Gold, Water and the Struggle for Basic Rights in El Salvador

Transcription

1 Gold, Water and the Struggle for Basic Rights in El Salvador Damien Kingsbury Professor Damien Kingsbury is Director of the Centre for Citizenship, Development and Human Rights at Deakin University, Melbourne, Australia.

2 Published September 2014 Author: Professor Damien Kingsbury Editor: Sarah McLaren Designer: Cameron Goodwin Oxfam Australia 132 Leicester Street, Carlton VIC 3053 Australia Tel: Fax: Oxfam Australia 2014 Oxfam Australia is affiliated with the Australian Council for International Development (ACFID), by whose code of ethics we are bound; Oxfam International, by whose constitution and code of conduct we are bound; and People in Aid, by whose code we are bound. This report is available online at

3 Foreword This paper on the El Dorado gold mine project in El Salvador provides a unique and important perspective on the social impacts of mining in a country with a violent past, deep political divisions, and a rich history of social movement and active citizenship. The paper also highlights the risks posed by mining to drinking water supplies in a country where clean water is scarce. The El Dorado project is owned by OceanaGold. OceanaGold is headquartered in Melbourne, Australia, and listed on the Australian, Toronto and New Zealand stock exchanges. The government of El Salvador had denied Pacific Rim (the company that OceanaGold bought in 2013) a mining permit because the company failed to comply with national regulations related to community and environmental rights. This paper has been published to coincide with the final arbitration hearing to be held at the World Bank s International Centre for the Settlement of Investment Disputes in Washington, DC. OceanaGold is pursuing a law suit against El Salvador the company is suing for USD $301 million (OceanaGold 2013) to protect what it claims are its rights to the El Dorado project and to recover its financial losses. However, for many Salvadorans and the government, mining is not an option for sustainable development in the country. Many people believe that OceanaGold is using investor-state rules to subvert democratic debate over mining in El Salvador which is fundamentally unfair. Oxfam agrees with this. The outcome of the arbitration will be of great importance to the communities living near the El Dorado project, and across El Salvador, as it will impact on their access to clean water, lands, livelihoods, well-being and basic human rights. This paper has been written by Professor Damien Kingsbury, Director of the Centre for Citizenship, Development and Human Rights at Deakin University. Damien s paper is based on his recent visit to El Salvador and interviews he conducted with many people during that visit. It is worth noting that Damien has a deep understanding of El Salvador having worked there as a journalist during the civil war. I thank Damien for his work. I would also like to acknowledge the work of my colleagues at Oxfam America who for many years have worked with local organisations in El Salvador, and others internationally, to support the right of Salvadoran people to determine whether they want mining in their country or not. As this paper demonstrates, the social and environmental risks associated with mining in El Salvador are significant. Salvadorans are thus justified in demanding that OceanaGold should drop its legal case at the International Centre for the Settlement of Investment Disputes. Dr Helen Szoke, Chief Executive, Oxfam Australia 3

4 About Oxfam Oxfam Australia is one of 17 Oxfams around the world that form the Oxfam Confederation. We work together to achieve Oxfam s ultimate goal of a just world without poverty, where people influence decisions that affect their lives, enjoy their rights, and assume their responsibilities in a world in which everyone is valued, and everyone is treated equally. The organisation undertakes long-term development projects, provides humanitarian responses during disaster and conflict, and advocates for policy and practice changes that promote human rights and justice. Oxfam Australia s Mining Advocacy Program works to influence the policies and practices of mining, oil and gas companies, and the Australian Government and multilateral institutions that support extractive industry activities and responsible business practice. The Mining Advocacy Program also works with affected communities to support them to understand their rights and the corporate accountability mechanisms available to them to hold companies to account for their practices. Acknowledgements There are a number of people to thank for assistance with gathering information and making the research visit possible at short notice for this document. They include (in alphabetical order) Andrea Atell, Kevin Bracken, Robin Broad, Pedro Cabezas, Ron Carver, Christina Hill, Rae Kingsbury, Colin Long, Vladimir Pacheco and Manuel Rocha. This visit was organised by Pedro Cabezas, the coordinator of the International Allies Against Mining in El Salvador, primarily funded by the Maritime Union of Australia and subsidised by the author. Methodology The methodology employed by this paper is a qualitative analysis based on primary data collection from semistructured interviews with a range of relevant informants in situ; first-person field inspection of the site in question and an older mine site; interviews with OceanaGold representatives and the selective use of primary and secondary literature. The author travelled to El Salvador between 9-17 July 2014, to conduct site visits in the region of the proposed OceanaGold El Dorado gold mine, to interview local social and environmental activists, community members (including the victims of violence and threats of violence), NGO leaders and government officials. The data gathered on this visit was supplemented with relevant data concerning El Salvador s rainfall and potable water supply, its economic status and economic and political relationships and the Human Development Indicators of its population. 4

