El Salvador’s gold reserves could be worth an astounding three trillion dollars – representing over 8,800% of the country’s current GDP
In a dramatic shift from its previous environmental stance, El Salvador is reconsidering its landmark 2017 ban on metal mining, with President Nayib Bukele claiming the country is sitting on a potentially transformative economic treasure.
A History of Mining Resistance
In 2017, El Salvador made global headlines by becoming the first country in the world to completely ban metal mining. The decision, implemented under then-President Salvador Sanchez Ceren, was driven by serious concerns about the environmental and health risks associated with mining operations, particularly the use of harmful chemicals like cyanide and mercury.
The ban was widely supported by rural communities and environmentalists who had witnessed the devastating environmental and health impacts of mining activities. This progressive move inspired similar actions in neighboring countries, with Costa Rica, Honduras, and Panama implementing various restrictions on mining operations.
Bukele’s Bold Vision
Now, President Nayib Bukele is challenging this long-standing prohibition, asserting that El Salvador is overlooking an enormous economic opportunity. In a series of provocative statements on social media platform X, Bukele claims the country potentially has “the largest gold deposits per square kilometer in the world.”
According to preliminary studies cited by the president, El Salvador’s gold reserves could be worth an astounding three trillion dollars – representing over 8,800% of the country’s current GDP. Bukele argues that mining just 4% of the country’s gold deposits could generate $131 billion, which would be equivalent to 380% of the current GDP.
Translation: GOD PLACED A GIGANTIC TREASURE UNDER OUR FEET: El Salvador potentially has the highest density gold deposits per km² in the world. Located in the Pacific Ring of Fire, one of the richest areas in mineral resources thanks to its volcanic activity.
Economic Context and Challenges
El Salvador’s economic landscape provides important context for Bukele’s mining proposal. The country has struggled with persistent economic challenges:
- Annual economic growth has been limited to between 2% and 3.5%
- 27% of Salvadorans live in poverty
- 70% of the workforce operates in the informal sector
Bukele, who previously made waves by adopting Bitcoin as legal tender, now sees mining as a potential economic miracle. He argues that responsible resource exploitation could dramatically transform the nation’s economic prospects.
Environmental and Social Concerns
However, the proposal faces significant pushback from environmental activists and local communities. Critics like Pedro Cabezas from the Central American Alliance Against Mining warn about the substantial risks of open-pit mining in environmentally sensitive areas like Chalatenango.
The San Sebastian River, already contaminated from previous mining activities, serves as a stark reminder of the potential environmental consequences. Local residents remain divided, with some seeing potential job opportunities while others fear environmental destruction and the displacement of artisanal miners.
Minerals Beyond Gold
Bukele’s vision extends beyond gold. The preliminary studies also suggest the presence of other critical minerals like cobalt, nickel, and lithium—resources considered essential for technologies of the fourth industrial revolution.
A Delicate Balance
Economist Carlos Acevedo cautions against overly optimistic projections, emphasizing that any economic benefits will depend critically on the royalties negotiated with mining companies.
Conclusion
El Salvador stands at a crossroads. The potential for massive economic transformation is tantalizing, but the environmental and social risks are substantial. As Bukele pushes for lifting the mining ban, the world watches to see whether this could be a groundbreaking economic strategy or an environmental gamble.
The coming months will be crucial in determining whether El Salvador will unlock its “underground treasure” or prioritize its hard-won environmental protections.
By Eran Tal of The Jerusalem Post
