Stella Dawson, Reuters

WASHINGTON (Thomson Reuters Foundation) - Protesters rallied on Monday to demand that a World Bank tribunal reject an international mining company’s claim for $300 million from El Salvador over denial of a gold mining license.

El Salvador refused to issue OceanaGold Corp an extraction permit in 2006. Activists say that the company failed to get permission to mine from a sufficient number of the landowners in the northern province of Cabanas, or to obtain title to the land, and that it had not met basic environmental safeguards.

 

The tiny Central American country is rich in silver and gold, but mining has polluted water supplies, and residents say cyanide and arsenic are poisoning their children. The mining projects have led to civil unrest and five deaths in the area.

“OceanaGold is trying to push the project undemocratically. It makes promises of jobs in an impoverished area, building schools, it is trying to divide the people without following the proper procedures,” said Sofia Vergara, a community leader at Oxfam America, one of the organisers of the protest.

The protesters, some from El Salvador, waived signs that read saying “Water is worth more than gold” and “Water is a human right”.

The company, which was called Pacific Rim before it was acquired by the Australian-Canadian firm OceanaGold, had explored the region for gold and filed a request for a mining permit. El Salvador has effectively halted mining and said that it must submit a feasibility study for the project, and that it did not get government approval for its environmental impact study.

The company said the government had no right to deny the permit and took the case in 2009 to an arbitration panel, the International Center for Settlement of Investment Disputes, which provides a forum for countries and companies to resolve investment disputes and is loosely affiliated to the World Bank.

Much is at stake for El Salvador. Not only does the case touch on the sovereign right of a country to determine how its natural resources are exploited, but a $300 million award would have a significant financial impact. Its budget revenue in 2013 was $4.68 billion, and per capita income is $7,290.

OceanaGold was not immediately available for comment. The case is expected to be heard all week, and the tribunal is to issue its decision sometime later.