Four years ago, San Miguel resident Jacobo López welcomed news that a mine would be dug here. He figured the project would spur the economy of this slow-paced town tucked in the mountains of western Honduras.

But today, he has his doubts. Residents here live with a cyanide leach pit 140 feet (42 meters) from the closest house. They see hillsides deforested, endure frequent showers of dust and complain of increased skin and respiratory problems.

“There are about 30 families benefiting from the mine, and the company has given us some public works projects,” López says. “But that’s not the whole picture. You have to consider the damage to the environment, too.”

López is not alone in making such demands.Worried that the government is promoting mining without requiring adequate environmental safeguards, many here are calling on national leaders to reconsider the country’s mining policies. Last month their cause became front-page news when the country’s respected Roman Catholic Cardinal, Oscar Rodríguez, led thousands of protesters in a march to another mine—the San Martín gold mine.

Demonstrators following the purple-robed leader in the so-called “pilgrimage for life” protested the open-pit mining by Entre Mares, a subsidiary of Nevada-based Glamis Gold, and complained of excessive water use and of deforestation near the mine.

Criminal charges filed

Other mines have found themselves in the national spotlight. In June, attorneys from the environmental unit of the Honduran prosecutor’s office filed criminal charges against American Pacific of Honduras, a subsidiary of Breakwater Resources of Canada, alleging its El Mochito mine was discharging lead and cyanide into a stream that feeds a mountain lake. The company denies the allegations.

Prosecutors already had filed charges against Entre Mares late last year. And they are currently investigating a third mine, San Andrés.

In all, four mines are operating in Honduras, extracting metals including zinc, silver, gold and lead. (See map, front page.) The fact that all but one has attracted the attention of prosecutors indicates the need for improved oversight, says Edy Lagos, legal advisor to the prosecutor’s environmental unit.

Others agree. Earlier this year, activists and community leaders launched a campaign titled “Honduras is Worth More than Gold” to press for a reexamination of mining policies.

“In Honduras there’s neither the technical ability nor the political will to properly regulate this new industry,” says campaign organizer Michael Marsh, a U.S. citizen who has researched mining here for the Association of Non-governmental Organizations (Asonog), an association of Honduran groups.

Marsh began looking into the mining industry last year. He says that when he asked officials for a list of concessions, he was given two composition notebooks with handwritten lists of exploration and extraction contracts, with handwritten notes on a map.

The contracts granted since 1996 encompassed one third of the national territory.

Officials admit the list is in need of updating. And Marsh acknowledges that most concessions will probably never become mines. Yet Marsh and others worry that the projects that do move forward will lack safeguards.

Critics of the government’s policy point to a 1998 law aimed at attracting foreign mining investment. Enacted just weeks after Hurricane Mitch, the law contains few mentions of environmental matters, they complain. Meanwhile, they point out that an agency created under the mining legislation—the Office for the Promotion of Mining (Defomin)—is charged not only with negotiating mining contracts, but also with reviewing environmental-impact studies and monitoring mines.

“This is a classic case of the fox guarding the henhouse,” Marsh says. “Defomin is promoting the mining industry while making environmental decisions that could affect the companies’ profit margins.”

Activists here worry mainly about contamination of water supplies with cyanide and heavy metals; overuse of water resources; deforestation; and the failure of some mines to make environmental deposits to cover accidents.

Government officials, for their part, argue that mining income is critical for Honduras, which has endured a severe economic crisis since Hurricane Mitch pummeled farmland and infrastructure here in 1998.

By law, mines must pay the federal government a 12% sales tax on the value of extracted minerals and income tax on profits. They also must pay a 1% tax on the value of the minerals to the municipality where the mine is located.

“The principal exports in this country were drastically affected by Mitch,” says Amílcar Zúniga, Defomin’s executive director. “The goal is to find new sources of income for the country. Being a nation with great mineral potential, it is logical to try to promote it.”

Mineral exports climbing

Zúniga says that since the new law was written, three mines have opened and numerous Canadian and U.S. companies have come calling. He estimates mining exports this year will total $80 million, close to the $87 million generated during the entire 1995-1999 period.

He acknowledges the new mining law could use “more precision” on environmental matters. But weak areas can be addressed using regulations and changes to the law, he says.

Zúniga says next month the government will issue regulations and an environmental manual required under the mining law. And he reports that two mine operators have made $250,000 in deposits to cover environmental damage in the event of an accident.

Activists welcome this news, which they attribute to pressure they have helped bring to bear. Still, they say the results of the nation’s first forays into mining merit stronger and more comprehensive safeguards.

In San Martín, activists want a special committee made up of representatives from government and civil society to review and reform the mining law. In San Miguel, López lauds the effort. “I think the new mining law should be evaluated to see whether the benefits outweigh the costs,” he says.