More mining uncertainty as Honduras elects new president

By Joao Peixe

Right-wing candidate Juan Orlando Hernandez is set to become the next president of Honduras following 24 November elections, and the mining sector is on edge, unsure whether the regime change will be investor-friendly or usher in mining regulations.

Hernandez, of the conservative National Party (PN), has promised to do more to attract foreign investment, but has also publicly considered new taxes or royalties for the mining sector to boost state coffers in the face of growing debt.

According to experts at SouthernPulse.com, the results of 24 November presidential elections show Hernandez as the clear winner with over half the votes counted. Hernandez garnered 34.25% of votes, while his main opponent, Xiomara Castro Zelava, wife of ousted president Manuel Zelava and representative for the Liberty an Refoundation Party (LIbre), came in second with 28.67%.  

However, both Hernandez and Castro have claimed victory, and Castro is now calling the elections a fraud.

While Hernandez has vowed to do more to attract foreign investment to Honduras, and foreign investors have perhaps been optimistic about having conservative at the helm, he has specifically mentioned changes in the mining sector as one way to reduce state debt, though mining exports are already on the decline.

In the first eight months of 2013, mining exports fell 5.1% to $176 million, compared to the same period a year ago. Most of this was the result of a 16.6% fall in gold exports to $75.9 million.  

The sector has been languishing in a state of uncertainty since August, when former president Porfirio Lobo vetoed highly controversial plans to transfer mining projects into trusts or public-private partnerships. This law had been passed in January before it was shot down in the summer.

Honduras’ next president, which looks set to be Hernandez, will have to readdress this legislation.

Honduras has been bitterly divided since the 2009 coup, and Hernandez “has an uphill slog once he becomes president of a country with rampant poverty, a divided populace and the highest murder rate in the world,” says SouthernPulse. “However, his victory signals relative continuity of right-wing executive policies including a more prominent use of the military to fight crime.”