5 Contents Foreword...3 About Oxfam...4 Acknowledgements...4 Methodology Introduction Background El Salvador El Dorado, OceanaGold and Pacific Rim The Legacy of the San Sebastian Mine Mining in the Surrounding Region El Salvador s Water Crisis Impacts of El Dorado Environmental Impacts Social Impacts and Mining-related Violence Allegations of Corruption Economic Impacts Legal Dispute Alternative Development Model Conclusion...26 References...28 Interviewees...28 Other references...28 Appendices...32 Appendix I List of Acronyms...32 Appendix II History of Conflict

6 1 Introduction Set amongst dense green foliage and steep hills, the water of the San Sebastian River runs a light orange colour though, depending on the extent of rainfall, it has variously flowed anything from a pale yellow to a deep orange. The river in La Union department in eastern El Salvador is a dead river; no life exists within it, and its water is poisonous to drink. The unnatural colour is a consequence of acid mine drainage a chemical reaction caused when sulfides in mine rock are exposed to air or water, in turn forming sulfuric acid. The acid then dissolves surrounding rock, releasing other harmful minerals or toxic metals, including arsenic, lead and mercury, into waterways. These metals, particularly when associated with iron, coat stream-beds with an orange-red coloured slime referred to as yellow boy. The acid mine drainage into the San Sebastian River derives from a stream which starts among the steep slopes above the village of San Sebastian, adjacent to an abandoned gold mine. A visit to the mine site clearly shows where the surface run-off from the mine began, although acid mine drainage also occurs underground and leaches out of the soil along the hillside into the stream. The deadly stream feeds directly into the San Sebastian River, which itself flows into the Gorascoran River. This river marks the eastern border between El Salvador and Honduras and then flows into the Gulf of Fonseca, also shared by Nicaragua, where it poisons the local fish stocks. The stream flowing from the base of the San Sebastian mine in La Union. Serious contamination is apparent. Photo: Damien Kingsbury/OxfamAUS 6

7 The contaminated stream entering the San Sebastian River, where it has killed all aquatic life and made the water dangerous to drink. Photo: Damien Kingsbury/OxfamAUS According to El Salvador s Ministerio de Medio Ambiente y Recursos Naturales (the Ministry of Environment and Natural Resources or MARN 1 ), the river carries nine times the maximum permissible level of cyanide, approximately 1,300 times the permissible level of iron and an unknown but certainly toxic level of arsenic (MARN 2012). Because the water from the San Sebastian is poisonous, the community of San Sebastian is required to truck in drinking water. For an impoverished community, this represents a great, almost unbearable, expense. Despite these measures, community members suffer a very high level of quite specific illnesses usually associated with arsenic and metals poisoning. Not only does acid mine drainage seep from the mine above the village sitting abandoned in unsecured and deteriorating shipping containers are more than 20 barrels containing both sodium cyanide and iron sulfate, also used in gold mining. There is believed to be enough cyanide in the containers to kill approximately a half a million people. In a country in which there has been little gold mining, the San Sebastian mine and its consequences stand as a stark illustration of what can happen when there is a confluence of a highly toxic industry, a vulnerable topography, high population density and generalised water shortage. It is, in short, a human and ecological disaster, which retains the potential to become very much worse. Recognition of the dangers posed to communities and environment by gold mining has led to a growing popular movement against further mining. That movement is now supported by the left-wing government of El Salvador, which has declared an effective moratorium on mining by refusing to grant further permits including permits to explore or mine at the proposed El Dorado project site in Cabañas department. Since 2009, successive presidents on both the left and right have also refused to give permits. 1. See Appendix I List of Acronyms for a full list of organisations and acronyms cited in this paper. 7

