The small country of El Salvador has dared to stand up against powerful international gold mining companies. And now they’re dealing with the blowback.
One of the companies salivating over El Salvador’s gold is suing the government for their failure to bow down and grant a permit for a proposed mining project. There is strong local resistance to the project because of concerns it could poison a river that is the source of water for more than half the national population.
The company, Pacific Rim, is demanding in excess of $77 million in compensation, alleging violations of “investor protections” under the U.S. trade agreement with Central America.
In September of this year, the price of gold reached a record high, breaking $1,900 per ounce for the first time in history. This unprecedented spike in gold prices has come in the midst of the U.S. debt crisis and the financial turmoil sweeping over Europe. Although prices have tempered since then, hovering around $1,650 per ounce in October, the overallprice of gold has more than quintupled over the past decade.
The rising uncertainty of today’s economic climate has only intensified the allure to invest in this precious metal, which, unlike the dollar and the euro, has a value that is not tied to sovereign debt or hobbled economies, making it a safer investment. That’s why recent boosts in gold prices will likely fan the already raging flames of today’s gold rush, which began when the value of gold first shot up in the early 2000s.
Council on Hemispheric Affairs Research Associate Krista Scheffey
July 30, 2010.
In 2005, then-Senator Barack Obama published an opinion piece in the Chicago Tribune entitled “Why I oppose CAFTA.” In his article, released on the same date as the Senate vote on the Dominican Republic-Central American Free Trade Agreement (“DR-CAFTA”), Obama explained that he would not vote for the bill and voiced his opinion that DR-CAFTA “…does little to address enforcement of basic environmental standards in the Central American countries and the Dominican Republic.”1 Despite well-founded fears about the consequences of DR-CAFTA among its critics, President George W. Bush and his administration lobbied heavily for the passage of the bill, which was signed into law on August 2, 2005. El Salvador became the first of the Central American nations to implement DR-CAFTA after the treaty took effect in the country on March 1, 2006….
Pac Rim LLC vs. Government of El Salvador Arbitration Details (ICSID Case No. ARB/09/12)
The mining company Pac Rim LLC is claiming investor rights violations by the Government of El Salvador and demanding a minimum of $77 million in compensation in a case brought in front of the International Centre for Settlement of Investment Disputes (ICSID) through stipulations in the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA).
The case is being heard by a panel of three arbitrators:V.V. Veeder (from Great Britain), Brigitte Stern (from France) and Guido Santiago Tawil (from Argentina).
The company filed a Notice of Intent for Arbitration on December 9, 2008 and a Notice of Arbitration on June 15th.The hearing on preliminary objections was held in Washington D.C. from May 31 to June 1, 2010.The tribunal found in favor of the company and the second round of hearings, on the jurisdiction of the case, were held from May 2 to May 4, 2011.The tribunal has yet to release their decision on this round.
During the jurisdiction hearing both Nicaragua and Costa Rica submitted non-disputing party claims in the case, in favor of the Salvadoran government.The Department of State also made a submission questioning Pac Rim’s use of DR-CAFTA.
Also, the National Roundtable against Metallic Mining in El Salvador together with the Center International Environmental Law (CIEL) submitted an Amicus Brief, supporting the Government of El Salvador position.
All procedural details can be seen at case 67. on the ICSID pending cases page.
On Thursday December 15, 2011 over one hundred people gathered in solidarity with the Salvadoran people in front of the World Bank headquarters in Washington D.C. to denounce the actions of Canadian mining company Pacific Rim. The protest included participants from United Mine Workers of America, the Institute for Policy Studies, the American Federation of Teachers, the AFL-CIO, the International Brotherhood of Teamsters, the Farm Labor Organizing Committee, the Communications Workers of America, the Steelworkers, the International Longshoremen's Association and CISPES (the Committee in Solidarity with the People of El Salvador.), among others
The National Roundtable against Metallic Mining in El Salvador sent the following greeting that was read at the protest:
The Salvadoran people, on the front lines against the abuses of transnational mining companies, join in spirit the protest that unions and civil society organizations are holding today in front of the World Bank to reject the unjust trade policies that the United States promotes in our country and Latin America. We are convinced more and more that the number of voices are growing who demand political and trade policies that respect the sovereignty of every country to the decide the way in which it wants to build its own destiny. We are pleased and excited by the strength you, as civil society, are showing today because together we are telling the world that human rights, labor rights, and environmental rights are non-negotiable and we will do everything within our reach to ensure they are respected.
