Costa Rica says it would have to pay $1.7 billion to annul mining concession

July 23, 2010

 

The Costa Rican government announced on Tuesday that it will not repeal the concession granted to Industrias Infinito S.A. for the operation of an open-pit gold mine.
 
According to a study just completed by a government commission, the state would have to pay $1.7 billion in compensation to Industrias Infinito S.A., the Costa Rican subsidiary of the Canadian-owned Infinito Gold, were the concession to be cancelled. The mine is located near the small town of Crucitas, in northern Costa Rica near the Nicaraguan border
 
Costa Rican Vice President Alfio Piva, who is government’s designated point man on environmental issues, said that the country cannot afford to pay such a high figure. 
 
“If it were $15, I would pay it myself and we’d be done with this once and for all,” Piva told the daily La Nación. “But that’s not the case.”
 
In a press statement, the executive branch said that it will leave the future of the mine in the hands of the judicial branch’s Administrative Appeals Court, where a ruling is pending on the legality of the executive decree issued by President Oscar Arias that allowed Industrias Infinito S.A. to begin construction of the mine.
 
Steven Ramirez, a press official at Casa Presidencial, said that the elements considered by the commission to arrive the $1.7 billion sum “were not revealed,” but noted that the estimate most likely included reimbursement for investments that the company has made, such as construction costs, as well as future earnings that would be lost by the company. 
 
Juan Carlos Obando, manager of corporate relations for Industrias Infinito, called the figure “very large” and “attention grabbing.”
 
Ana Chacón, Obando’s wife, who also works at Industrias Infinito S.A., told The Tico Times that the company has never calculated possible compensation because the firm never anticipated that the concession would be annulled.
 
The Tico Times left a message for Piva on Tuesday in hopes of learning more about how the $1.7 billion figure was calculated, but did not receive a response by deadline. 
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