8 Shipping containers holding barrels of cyanide at San Sebastian mine site. They have only basic locks and sit on top of exposed soil. Photo: Damien Kingsbury/OxfamAUS Pedro Cabezas, coordinator of International Allies Against Mining in El Salvador, identified the mining issue in El Salvador as being a consequence of postwar, right-wing governments choosing to implement an economic development model that locked the country into trade and commercial agreements which benefit the profits and interests of corporations over what he identified as the public interest. That contradiction has been manifested through the law suit that Pacific Rim launched against the government of El Salvador for not issuing a mining exploitation permit. According to Mr Cabezas: That law suit and the mining itself [will potentially have] a really big impact on El Salvador because it will define whether a country has the right to protect its population which elects that government in a democratic manner, without being penalized by an economic system that favours the rights of foreign corporations. He further argued that, should OceanaGold be successful in its legal suit against the government of El Salvador, [It] would set a legal precedent it would open the floodgates to other companies that have exploration concessions in the country to sue the government of El Salvador. At the international level, the case might set a further precedent for other companies to sue other governments around the world that are struggling with the same question of democratic rights versus investor rights. The issues of mining in El Salvador, and the legal dispute surrounding the proposed El Dorado gold mine, are fraught with tension and ideological clashes. This paper examines some of the issues which led to the tension, as well as the potential impacts that the El Dorado mine may have and, indeed, has already had on the Salvadoran environment, society and economy. 8

9 2 Background 2.1 El Salvador El Salvador is a small country (about 21,000 square kilometres) located on the Pacific coast of Central America. It shares borders with Guatemala to its west and Honduras to its north and east. It has a population of about 6.34 million people and a population density of over 340 people per square kilometre, putting it in the top 12% of the world s most densely populated states or territories. El Salvador is one of Latin America s poorest countries, with an average Gross National Income (GNI) of just $3, per capita roughly one-third of the average GNI for the greater Latin American region (WB 2014). Nearly 40% of the population lives at or below the national poverty line, and the Gini Coefficient for the country is 48.5 indicating a relatively high (and historically significant) disparity between the incomes of the nation s rich and poor. In Cabañas, the department in which the El Dorado mining project is proposed to take place, the poverty level is approximately 55% (Bauman, Bohannon and O Brien 2010:195). income (in 2012) is supplemented by around $4 billion in remittances from Salvadoran workers (predominantly in the United States) and around $300 million in international aid. El Salvador s economy is based primarily on extended self-sufficiency, agricultural exports (principally coffee) and remittances. Since the end of the civil war there has also been increasing foreign investment in, and dependence upon, simple maquila manufactures based on cheap labour in special economic zones. Further income supplements come from still-limited tourism, particularly along the country s coast. El Salvador s issues surrounding economic growth and development are further complicated by the water crisis currently faced by the overwhelming majority of the population (see 2.5 El Salvador s Water Crisis). Resource extraction, principally from mining, could theoretically offer El Salvador an alternative source of export income, primarily through rents and other taxes imposed on international mining companies. However, the potential financial returns from foreignowned mining are tiny by international standards, both as a percentage of overall economic activity and as a proportion of rents (2%) paid for mining access. While there has been some economic development in El Salvador since the conclusion of its 12 year civil war in 1992 (see Appendix II History of Conflict), the country remains both dependent upon and vulnerable to foreign sources of income. Its $4.8 billion national Guatemala Honduras Cabañas SAN Salvador El Salvador Nicaragua The country of El Salvador, and its departments. Cabañas is in the central north of the country, near the head of the Rio Lempa; its primary city is Sensutepeque. Map not to scale. 9

