Montreal-based Central America Nickel (CAN) reportedly plans to acquire the controversial Fenix mine in El Estor, Guatemala

Photo: In November 2022, PBI-Guatemala accompanied the Human Rights Law Firm (BDH) at a hearing for Cristobal Pop (accused of the illegal detention of people for a protest held by the Artisanal Fishermen’s Union to denounce the pollution of Lake Izabal by the Fenix mine) and Q’eqchi’ journalist Carlos Ernesto Choc (accused of “instigation to commit a crime” after he reported on an October 2021 protest against the Fenix mine).

In January, Diálogo Américas reported: “The U.S. Treasury Department imposed economic sanctions on Russian citizen Dmitry Kudryakov and Belarusian citizen Iryna Litviniuk, who financed and directed three mining companies in Guatemala.”

That article specified: “The mining companies owned or controlled by Kudryakov are: Compañía Guatemalteca de Níquel (CGN), Compañía Procesadora de Níquel (ProNiCo), and Mayaníquel, subsidiaries of Solway Investment, a mining group based in Switzerland and fueled by Russian capital, the Treasury Department indicated.”

Now, Newsweek Diplomatic Correspondent David Brennan reports: “A memo obtained by Newsweek indicates that, with the support of the U.S. government, the Guatemalan assets of the Switzerland-based Solway Investment Group—which were put under U.S. sanctions amid allegations of Russian influence peddling and ecological devastation—are in line for acquisition by a Canadian company for a ‘substantial discount’.”

The article adds:

“The Montreal-headquartered Central America Nickel (CAN) corporation reportedly plans to acquire the Fenix Nickel Project, a vast complex located close to the eastern Guatemalan town of El Estor that is valued at up to $1 billion and has been in operation since 1960 despite fierce resistance from local indigenous communities.

A legal representative for CAN … acknowledged in a statement to Newsweek that the firm has applied for Treasury consent to acquire the sanctioned assets, via an “exemption request in the month of January 2023 for the Solway-owned assets and permits in Guatemala, through its duly incorporated American subsidiary.”

The memo says that CAN is working closely with a U.S. diplomat at the American Embassy in Guatemala, who has been speaking with the Department of Defense on the company’s behalf, and who has connected the company with the U.S. International Development Finance Corporation (DFC) to seek additional funding.

According to the memo, the DFC has already agreed to provide political risk insurance for a nickel project in Guatemala, plus $300 million in financing for additional processing facilities. The nickel sulphate produced there is intended for sale “to American battery and [electric vehicles] manufacturers such as General Motors.” Contacted by Newsweek via email, the DFC declined to comment.

The diplomat, the memo says, recently confirmed they “will be supporting the company in its efforts to acquire the Solway nickel assets in Guatemala, following the recent sanctions imposed on the Russian company.”

The plan, as outlined in the memo, is to transfer CAN’s nickel assets in Guatemala to a U.S.-incorporated firm called America Rare Earth Sources Inc. (ARES), which will be wholly owned by CAN. CAN will acquire 100 percent of ARES, which will in turn acquire 100 percent of two Guatemala companies, Rio Nickel Inc. and Nichromet Guatemala Inc.”

The furor around Solway may have opened a door for the U.S. to wrest a strategic asset away from Russian—and by extension Chinese—influence.

A former U.S. diplomat with knowledge of the situation—who also requested anonymity to discuss the issue candidly—said the reported acquisition plan fits with Washington’s new focus on strategic materials

The U.S. Geological Survey added nickel to its list of critical minerals in 2022. Nickel is used in the production of key products including stainless steel, superalloys, and rechargeable batteries. The growth of the electric vehicle industry—projected to be worth some $858 billion worldwide by 2027—has been a particular driver of growing focus around nickel.”

Timeline of the Fenix mine

In 1960, Toronto-based INCO Ltd. began negotiations with the military dictatorship of Guatemala to establish the Fenix mine. By 1965, EXMIBAL, a joint venture between INCO and the Guatemalan state, was granted a 40-year mining licence.

Professor Shin Imai has written: “Colonel Carolos Arana Osorio was responsible for clearing the Indigenous people out of the INCO region in Zacapa-Lake Izabal. He launched what has been referred to as a ‘reign of terror’ in the region, in which the number of people killed is estimated to be between three and six thousand. Major construction began on the El Estor mine in 1974 aided by a $20 million loan from the Canadian Export Development Corporation.”

By 1982, INCO shut down the mine because the market value of nickel had declined and the cost of oil was rising.

Then in 2004, Vancouver-based Skye Resources bought the Fenix mine from INCO. (INCO was bought by the Brazilian mining company Vale in 2006). The Canadian Embassy in Guatemala helped Skye Resources acquire a 3-year exploration license for a 259 square kilometre area that encompassed at least 19 Maya Q’eqchi’ settlements, including Lote Ocho. Skye renamed EXMIBAL to the Guatemalan Nickel Company (CGN).

Then in April 2006, Guatemala granted Skye Resources and CGN a license that allowed them to start mining. By September 2006, 300 Maya Q’eqchi’ families moved onto company-claimed land stating that it had been stolen from them 40 years prior.

In 2008, Skye Resources merged with Toronto-based Hudbay.

Between 2007 and 2009, personnel from the mine along with the police and military violently expelled members of the community of Lote Ocho from their homes. During an expulsion in 2007, eleven Mayan Q’eqchi’ women were gang-raped.

In 2009, community leader Adolfo Ich was killed, while another community member, German Chub, was shot and paralyzed.

Then in September 2011, the mine was purchased by the Switzerland-based Russian company Solway Investment Group (and its subsidiaries CGN and PRONICO).

In January 2021, Mynor Padilla, a former army lieutenant colonel and security chief for the Fenix mine, was found guilty of homicide in the death of Adolfo Ich.

The full article by Newsweek can be read at Exclusive: U.S. Role in Notorious Nickel Mine Deal Revealed (April 6, 2023).