Environmental Review Summary
Project Number
21766
Company Name
Montana Exploradora de Guatemala S.A.
Date ERS Disclosed
Mar 24, 2004
Country
Guatemala
Region
Latin America and the Caribbean
Environmental Category
A - Significant
Status
Completed
Previous Events
Approved : Jun 3, 2004
Signed : Jun 29, 2004
Invested : Nov 5, 2004
Sector
Gold
Industry
other
Department
Infra-WBG Dir. Minerals & Metals
Project Description
The Marlin project (Marlin or the project) is a promising greenfield gold project located in the western Guatemalan highlands approximately 90 air miles northwest of Guatemala City. The $254 million open pit/underground project is estimated to produce about 217,000 oz per annum over 11 years at $95/oz cash cost (lowest quartile on the cost curve). Total open pit and underground reserves in the current mine plan are estimated 13.3 million tonnes at 5.4 g/t gold. In addition, there is significant exploration potential. The metallurgy appears simple and conducive to a simple treatment circuit with high recoveries.
The Marlin project is located near the village of San Miguel in western Guatemala. San Miguel is located 30 kilometers south of Huehuetenango, a major town 250 kilometers northwest of Guatemala City along the Central American highway. The Marlin project is accessible by an all-season road, which is connected to a paved highway near Huehuetenango.
Environmental and Social Issues:
This is a Category A project according to IFC''s Procedure for the Environment and Social Review of Projects. Environmental, health and safety issues reviewed during appraisal included the following: management of wastewater, air emissions and wastes; management of hazardous materials including cyanide; management of tailings including cyanide detoxification and dam safety; international waterways (riparian notification); mine closure; occupational health and safety; emergency preparedness and response. The company adequately addressed these issues in its Environmental Impact Assessment (EIA) and supporting documentation, and is taking appropriate measures to deal with them. The company has also demonstrated adequate capacity to comply with IFC requirements. Key environmental and social issues at Marlin are described below.
- Tailings Dam.
Lining the tailings dams is not an option at Marlin due to the mountainous setting of the region. Glamis plans to utilize a cyanide destruction process to bring the weak dissociable (WAD) cyanide content down to 1 ppm prior to pumping the tailings in an unlined tailings dam. A number of tailings dams worldwide are constructed in this manner and they operate satisfactorily. Their success depends upon such factors such as: i) tailings chemistry; ii) ground water hydrology characteristics, and iii) tailings facility design, given that Guatemala is on a seismic zone. The IFC team reviewed the tailings dam designs and found it satisfactory. Furthermore, the company has engaged an independent review, as per IFC’s Safety of Dams policy, to ensure that all applicable requirements are fulfilled.
- Hazardous Materials Management and Safety Plans.
The project includes a management plans for hazardous materials (with special emphasis on Cyanide) and plans for human health, industrial and environmental safety. Marlin’s solid waste management system also includes procedures for management and disposal of hazardous waste. The company has committed to expand its safety plans as necessary, to comply fully with applicable IFC guidelines.
- Reclamation and Closure Plan.
The project also includes a conceptual reclamation and closure plan, which will be tailored to the prevailing situation at the time of closure. The company will include adequate provisions for closure as part of the operating budget of this project.
- Indigenous Peoples.
The project is located in an area populated almost exclusively by Mam-Mayan and Sipacapense-Mayans peoples. While residents of communities near the Marlin project are indigenous, they are not tribal or nomadic. They typically own land as individuals and families; there is no communal land in the immediate vicinity of the project area. And, while local indigenous persons engage in subsistence farming, most must supplement these activities with wage labor and small-scale entrepreneurial activities. The company has prepared an Indigenous Peoples Development Plan (IPDP) to ensure that indigenous peoples in the area share in the benefits of the project through the following initiatives: local hiring; local capacity building and infrastructure improvements; projects to promote sustainable development in the area; and reforestation and sustainable forestry. The IPDP will be implemented through the recently created Fundación Sierra Madre (FSM), in which the Company will invest around $400.000 per year during the first five years of operations. IFC''s Corporate Citizenship Facility (CCF) will support FSM in the development of a program to establish community-managed nurseries to supply the mine''s reforestation needs. - Land Acquisition.
Montana owns the rights to the subsurface minerals within the Marlin project area, but the land surface is being acquired from private owners. Guatemalan law does not allow condemnation of land for non-public purposes; therefore Montana must acquire the right to use the needed land through purchase, lease, rental or other use arrangements. Current surface owners must enter into these arrangements voluntarily.