To date, those who have promoted metallic mining in our country have hidden most of the reality that communities face where previously there was mining. As is the case of Mr. John Machulack, the owner of the mining company Commerce Group, who recently said that the San Sebastian river in the state of La Union in eastern El Salvador, didn't show any signs of water pollution, even when there are local scientific studies that show toxic levels of pollution in the river that far exceed minimum sanitary and environmental standards in any part of the world.
Those who promote metallic mining hide the unsuitable and unsafe working conditions and low wages that would characterize jobs in the extractive industry in our country. In El Salvador, like the rest of Latin America, workers have few possibilities to access workers comp or job security in the case of accidents, which is not fair. Today we are saying: Enough!
Companies, like Pacific Rim, that promote metallic mining in El Salvador are trying to subvert the will of the population that has been saying NO since 2008 to mining. We, Salvadorans, believe that mining is not ecologically or environmentally friendly; it does not represent a significant source of jobs for the majority of the country; and economically it represents misery and is a joke that we reject with dignity based in our most profound beliefs.
We will continue united in this struggle. We are sure that because of our actions a new dawn is coming that will improve everyone’s future.
The Environmental and Social Costs of Pacific Rim in El Salvador
As Pacific Rim continues with its law suit demanding millions of dollars from the Salvadoran Government, the economic costs resulting from the arbitration become more and more evident.Both disputing parties are paying millions of dollars in fees to the International Center for Investment Settlement Disputes, the tribunal hearing the case, as well as to their own lawyers.
However, it is important to note that there are other costs associated to the way Pacific Rim has acted in El Salvador: namely the environmental and social costs on the communities of Cabañas, the region where Pacific Rim intends to mine.
Environmental Impacts
Even though Pacific Rim never received an exploitation permit, local residents of Cabañas have documented environmental impacts caused by their exploration process.
El Salvador is one of the Latin American countries with the least access to water.There have been five cases reported of local wells and water sources drying up as a result of Pacific Rim’s exploration process.They have been reported in the small towns of Palmito, Palo Bonito, and Llano de Hacienda. The Association for Economic Social Development of Santa Marta reports that 100 families have been already been affected by the lack of water.
Francisco Pineda, Goldman Prize winner in 2011 for his work resisting mining in Cabañas, first began to investigate Pacific Rim’s actions when the stream on his property dried up.In April of 2011 he told the Nation about the moment he realized the stream was dry: “...So we walked up the river to see why…. And then I found a pump from Pacific Rim that was pumpingwaterforexploratory wells.”
In the town of Palo Bonito, Lydia Uria lost her farm of over 500 fruit trees because the springs she used to irrigate dried up.She also was unable to continue her hog farm, which was her primary source of income.The farm was started by her late father, who received international recognition from Friends of the Earth for his efforts to plant trees due to the fact that El Salvador is one of the most deforested countries in the hemisphere.Now most of the trees have dried up from the drought.
In the municipality of San Isidro, locals claim Pacific Rim built a small dam on a local stream.Adan Martinez, whose land borders that steam, has stated that it has made his land un-farmable because during the rainy season the dam retains too much water and floods his crops.
Social Impacts
The arrival of Pacific Rim also brought divisions and conflict to Cabañas, which traditionally had the lowest crime rates in the entire country.To date there have been four anti-mining activist murdered and numerous cases of death threats and intimidation.In some of the cases there have been arrests of those hired to carry out the crimes.However, the Civilian National Police and Attorney General’s Office have never done thorough investigations into the intellectual authors of the crimes.Neighbors and families of the victims believe there could be ties to the company or company supporters.
*Marcelo Rivera’s body was found at the bottom a well in July of 2009 showing signs of torture.He was a vocal opponent to mining and other projects, such as landfills, that could bring environmental destruction.
*In December of the same year two members of the Environmental Committee of Cabañas (CAC) were gunned down in their home town.One of the victims, Dora Sorto, was eight months pregnant at the time and carrying her two year old son in her arms.
*More recently, the body of Juan Francisco Duran Ayala was found with two gunshot wounds to the head.The day before his disappearance, Juan Francisco had been hanging up anti-mining posters with other members of the CAC.
*Employees of Radio Victoria, a community radio station in the region, have been receiving threats off and on over the last three years.Radio Victoria has been an outspoken critic of local corruption and Pacific Rim’s actions in the region.Many of the radio station’s employees have 24 hour body guards and two have been forced to leave the country.
