After putting an end to gang violence, the President of El Salvador, Nayib Bukele, has taken on a new and controversial challenge: reintroducing mining—banned since 2017—to transform a slow-growing economy. The president stated that it is “absurd” for mining to be prohibited in a country that holds “the world’s highest density of gold deposits per km²,” announcing that he will ask Congress—controlled by his party—to repeal the existing ban.
“Studies carried out on just 4% of the identified potential area found 50 million ounces of gold, valued today at 131.565 billion dollars. That’s equivalent to 380% of our GDP,” Bukele posted on platform X on November 27, without revealing who conducted these studies. “If we responsibly exploit our natural resources, we can change El Salvador’s economy overnight,” he declared days later.
Tremendous Risk
Bukele’s announcements have alarmed environmentalists, and about fifteen NGOs have called for protests this Tuesday near Congress. “It’s one thing to set up a mine in Chile’s Atacama Desert and quite another to open an open pit mine in Chalatenango (northern El Salvador), where we have a high population density and what little remains of our forest reserves,” activist Pedro Cabezas said.
“The [harmful] effect would multiply across the entire Salvadoran territory,” added the leader of the Central American Alliance Against Mining. Antonio Pacheco, head of the NGO ADES, said that mining in the Lempa River basin—which supplies water to the capital— “poses a tremendous risk.”
A coalition of organizations that previously fought for the anti-mining law argued that renewed mining activity would lead to “water scarcity and contamination.” Bukele posted a map on X showing deposits located in mountainous areas stretching from east to west, mainly in the north where the Lempa River flows.
Central America has no strong mining tradition like the Andean countries. Open-pit mining is illegal in Costa Rica—though the government hopes to reauthorize it—and Panama declared a mining moratorium a year ago, after halting a huge copper mine following a month of protests.
It Would Generate Employment
At the foot of San Sebastián Hill, in the former mining region of Santa Rosa de Lima (in the northeast)—where the U.S. company Commerce Group had its license revoked in 2006 due to river pollution—opinions on Bukele’s plan are divided. “I think that if they do that, the canton (a rural area of a municipality) could prosper… it would create jobs and benefit everyone,” said Rubén Delgado, a 55-year-old construction worker.
But José Torres, who currently extracts gold nuggets by hand from his own small tunnels, opposes the plan for fear of losing his source of income should mining companies arrive. “The rivers get polluted, animals die, and we end up with nothing here,” said the 72-year-old laborer.
Since El Salvador adopted the U.S. dollar in 2001, it has averaged 2.1% annual GDP growth. According to CEPAL, 27% of Salvadorans live in poverty, and nearly 70% are informal workers. These factors—along with gang violence—have fueled emigration.
Negotiate Differently
Economist Carlos Acevedo, a former president of the Central Reserve Bank, noted that the “spectacular” figures presented by Bukele make it seem as though El Salvador “is sitting on a gold mine.” Acevedo said that with the 50 million ounces of gold, the country could pay off its $31 billion external debt—equivalent to 85% of its GDP—four times over.
He stressed that the main challenge is “how to extract that gold in a socially and environmentally responsible way,” while cautioning that “there’s no formula that can bring about overnight growth.” Moreover, Acevedo pointed out that experiences with gold mining have “not been very pleasant” in some countries, as mining companies often pay only 2% or 3% in royalties. Bukele’s challenge, therefore, will be to “negotiate differently” with multinational mining firms.
In 2016, El Salvador won an arbitration case against Pacific Rim Cayman, later acquired by Australian-Canadian mining giant OceanaGold Corporation, which had demanded $250 million after being denied an extraction permit in 2009. When asked, the National Association of Private Enterprise declined to comment on Bukele’s plans.
