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Mining in El Salvador: Can Corporate Behaviour be Changed?

Guest article by Vladimir Pacheco Central America remains a land of tremendous potential but persistent poverty. In vulnerable states recovering from civil strife and growing inequality, foreign corporate investment has additional obligations to ensure community consent through patient engagement. In this guest article, Vladimir Pacheco, a social scientist who has worked on mining and human...

Guest article by Vladimir Pacheco

Central America remains a land of tremendous potential but persistent poverty. In vulnerable states recovering from civil strife and growing inequality, foreign corporate investment has additional obligations to ensure community consent through patient engagement. In this guest article, Vladimir Pacheco, a social scientist who has worked on mining and human rights shares his perspectives on a current campaign against mining in El Salvador – Central America’s smallest but most densely populated country. The views expressed are those of Dr. Pacheco and the posting of this article does not indicate endorsement of specific perspectives.

Pollution runoff in rivulet near mining region in El Salvador. Photograph by Ron Carver

Scars of civil war still fresh in the country’s social landscape.

After years of civil war El Salvador remains a fragile country both politically and economically. With a geographical territory of 21,000 square kilometers, a population of 6.2 million and scare water resources, the country struggles to provide a decent livelihood for all of its citizens. Since the end of the civil war in 1992, successive governments of this small Central American nation have sought to industrialize the country by opening up the economy and encouraging foreign investment. Even though mining has not featured strongly in El Salvador’s economic history, mining companies have taken advantage of the country’s relaxed foreign investment rules to start exploration activities. Since the early 2000 as many as 10 transnational mining companies have been prospecting for gold and other minerals around the northern parts of the country. This also happens to be a mountainous and forested area that provides the main sources of water and local agricultural production for the country.

Soon after mining companies lobbied the government to introduce a legal and logistical framework to set up industrial scale open pit mines through the northern region, they met opposition from communities, civil society and church organizations. Those against mining have repeatedly raised concerns over the use of excessive amounts of water, environmental degradation, public health impacts, as well as the social division that these projects may cause in this densely populated and politically polarized country.  The anti-mining movement has been led by a highly organized group of civil society organizations convened under the National Roundtable against Metallic Mining, as known as “La Mesa”.

La Mesa has conducted successful national and international campaigns to stop mining in the country. For instance, in early 2008, the government of the rightist Antonio Saca acceded to public pressure organized by La Mesa and stopped issuing mining exploration and exploitation permits. The outgoing leftist government of Mauricio Funes upheld the moratorium during his presidency (2009-2014) and the newly elected president, Salvador Sanchez Ceren, also from the Left, promised, during his election campaign not to grant exploration licenses in the foreseeable future. In 2009 and again in 2013, La Mesa tabled a bill that will effectively ban metallic mining in the country and hopes that the National Assembly will debate the proposed legislation sometime this year.

Corporate response.

In response to the moratorium Pacific Rim, a company recently acquired by Australia’s OceanaGold, sued the government of El Salvador for over US $77 million at the International Centre for Settlement of Investment Disputes (ICSID), under an investor state clause in the Central America Free Trade agreement with the US (CAFTA-DR). After the case under the ICSID was thrown out of court, Pacific Rim re-launched its law suit against El Salvador under local investment laws, and increased its demand to US $301million (a sum equivalent to half of El Salvador’s public education budget). Even though OceanaGold said in a recent interview with Oxfam Australia that the company is not interested in an arbitrated outcome and will resume seeking a negotiated outcome, the company has not accepted suggestions to simply drop the lawsuit. A verdict at the ICSID is expected in 2015.

In 2009, another mining company, Commerce Group, filed a lawsuit for US $100 million against El Salvador for failing to renew its environmental permit. In March 2011, the ICSID threw out the Commerce Groups case because the company had filed simultaneous court cases in the local courts in El Salvador. Commerce Group appealed the decision but in August 2013, the company was unable to pay the fee needed to continue appealing and so the case was definitively closed.

Mining in El Salvador aggravates social conflict and water scarcity.

Pacific Rim Mining’s presence is creating tremendous social division in the community of San Isidro, where its operations are located. Five environmental activists have been killed since 2009; intimidation and attacks of community leaders and their organisations continue to be a common occurrence and many environmental activists, are currently under death threats. Allegations of a corrupt relationship between company officials and local authorities such as the mayor’s office, the police and the local courts are rampant. Company supporters have complained of being threatened by environmentalists. Others argue that this conflict is simply a neighbour’s dispute gone wrong and that the company has nothing to do with the threats and attacks against environmentalists. If this is the level of conflict occurring now at the local level, what can we expect once the project is up and running?