The Marlin project is located within an area of steep slopes, dispersed forest cover and thin soils. There are relatively few primary residences within the project area. Much of the land is minimally used, primarily for supplemental subsistence farming, occasional grazing and firewood gathering. Early on Montana Exploradora determined that landowners prefer to sell their properties rather than be resettled, either as a group or as individuals. This is because many land owners do not live on the property, the price offered for the property is substantially higher than the value of comparable land, most of the land is marginally arable and relatively recently acquired, and, in many cases, cultural attachment to the land is not strong.
The initial footprint for the Marlin mine and facilities was 6 km2 (when adjusted for slope), but after redesigning the tailings and waste rock disposal areas, it was reduced to 5 km2. As of February 2,004, Montana has acquired 287 parcels through a local company, Peirot S.A. The 287 parcels represent 89% of the land required by the Marlin project. In these parcels there were only 30 houses, which were owned by 28 families. Of the 28 families who sold land with homes, 14 of the owners have already moved to new homes: 11 to communities in the project area (Agel, San José Esperanza and San José Ixcaniche), one to the Municipality of San Miguel Ixtahuacán, and one each to other nearby communities (Salitre and Subchal). Current transaction statistics are still being tabulated; however, as of September of 2003, almost 19 percent of all property owners that had sold to Peridot were women and of the 148 individual landowners that had sold to Peridot at that time, 76 (51 percent) currently worked or had worked in the past for Montana. To date none of the properties that Montana has acquired has been occupied by renters or sharecroppers, similarly, none of the current negotiations involve properties occupied by persons who are not owners.
At present, no landowners have expressed a desire to be relocated. However, a municipal building, a school and two churches within the village of San José Nueva Esperanza must be relocated. Montana is currently working with community and church officials to find and purchase suitable land within San José Nueva Esperanza. Montana will build a new road to access the site, replace the municipal building, school and church buildings and build a new health clinic on the same site. It is estimated that this relocation will cost just over $300,000, which will be drawn for the Marlin project operating budget.
- Employment.
For the current exploration phase of the project, Montana routinely employees between 125 to 150 workers, primarily indigenous peoples from surrounding communities. Approximately 45 are long-term and the remainder is temporary, working on a task basis. During the peak period of construction it is estimated that up to 1,000 direct mine and contractor employees will be required. With the exception of highly skilled and technical workers and key employees that may accompany non-local contractors, construction employees will be drawn from local communities. During operations, about 200 employees will be required. Montana intends to hire and train 80 percent of the operations workforce (about 160 workers) from communities surrounding the mine.
- Revenue Management.
The municipalities of San Miguel Ixtahuacán and Sipacapa will receive approximately $350,000 annually in royalties during the operation of the mine. The company is considering measures to help these municipalities to invest royalty payments in a transparent and effective manner.
The Marlin project is located near the village of San Miguel in western Guatemala. San Miguel is located 30 kilometers south of Huehuetenango, a major town 250 kilometers northwest of Guatemala City along the Central American highway. The Marlin project is accessible by an all-season road, which is connected to a paved highway near Huehuetenango.
Environmental and Social Issues:
This is a Category A project according to IFC''s Procedure for the Environment and Social Review of Projects. Environmental, health and safety issues reviewed during appraisal included the following: management of wastewater, air emissions and wastes; management of hazardous materials including cyanide; management of tailings including cyanide detoxification and dam safety; international waterways (riparian notification); mine closure; occupational health and safety; emergency preparedness and response. The company adequately addressed these issues in its Environmental Impact Assessment (EIA) and supporting documentation, and is taking appropriate measures to deal with them. The company has also demonstrated adequate capacity to comply with IFC requirements. Key environmental and social issues at Marlin are described below.
- Tailings Dam.
Lining the tailings dams is not an option at Marlin due to the mountainous setting of the region. Glamis plans to utilize a cyanide destruction process to bring the weak dissociable (WAD) cyanide content down to 1 ppm prior to pumping the tailings in an unlined tailings dam. A number of tailings dams worldwide are constructed in this manner and they operate satisfactorily. Their success depends upon such factors such as: i) tailings chemistry; ii) ground water hydrology characteristics, and iii) tailings facility design, given that Guatemala is on a seismic zone. The IFC team reviewed the tailings dam designs and found it satisfactory. Furthermore, the company has engaged an independent review, as per IFC’s Safety of Dams policy, to ensure that all applicable requirements are fulfilled.
- Hazardous Materials Management and Safety Plans.
