POLITICAL ECONOMY

Costa Rican Mining Chamber sues to overturn open-pit mining ban

Costa Rica's lengthy history of on-and-off-then-on-again prohibitions against open-pit mining has taxed the patience of mining and exploration companies, who are now seeking legal relief.

RENO (MINEWEB) - 

The president of the Costa Rican Chamber of Mines has filed a petition of unconstitutionality against the country's current ban on open-pit metal mining.

EI País reports Franz Ulloa, also an executive of the British gold mining company Ascot Mining, filed the petition on June 11.

In November 2011 Costa Rica's legislature approved reforms to the nation's mining code, which prohibits open-pit mining.

Ascot, which operates the Chassoul gold mine in San Ramon, begins trading on the European GXG Exchange this morning.

In a statement published Wednesday, Ascot's CEO David Jackson said, "The market has changed. In recognition of this fact the company is focusing all efforts toward its Chassoul operations, and until robust and stabilized operations have been achieved, further projects will only be considered in exceptional circumstances."

"The current environment for junior resource companies dictates that the market is demanding production, and Ascot is in an enviable position in that it has a functioning gold mine with an operating mill," he added. "Full attention will be directed toward improving operations and to make certain modifications for better recovery of gold and to facilitate the recovery of both gold and silver."

The company hopes to achieve its initial production target of 1,500 ounces of gold per quarter later this year. Brokerage Daniel Steward expects the company to produce 2,737 ounces for the fiscal year to September from Chassoul.  It is anticipated production will increase to 4,546 ounces in the full year 2013 following underground development of the Cajeta vein.

In his pleading, Ulloa argues there is no environmental reason for the open-pit metal mining ban. He contends the elimination of open-pit metal mining will be catastrophic for Costa Rica since 90% of all mined materials come from open-pit mining.

Ulloa's complaint says Costa Rica's open-pit mining ban is unfair and discriminatory, creating uncertainty for the investments that foreign exploration and mining companies have made in Costa Rica to date, El País reported.