Guatemala's government said it will move forward with a proposal to acquire as much as a 40 percent stake in new mining projects despite requests from mining industry representatives to pull the plan.

President Otto Perez will propose changes to the country's mining laws as part of a package of constitutional reforms to be presented to Congress for debate on July 16. The proposed mining law change says "the state reserves the right to acquire up to 40 percent of all extraction businesses. The state will be able to become a shareholder in all companies that extract natural resources."

Guatemala's mining chamber is pushing for the government to scrap the plan, claiming it will stifle new investment key to development in the Central American country.

"The Guatemala government should immediately withdraw the article on mining from the constitutional reform package," Mario Marroquin, the head of the mining chamber said on Tuesday. But Fernando Carrera, a top presidential advisor who helped draft the reform, said the government was moving forward with the plan, which had so far received more support than criticism. Initial reports of the proposal last week hit shares of Canadian mining companies working in Guatemala, like Tahoe Resources Inc., which is developing the $500 million Escobal silver project near the country's capital. Perez, a conservative retired general who took office in January promising to boost government revenue from mining projects, said the new rules - if approved - would only apply to future projects and the state would not seek shares in companies already operating in Guatemala.

"The state will not administer or develop projects ... and we are not talking about nationalization," Perez said after a meeting with Marroquin and other industry representatives. "We are talking about future mining and oil operations." Guatemala is not a major oil producer, only pumping around 12,000 barrels per day from the northern jungle region of Peten. The country has gold, silver and nickel mines but some projects have been met with local opposition where indigenous villages have complained of contamination and land expropriations. The largest gold mine in the country, Marlin mine, is owned by Canada's Goldcorp and produced 382,400 ounces of gold in 2011, generating $900 million in revenue.

PARTNER UP

Constitutional reforms require a two-thirds vote in the 158-member unicameral congress where Perez's conservative Patriot Party holds 63 seats, short of the majority needed. The government says it could win support from other smaller parties in the chamber. 

The mining clause is only one part of a 68-page package that includes other judicial and legislative reforms. Officials from the country's mining ministry said they were not consulted on the amendment.

If the changes pass, the government would automatically own shares in a company equal to the value of the minerals expected to be extracted by the new project, Carrera said. The value of the minerals would be determined in talks between the government and mining companies. If the state wishes to purchase a larger share than the value of the resources, it may do so with cash from government revenue or loans, he said.

The amendment would not force the government to participate in extraction projects, but advisers said there would be few exceptions. "Very rarely would we not want to become a partner," Carrera said. "If there is a possibility for the government to be a shareholder then we will be a shareholder. How big of a share, whether one percent or 40 percent, will be part of later discussions, but we want to partner up."

For the past three years, the Guatemalan government has received an average of 50 requests for mineral exploration permits per month. Of those, only around two per month come from international companies looking to mine mostly nickel and silver. So far this year, the mining ministry has extended 22 mineral mining operation licenses and issued 12 new ones. Extraction companies must pay a one percent royalty on their profits to the government by law, but this year mining companies volunteered to pay a three percent additional royalty for silver and four percent for gold.

Goldcorp Inc., which owns 40 percent of Tahoe Resources, v oluntarily agreed to pay a 5 percent royalty. With the recent increases, the ministry says royalties could total $25.5 million this year.