The project includes a management plans for hazardous materials (with special emphasis on Cyanide) and plans for human health, industrial and environmental safety. Marlin’s solid waste management system also includes procedures for management and disposal of hazardous waste. The company has committed to expand its safety plans as necessary, to comply fully with applicable IFC guidelines.
- Reclamation and Closure Plan.
The project also includes a conceptual reclamation and closure plan, which will be tailored to the prevailing situation at the time of closure. The company will include adequate provisions for closure as part of the operating budget of this project.
- Indigenous Peoples.
The project is located in an area populated almost exclusively by Mam-Mayan and Sipacapense-Mayans peoples. While residents of communities near the Marlin project are indigenous, they are not tribal or nomadic. They typically own land as individuals and families; there is no communal land in the immediate vicinity of the project area. And, while local indigenous persons engage in subsistence farming, most must supplement these activities with wage labor and small-scale entrepreneurial activities. The company has prepared an Indigenous Peoples Development Plan (IPDP) to ensure that indigenous peoples in the area share in the benefits of the project through the following initiatives: local hiring; local capacity building and infrastructure improvements; projects to promote sustainable development in the area; and reforestation and sustainable forestry. The IPDP will be implemented through the recently created Fundación Sierra Madre (FSM), in which the Company will invest around $400.000 per year during the first five years of operations. IFC''s Corporate Citizenship Facility (CCF) will support FSM in the development of a program to establish community-managed nurseries to supply the mine''s reforestation needs. - Land Acquisition.
Montana owns the rights to the subsurface minerals within the Marlin project area, but the land surface is being acquired from private owners. Guatemalan law does not allow condemnation of land for non-public purposes; therefore Montana must acquire the right to use the needed land through purchase, lease, rental or other use arrangements. Current surface owners must enter into these arrangements voluntarily.
The Marlin project is located within an area of steep slopes, dispersed forest cover and thin soils. There are relatively few primary residences within the project area. Much of the land is minimally used, primarily for supplemental subsistence farming, occasional grazing and firewood gathering. Early on Montana Exploradora determined that landowners prefer to sell their properties rather than be resettled, either as a group or as individuals. This is because many land owners do not live on the property, the price offered for the property is substantially higher than the value of comparable land, most of the land is marginally arable and relatively recently acquired, and, in many cases, cultural attachment to the land is not strong.
The initial footprint for the Marlin mine and facilities was 6 km2 (when adjusted for slope), but after redesigning the tailings and waste rock disposal areas, it was reduced to 5 km2. As of February 2,004, Montana has acquired 287 parcels through a local company, Peirot S.A. The 287 parcels represent 89% of the land required by the Marlin project. In these parcels there were only 30 houses, which were owned by 28 families. Of the 28 families who sold land with homes, 14 of the owners have already moved to new homes: 11 to communities in the project area (Agel, San José Esperanza and San José Ixcaniche), one to the Municipality of San Miguel Ixtahuacán, and one each to other nearby communities (Salitre and Subchal). Current transaction statistics are still being tabulated; however, as of September of 2003, almost 19 percent of all property owners that had sold to Peridot were women and of the 148 individual landowners that had sold to Peridot at that time, 76 (51 percent) currently worked or had worked in the past for Montana. To date none of the properties that Montana has acquired has been occupied by renters or sharecroppers, similarly, none of the current negotiations involve properties occupied by persons who are not owners.
At present, no landowners have expressed a desire to be relocated. However, a municipal building, a school and two churches within the village of San José Nueva Esperanza must be relocated. Montana is currently working with community and church officials to find and purchase suitable land within San José Nueva Esperanza. Montana will build a new road to access the site, replace the municipal building, school and church buildings and build a new health clinic on the same site. It is estimated that this relocation will cost just over $300,000, which will be drawn for the Marlin project operating budget.
- Employment.
For the current exploration phase of the project, Montana routinely employees between 125 to 150 workers, primarily indigenous peoples from surrounding communities. Approximately 45 are long-term and the remainder is temporary, working on a task basis. During the peak period of construction it is estimated that up to 1,000 direct mine and contractor employees will be required. With the exception of highly skilled and technical workers and key employees that may accompany non-local contractors, construction employees will be drawn from local communities. During operations, about 200 employees will be required. Montana intends to hire and train 80 percent of the operations workforce (about 160 workers) from communities surrounding the mine.
- Revenue Management.
The municipalities of San Miguel Ixtahuacán and Sipacapa will receive approximately $350,000 annually in royalties during the operation of the mine. The company is considering measures to help these municipalities to invest royalty payments in a transparent and effective manner.
