• Costa Rica Real Estate Auction
  • Costa Rica Real Estate

Crucitas ruling bad sign, say biz leaders

January 20, 2016

A landmark court ruling that last week struck down a major gold mining concession may scare away foreign investment, say some members of Costa Rica’s business and political communities.

“It’s a mark in the negative column,” said Lynda Solar, executive director of the Costa Rican-American Chamber of Commerce (AMCHAM), referring to a ruling that rescinded a concession the government had already granted to Industrias Infinito, a Costa Rican subsidiary of Calgary, Canada-based Infinito Gold, for operations at its site at Las Crucitas.

Shortly after the Nov. 24 ruling, shares in Infinito Gold lost more than half their value (TT, Nov. 26).

Some AMCHAM members fear that the court’s decision sends a bad signal to foreign businesses thinking of investing in Costa Rica. The court ruling not only annulled a signed contract, but also one that was backed by an executive decree that declared the Crucitas mine a national interest project.

Judges ruled last week that environmental viability studies needed to grant the concession were incomplete, rendering the mining contract illegal. The company claims the viability studies were valid.

“They did everything that was required, and then the rug was pulled out from underneath them with absolutely no justification,” Solar said.

While Infinito Gold is just one company, and their difficulties might not reflect all investment experiences here, they are not alone. Other companies have run into snags too.

In 1998, former Costa Rican President Miguel Angel Rodríguez, who is now on trial for allegedly receiving $800,000 in kickbacks from French telecommunications company Alcatel, personally invited U.S.-based Harken Energy to Costa Rica to begin offshore exploration work in the Caribbean (TT, Mar. 19, 2004).

Harken signed a contract with the government for exploration rights, but the deal was terminated by Rodríguez’s successor, Abel Pacheco, who banned petroleum exploration in Costa Rican waters in 2002 (TT, Jan. 16, 2004).

Harken requested arbitration from the United States, seeking $57 billion from Costa Rica for breach of contract. The Texas-based oil firm later withdrew their suit and filed an $11 million damages claim in Costa Rican courts (TT, Dec. 24, 2004).

“I wouldn’t recommend any company doing business with the Costa Rican government,” Solar said. “You never know the rules of the game and they can change on you at any minute.”

Reminiscent of the Harken Energy days, Costa Rica’s legislators voted unanimously on Nov. 9 to ban open-pit metal mining in Costa Rica, two weeks before the court’s decision on Crucitas. Costa Rican President Laura Chinchilla has not yet signed the bill.

If last week’s ruling withstands an expected appeals process, and Chinchilla signs the bill into law, Industrias Infinito would not legally be permitted to request a new mining permit.

Industrias Infinito has invested $127 million in infrastructure development at the mine, located in northern Costa Rica. Company officials say they expected to extract 800,000 ounces of gold in 12 years.

Judges also ordered a criminal investigation of former National Liberation Party President Oscar Arias, who signed a document stating the mine was in the public interest. Doing so without valid environmental studies is illegal, the judges said.

Although Arias initially declined comment on the court ruling, he later posted a statement on his Facebook page, saying the “court contradicted a ruling by the Constitutional Chamber of the Supreme Court (Sala IV) that had previously declared the national interest decree both constitutional and legally sound.”

Rodrigo Arias, former head of the Ministry of the Presidency, and Oscar Arias’ brother, told a local talk radio station that the court “went too far” with the verdict, and the decision could “cause a judicial conflict with the Sala IV.”

You may be interested

U.S. Embassy tweet of supposed tsunami causes alarm in El Salvador, Central America
Central America
53 views
Central America
53 views

U.S. Embassy tweet of supposed tsunami causes alarm in El Salvador, Central America

AFP and The Tico Times - November 11, 2019

A tweet that warned of a potential tsunami on the Pacific coast caused alarm Monday in El Salvador, where President…

Their future in the United States at stake, ‘Dreamers’ trek to Supreme Court
immigration
26 views
immigration
26 views

Their future in the United States at stake, ‘Dreamers’ trek to Supreme Court

Ariela Navarro / AFP - November 11, 2019

Carolina Fung Feng was resting after the grueling 230-mile walk from New York to Washington for a Supreme Court hearing…

Exciting new opportunity for Costa Rica buyers and sellers
Sponsored content
22 views
Sponsored content
22 views

Exciting new opportunity for Costa Rica buyers and sellers

The Tico Times - November 11, 2019

Bid on three unique Costa Rica properties. You Have Until Tuesday, November 12, 2:00 P.M. Here is some brief background…

Do NOT follow this link or you will be banned from the site!