dollars in lawsuits from corporations, many tied to controversial investments made after the 2009 coup, creating a deterrent effect on the government’s ability to make sovereign decisions and making it the second-most-sued country in Latin America over the period of 2023 to August 2024, after Mexico.
Some local communities in Honduras are divided over foreign investment projects, with several expressing resistance due to concerns about their impact on the environment and land rights.
Honduras’ recent energy reforms and mining bans are facing backlash and legal challenges, as foreign corporations resist changes aimed at protecting natural resources and human rights.
Foreign investors in Honduras enjoy “extraordinary privileges” that hinder the government’s ability to implement reforms that could benefit human rights and the environment, a report has found. These advantages allow corporations to sue the Central American country for policy changes that allegedly harm their investments using controversial investor-state dispute settlement (ISDS) mechanisms, resulting in a surge of lawsuits amounting to billions of dollars.
The report from the Institute for Policy Studies, the Transnational Institute, TerraJusta and the Honduras Solidarity Network reveals that the impact of these legal disputes creates a “chilling effect,” otherwise known as a “deterrent effect,” in which the state may be discouraged from enacting public interest legislation due to the costly risk of liability under investment agreements.
“The lawsuits directly undermine the government’s ability to listen to local communities and make sovereign decisions about protecting their land and resources,” Karen Spring, coordinator for the Honduras Solidarity Network and co-author of the report, told Mongabay.
Honduras has faced 19 claims over the past two decades, 14 of which have occurred since 2023. The chart highlights the various sectors involved and the legal pathways investors have used to file these lawsuits. Image via ‘Corporate Assault on Honduras’ report.
The ISDS provision allows private sector lawyers to determine whether countries are treating foreign investors fairly. The report says that many lawsuits in Honduras stem from companies that made questionable investments after the 2009 coup d’état, with around a third of the investments facing significant resistance from affected communities.
ISDS is a controversial mechanism that companies across the world are increasingly using to sue governments for policies that may impact their profits, often with harmful consequences for environmental protection and human rights. In a 2023 report, U.N. human rights rapporteur David Boyd described ISDS as “a major obstacle to the urgent actions needed to address the planetary environmental and human rights crises,” noting that such cases contribute to a “regulatory chill,” discouraging governments from enacting stricter regulations.
“These [lawsuits] are an incredible amount of money that would absolutely erode what Honduras has available for health, education, infrastructure and other public investments,” Jen Moore, associate fellow at the Institute for Policy Studies and co-author of the report, told Mongabay.
A $10.8 billion lawsuit
The island of Roatán is at the center of the largest pending lawsuit against Honduras, sparked by government reforms to the employment and economic zones (ZEDEs) that threaten the U.S.-based Honduras Próspera’s “startup city” project. Established in 2013 to attract foreign investment, ZEDEs operate under the Honduran Constitution but enjoy extensive legal, tax and administrative autonomy, a situation that has fueled significant controversy.
During President Xiomara Castro’s electoral campaign before she was elected and took office in January 2022, she vowed to eliminate ZEDEs. Her promise led to their repeal in 2022 and a Supreme Court ruling in September that declared them unconstitutional, a decision applicable retroactively back to 2013.
The island of Roatan is at the center of a $10.8 billion lawsuit against Honduras, after the government vowed reforms of Employment and Economic Development Zones (ZEDEs). Image by Michelle Raponi via Pixabay.
“Justice for the Honduran people,” Castro wrote on X in light of the Supreme Court’s decision, “means not selling off pieces of our territory nor privatizing our sovereignty.”
Próspera ZEDE is an economic development zone in Honduras created to attract investment and boost job growth. It functions as a free trade zone with government oversight but is managed by the private company Honduras Próspera Inc. through a U.S.-based system. The setup encourages both local and international businesses, with more than $120 million in U.S. private investment reportedly drawn so far, according to a Próspera statement sent to Mongabay.
The project has become a source of division. Some members of Crawfish Rock, a community of a few hundred people in Roatán, were unaware of what a ZEDE was before development and consider it a dispossession of land, according to the report. Social tensions have risen between supporters of the projects and those focused on protecting the environment, Spring said. Meanwhile, Honduras Próspera said in a statement sent to Mongabay that support for the ZEDE outweighs opposition 4-to-1, claiming opposition comes from a “tiny, politically connected elite” within the community.
