Swedish steel producer Outokumpu has suspended new orders from the Fenix nickel mine in Guatemala due to allegations of improper conduct.

Indigenous groups in the country maintain that their right to free and informed prior consent was violated when the Guatemalan Ministry of Mines and Energy extended the mining title in 2016.

Outokumpu will stop the placing of new orders from Swiss chemical company Solway, which owns the mine.

"Until further notice, we have stopped placing new orders originating from Solway due to the allegations on environmental damage, negative impacts on local people and lack of transparency that were brought to our attention," Outokumpu said in a March 6 statement.

Outokumpu is sending a team to the Izabal department in Guatemala to conduct an "impartial evaluation of the situation."

The company said it is concerned about the "safety and welfare of the local population" and will continue monitoring the situation. It also said it plans to engage with local communities.

Protests have continued at the Fenix mine site since Solway reopened the mine in January.

The Swedish steel producer has taken a number of steps recently to improve its raw material sourcing. In 2021, it committed to the United Nations' Guiding Principles of Business and Human rights (UNGP), and renewed its Code of Conduct and Supplier Requirements with an emphasis on human rights.

It also completed a human rights risk assessment with Deloitte, and has trained personnel on the renewed Code of Conduct.

 It has also increased monitoring on suppliers, and had been planning a human rights impact assessment in Guatemala.

Outokumpu plans to increase the number of on-site visits, audits, and impact assessments of its suppliers in 2022.