La Mesa has also followed  OceanaGold’s environmental and human rights record in the Philippines and the prospects of something similar occurring in El Salvador is of grave concern. While in Australia, OceanaGold shows its best in their Annual Sustainability Report, in the Philippines, where one of its largest mines is located, the reality is different. Will the company behave differently in El Salvador?

The other questions are to do with state sovereignty and resource control. Through the lawsuit at the ICSID, Pacific Rim is exercising its right to recover previous investment and, most importantly, demonstrating that wealthy private interests are equally as valid as an elected government’s decision to control its water resources for the benefit of its large impoverished constituency. The ICSID rules say governments have the right to protect legitimate public welfare objectives, such as public health, safety or the environment so whose right should prevail?

The cyanide-leach processes at the company’s El Dorado mine will use approximately 900,000 liters of water a day. In comparison, it would take 30 years for an average Salvadorean family to use that amount of water. Despite company assurances that water is reused for such processes, the contamination of water continues elsewhere in the country. In 2012, the Salvadoran Ministry of the Environment found that the San Sebastian River, where Commerce Group used to discharge wastewater, had nine times the acceptable limit of cyanide and one thousand times the Salvadoran standard for lead in potable water. Will water needed for the project aggravate the already perilous state of water access in the country? A study by the Ministry of Environment found that only two percent of the rivers contain water that can be made fit for human consumption, or used for irrigation or recreational activities and in another study the Global Water Partnership warns that water supply in El Salvador is hovering on the threshold of 1,700 cubic metres of water per person per year, the upper limit for the definition of water stress. A bill to properly manage water resources in El Salvador has not made much progress in the Legislative Assembly since it was tabled in 2006 due mainly to political differences on whether private companies or public authorities should manage water resources.

Artisanal mining near San Sebastian. Photograph by Ron Carver
Artisanal mining near San Sebastian. Photograph by Ron Carver

La Mesa’s Australia’s connection

The effectiveness of La Mesa’s campaigns is based, to a large extent, on being able to represent and mobilize a number of civil society groups in El Salvador with links abroad. Because most mining investment in El Salvador originates in North America, La Mesa’s anti-mining campaigns have also drawn their support from people and organisations based in the US and Canada.

Now that OceanaGold, a Melbourne based mining company, is a majority shareholder of Pacific Rim stock the links with Australian like-minded organizations are likely to increase as a result of La Mesa’s international outreach efforts. Already, La Mesa, organized a fact finding mission in April 2013, to raise awareness of the problems associated with resource extraction in El Salvador and to encourage delegates to make international corporations accountable for their actions in developing countries. The Australian union movement sent a participant to that mission and a support group was set up in Australia soon after. In November of the same year Vidalina Morales, a representative from La Mesa, toured Australia in mid-November to meet with politicians, responsible investors, churches, trade unions and environmental organizations.

There is no doubt that La Mesa is effective at questioning the impacts of resource extractive industries in El Salvador and has the ability to mobilize support at home and abroad. Vidalina’s Australia tour late last year, for instance, has planted the seeds for new networks to start supporting La Mesa’s work from Australia, which up until 2012, was not on any of its member organisations’ plans.

The current transition of corporate ownership could provide an opportunity for OceanaGold to reengage with the community to heal the wounds of the past. However, much patience and perseverance will be needed to gain a “social license,” given the trust deficit which exists, and companies should also concede that in some instances mining may not be acceptable to the community under any current circumstances. As Central America’s most impoverished economy, El Salvador needs investment but it must be undertaken with great care and respectful persuasion.

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Meet the Author

Author Photo Saleem Ali
Saleem H. Ali is Blue and Gold Distinguished Professor of Energy and the Environment at the University of Delaware (USA) and a Professorial Research Fellow at the University of Queensland, Australia. He is also a Senior Fellow at Columbia University's Center on Sustainable Enterprise. Dr. Ali is a National Geographic Emerging Explorer for 2010 and World Economic Forum "Young Global Leader" (2011). His books include "Environmental Diplomacy" (with Lawrence Susskind, Oxford Univ. Press) and "Treasures of the Earth: Need, Greed and a Sustainable Future" (Yale University Press). He can be followed on Twitter @saleem_ali.