President Xiomara Castro came into office in 2022. Since then, she has sought to make social and environmental reforms, but has been met with billions of dollars in lawsuits from corporations alleging that the policy changes impact their profits. Image via Honduras government.
The impact of government reforms on existing ZEDEs is still unclear, but they have already faced a costly backlash. Honduras Próspera, which has invested significant sums into the project and has a 50-year legal stability guarantee, is seeking to sue the government for unfair treatment, claiming $10.8 billion, plus costs, which amount to at least $5 million per lawsuit.
In an emailed statement to Mongabay, Nick Dranias, the general counsel of Honduras Próspera, predicted thousands of human rights complaints may be filed to challenge the ruling, along with numerous trade treaty arbitration claims.
“Honduras remains the master of its fate,” he wrote. “If Honduras proceeds with what clearly constitutes indirect expropriation of investments, and the violation of the human rights of thousands of Honduran workers and international investors, just compensation is what will be due.”
A procession of lawsuits
In the past two decades, corporations have filed 19 ISDS cases in Honduras, with nearly all of them in the last two years. In 2023 alone, Honduras faced nine claims, and by August 2024, another five cases had been added, coinciding with Castro’s administration. This made Honduras the second most sued country in Latin America over that period (after Mexico). The 15 pending lawsuits total nearly $14 billion — about 40% of Honduras’ 2023 GDP — posing a significant threat to one of the poorest countries in Latin America.
Claimants, primarily from the U.S. (four), Europe (six) and Latin America (nine), including Panama, Guatemala, Mexico and Colombia, are mostly in the finance, real estate, energy and transportation sectors.
The report describes these lawsuits in Honduras as “mafia-style” and links them to the concept of “odious debt,” which holds that debts acquired from prior problematic regimes shouldn’t burden the people.
“It’s unfair that Hondurans should have to pay for these bad deals and bad policies that were struck under such irregular and corrupt and repressive circumstances after the military [regime] back in 2009,” Moore said.
Recent energy sector reforms
In 2022, Honduras passed a new energy law that aims to increase state control over the electricity sector that has been dominated by political-entrepreneurial groups since the 1990s and help reduce soaring energy prices, among the highest in Latin America.
These reforms, however, generated uncertainty among private energy generators over future energy production, prompting Norwegian investors Scatec, Norfund and KLP to file two lawsuits against Honduras related to the Agua Fria Solar Energy Park in Valle and Los Prados Solar Energy Park in Choluteca, totaling together $400 million plus costs.
The report states that the Los Prados project was rejected by the local population, and community leaders have faced persecution and criminalization for years for their opposition to the solar park. Furthermore, locals complain of environmental damage and restricted access to their land and crops due to hostility in the area.
Despite long-standing resistance, local activists in the Guapinol community face powerful opposition from the mining company Inversiones Los Pinares. Image by Fernando Destephen/Contra Corriente.
One local woman was cited in the report as saying that the solar companies Scatec and Norfund “buried the water sources. That’s been the hardest part for us — there’s not enough water to bathe, especially with all the heat here.”
Denia Castillo, a lawyer with the Network of Women Human Rights Defense Lawyers (RADDH), who is working with communities impacted by the solar projects, told Mongabay that negotiations between the companies and the government focus on lowering tariffs rather than canceling the contracts altogether. So far, RADDH and local communities have filed 33 complaints against public officials, citing alleged irregularities in the approval process for these contracts.
According to Castillo, the communities call for cancellation of the contracts and oppose the project. “The people feel completely let down by the government because it has not wanted to listen to them, but [instead] it is negotiating with the company,” she said.
Scatec, KLP and Norfund didn’t respond to a request for comment for this story.
A delayed ban on open-pit mining
As part of Castro’s green agenda, she announced in early 2022 that no new permits for open-pit mines would be issued. This common mining method involves digging large holes and can devastate ecosystems by clearing vegetation and displacing soil. A month later, the Secretariat of Energy, Natural Resources, Environment and Mines (SERNA) declared all of Honduras free of open-pit mining and pledged to review, suspend and cancel related permits.
