BARRIE, Ontario (miningweekly.com) – Canadian firm Pacific Rim Mining this week claimed a small victory in its arbitration against the El Salvadorian government, but President Mauricio Funes has been quoted as saying that he plans to stop mining in the country altogether.

“Funes has announced he intends to implement a total ban on mining,” London-based publication Latin America Monitor said in its August newsletter.

Funes, a former television reporter, took office in June last year, in the country’s first departure from right-wing politics.

Latin America Monitor said the intended ban on mining “undermines the generally pro-business policy stance that places El Salvador sixth in Latin America in the market orientation component of our business environment ratings”.

“Added to his refusal last year to recognise mining permits offered by previous administrations – which led Pacific Rim to seek international arbitration to recover $77-million of investment – we caution that the operating environment is likely to remain distinctly hostile for the industry over the medium term,” the newsletter said.

The tribunal at the International Centre for Settlement of Investment Disputes ruled in Pacific Rim’s favour this week, regarding a preliminary objection filed by the government in relation to the action brought by Pacific Rim.

The government had halted work at the El Dorado gold mine after tensions erupted with surrounding communities. Anti-mining activists were reported to have been killed.

Mining contributes less than 5% to the smallest Central American country’s gross domestic product.

Last month, the World Bank granted El Salvador three loans worth $230-million.