Tahoe fires 25% of Escobal workforce as Guatemala court process dawdles

VANCOUVER (miningweekly.com) – TSX- and NYSE-listed Tahoe Resources, whose flagship Escobal mine, in Guatemala, continues to languish in care and maintenance following a court-ordered suspension of its mining permit in July 2017, has moved to reduce the mine’s workforce by 25%, the miner announced on Monday.

The Vancouver-based miner has maintained the level of workers at Escobal since operation came to an abrupt halt last year, but continued legal delays have made the situation untenable and prompted the company to purge some 250 inactive workers.

According to the miner, the Guatemalan Constitutional Court heard appeals of the Supreme Court’s decision to reinstate the Escobal mining licence on October 25, 2017. According to Guatemalan law, the Constitutional Court must rule within five calendar days of the public hearing. At this time, however, the Constitutional Court has yet to rule.

Before the licence was suspended, Guatemalan subsidiary Minera San Rafael employed about 1 030 people, 97% of whom are Guatemalan and 50% of whom are from the Santa Rosa region.

Tahoe said that should the Constitutional Court rule in the next several weeks to uphold the lower court’s reinstatement of the Escobal licence, further workforce reductions may be avoided. 

Despite this difficult decision, Tahoe remains optimistic that based on legal precedent, the Constitutional Court will issue a favourable ruling reinstating the mining licence and Escobal will resume production. At such time, Tahoe will seek to restore its workforce, it advised.

“Despite extensive efforts in Guatemala, we have been unsuccessful in reaching a favourable resolution that would avoid negative impacts for all stakeholders, especially for our workforce and the local economy. We are very disappointed to reduce our workforce at this time, but this is a natural consequence to the prolonged inaction in the legal system,” president and CEO Ron Clayton said in a statement.

Clayton added that the company remains hopeful that the Constitutional Court will honour its own legal procedures and precedents and urged them to provide a fair and transparent ruling quickly, that demonstrates Guatemala remains open for responsible foreign investment.

Tahoe said that the Guatemala government and local communities are losing out on about $4-million in taxes and royalties for every month that Escobal – the world’s third-largest silver mine – remains inactive.