Yet despite the government’s announcement, Canadian mining company Aura Minerals, with controversial operations in Honduras, noted in a press release that SERNA’s minister later clarified that the government would focus on unregulated mining, allowing companies with valid operating permits to continue their activities. In response to Mongabay’s request for comment, the company replied, “Aura Minerals states that its Minosa [a subsidiary of the company] operation in Honduras holds all the necessary licenses and permits to operate and maintains its activities are in compliance with current legislation.” The extent of the mining ban remains uncertain.
Experts in the report suggest that the shift from an outright ban to allowing exceptions may be due to weakening commitments to avoid potential lawsuits. To date, the mining industry has not made any arbitration claims at the World Bank’s International Center for Settlement of Investment Disputes (ICDID) against Honduras in relation to the country’s policies on open-pit mining.
“A threat is sometimes as effective as an actual arbitration suit,” Moore said. “It makes public officials think twice about whether or not they would follow through on a [reform] decision.”
According to the report, this could be behind the delay in halting the open-pit iron oxide mine and associated installations linked to the Inversiones Los Pinares mining company (previously known as EMCO Mining and owned by EMCO Holdings) with operations in Tocoa in the department of Colón.
Killed on September 4 this year, Juan Lopez was an environmental defender who opposed mining in the Tocoa region. Human rights organizations, such as the UN and Frontline Defenders, have demanded a full investigation into his death. Image via Frontline Defenders.
The Los Pinares mining operations in Carlos Escaleras National Park have been accused of causing water shortages and pollution in the Guapinol and San Pedro rivers, vital for 42,000 people, and endangering local ecosystems, according to the humanitarian organization Trócaire. Trócaire also links the project to human rights abuses, including the killing, criminalization, and imprisonment of community members defending their water sources. This includes the recent killing of local environmental defender Juan López, who was shot dead in September. Following his death, U.N. experts called for an independent investigation into potential involvement by businesses and politicians.
López was one more victim in a string of killings of activists in the region. There have also been at least 32 people criminalized by Inversiones Los Pinares for defending Carlos Escaleras National Park, according to an Amnesty International report.
“It’s … absolutely scandalous that asymmetry between corporate power and what people have access to, to defend their very basic rights,” Moore said. “It’s just so starkly on display in this case and with this slew of arbitration cases since 2023.”
EMCO Group (to which Los Pinares belongs in the iron and steel division) didn’t respond to Mongabay’s request for comment for this story.
Next steps
In February, Honduras began its exit from the World Bank’s International Center for Settlement of Investment Disputes (ICSID), which handles the suits against the country — a move praised by researchers who argue ICSID membership isn’t essential to attract foreign investment.
Experts argue it’s not enough. The report calls on Honduras to revoke investor privileges in treaties, laws and contracts and fully repeal the 2013 constitutional reforms that enabled ZEDEs. The authors also contend it’s unjust for the Honduran people to bear the cost of compensating transnational corporations amid widespread local resistance.
“[The ISDS mechanism] is a system that should be abolished,” Moore said. “It is catastrophic for policies and decisions in the public interest, in the interest of affected communities, and that repeatedly is serving very narrow profit-based interests of investors at the expense of people.”
Banner image: The Carlos Escaleras National Park has long been at the center of community efforts to protect it from mining activities, which has reportedly caused environmental damage and led to social conflicts and violence. Image via the Comité Municipal para la Defensa de los Bienes Comunes y Públicos de Tocoa (Municipal Committee for the Defense of the Common and Public Goods of Tocoa).
A recent report from the FACT Coalition analyzed 230 cases of environmental crime in Amazon countries over the past decade to better understand how crimes are committed and how the associated profits are laundered.
It found that the U.S. is the most common foreign destination for the products and proceeds of environmental crimes committed in the Amazon region.
The most popular way to launder money involves the use of shell and front companies, and corruption was the single most prevalent convergent crime mentioned.
Of the cases analyzed, only one in three appears to have included a parallel financial investigation.
A new report by the FACT Coalition found that many investigations into environmental crimes do not follow the money. Of the 230 cases analyzed, 76% involved the use of front and shell companies, likely due to flaws in the anti-money laundering systems of foreign countries, researchers said.
The environmental crimes analyzed occurred between 2014 and 2024 in Amazon countries, mainly in Colombia, Ecuador and Peru. The aim was to better understand how criminals operate and how the associated profits are laundered.
The report pointed to weaknesses in the way the investigations were carried out — for instance, a lack of financial investigations — as well as the role of convergent crime, which played a role in most cases.
“When it comes to environmental crimes that are committed in countries in the Amazon region, many cases are discovered accidentally,” Julia Yansura, the program director for environmental crime and illicit finance at the FACT Coalition and author of the report, told Mongabay over email. “A police officer happens to stop a vehicle or an airport security officer randomly checks a bag, and they find something. That approach is far from sufficient and often yields minor cases involving low-level criminals.”
Trucks loaded with Amazon timber in Pará State. Image courtesy of Marizilda Cruppe for Greenpeace.
One in every three cases appeared to include a parallel financial investigation, the report said. Without financial investigations, it’s hard to find out who is responsible for these crimes and who is benefiting financially, Yansura explained. Criminal groups will most likely move to a different location and continue their crimes.
“We see this frequently with illegal gold mining in South America,” she explained. “When authorities seize the gold and destroy the heavy machinery, criminal groups are back literally the next day, re-establishing operations a few miles away.”
A failure to conduct parallel financial investigations will likely only lead to the arrest and prosecution of low-level individuals who may be victims themselves, while those who are responsible remain free. Research by the World Wildlife Fund (WWF) has shown that as much as 40% of all deforestation worldwide is carried out by victims of modern slavery or forced labor.
When it comes to the laundering of profits from environmental crimes, such as illegal logging, illegal mining and wildlife trafficking, the report found that the most common methods identified in the analysis involved front and shell companies, which are used to mask illegal activity.
According to the report’s findings, 25% of all cases, and 44% of “follow the money” cases, involved at least one foreign jurisdiction. The U.S. was the foreign jurisdiction mentioned most across all cases analyzed, either as a transit or destination point for illegally sourced natural resources, such as gold or timber, or dirty money.
Robert Muggah, co-founder of the Brazilian-based think tank Igarapé Institute, told Mongabay this is because of “the abundance of shell companies, front companies and trade-based fraud that allow criminal actors to wash dirty money” in the country.
“To a large extent, U.S. businesses have not historically been required to identify their true beneficial owners to the Treasury Department,” he explained over email. “In the meantime, owing to uneven regulatory oversight and enforcement, U.S. banks have allowed large sums of cash to be transferred in the financial system by individuals involved in corruption, fraud and sanctions evasion.”
Another reason why the U.S. is central to this network is because real estate is exempt from many rules related to countering money laundering, Muggah explained. “Networks of shell companies and foreign investors often purchase real estate to launder billions of dollars of profits generated by, among other things, environmental crime.”
Most of the environmental crimes analyzed by the FACT report occurred in Colombia, Ecuador and Peru. Image by Dimitri Selibas.
To address the issue, Yansura said the U.S. should implement the Corporate Transparency Act, which came into effect on Jan. 1, 2024, and is meant to increase transparency in business ownership and entity structures to combat laundering and other criminal activities. By ensuring this mechanism is up and running as soon as possible, “the U.S. could shut down one of the biggest loopholes currently being used by environmental criminals in the Amazon,” Yansura added.
Beyond the U.S., Muggah said national governments should follow the EU’s lead in ensuring that environmental crime is a predicate offense, a component of a more complex crime, often associated with money laundering or organized crime. In addition, anti-money laundering authorities can strengthen partnerships with environmental protection agencies, environmental crime investigators and other research organizations, “to assess the extent of vulnerabilities in financial and nonfinancial sectors to conceal and launder gains from environmental crime,” he said.
Environmental crime was almost always accompanied by other converging crimes, such as corruption and drug trafficking, the FACT Coalition found. Among the 230 environmental crimes analyzed, corruption was by far the most prevalent, followed by terrorism financing and drug trafficking.
According to research carried out by the Financial Action Task Force, wildlife traffickers often exploit weaknesses in the financial and nonfinancial sectors to move, hide and launder their profits. The annual revenue generated by the global illegal wildlife trade has been estimated at $20 billion per year.
Amid conversations at the COP16 biodiversity summit about funding collective efforts to protect biodiversity, Yansura said that by tackling environmental crime, which generates up to $281 billion a year, governments could recover and use the money to help restore damaged ecosystems and safeguard natural resources.