10 honduras Guatemala El Salvador Nicaragua Costa Rica Mineral Belt Panama Gold Deposit location The Meso-American mineral belt runs east-west through the north of El Salvador. Map not to scale. 2.2 El Dorado, OceanaGold and Pacific Rim El Salvador s eastern highlands sit across the MesoAmerican mineral belt and contain deposits of gold, silver, lead, copper and other metals. Despite this richness in resources, El Salvador is not known as a mining country (Moran 2005:iii). There have been around three dozen areas either under exploration for mining or under consideration for such exploration at the time of writing. But apart from some very smallscale artisanal mining by groups of irregular miners, no mines were in operation at the time of writing and the government s intention was to work towards an extended moratorium or permanent ban on all minerals mining in the country. Increases in the price of gold 2, along with economic deregulation, have led to a corresponding increase in international interest in mining in the region, especially since the turn of the century. However, this interest is in direct conflict with growing local opposition to such mining. The history of the proposed El Dorado site goes back to well before the current dispute erupted over the appropriateness of mining in the region. The site was initially worked by the New York El Salvador Mining Company between 1948 and 1953, but technologies available at that time meant that the site s main ore deposits could not be economically accessed. Ownership of the site eventually passed to the Dayton Mining Company, which commenced exploration at the site in the early 1990s, following the end of the civil war. Just before the company was taken over by Pacific Rim, it described the El Dorado site as an exploration property only (Leong 2002:10a). In April 2002, Pacific Rim Mining Corporation acquired the El Dorado site when it merged with the Dayton Mining Company. Opposition to mining at the El Dorado site and related violence developed and erupted during the period of Pacific Rim s ownership of the site (see 3.2 Social Impacts and Mining-related Violence). In November 2013, Pacific Rim was merged with OceanaGold in an exchange of shares. The acquisition placed a premium of 50% above the value of Pacific Rim shares at the time of the acquisition (Muth 2013). OceanaGold s Andrea Atell said that: The decision to acquire Pacific Rim was made following an extensive corporate due diligence process. 2 Since the 1990s, the price has jumped from USD $300 an ounce to USD $1300 an ounce. 10

11 OceanaGold is a publicly listed, Australianheadquartered mining company on the Australian, New Zealand and Toronto stock exchanges, with interests in New Zealand, the Philippines and El Salvador. OceanaGold describes itself as a significant multinational gold producer with four operating gold mines and a portfolio of development and exploration assets in the South Island of New Zealand and the northern Philippines (OceanaGold 2014a). The company says it is committed to the principles of sustainable development, which means operating in a way that protects and supports social integrity, environmental biodiversity and equitable economic development (OceanaGold 2014b). Upon the takeover of Pacific Rim Mining, Managing Director and Chief Executive Officer of OceanaGold, Mick Wilkes, said: Our Company has a long and successful track record of operating gold mines in partnership with local communities in a safe and sustainable manner and we look forward to working with our key stakeholders in El Salvador to unlock the significant opportunity that exists at El Dorado for the people of El Salvador (Wilkes 2013). Like many transnational mining companies, both Pacific Rim and its successor, OceanaGold, have had significant concerns raised about their mining practices in non-oecd countries. It is inappropriate to lay at the feet of OceanaGold the real or perceived sins of Pacific Rim, even though the two are commonly conflated in discussion of mining by people in El Salvador. However, OceanaGold s track record of mining in New Zealand and the Philippines (Glanville 2010) sets a disturbing precedent. According to a Radio Australia report, OceanaGold pleaded guilty to one charge under the Resources Management Act 1991 (New Zealand Cth) in 2010, after the company was served with 15 infringement notices over the preceding five years for discharging sediment from the Reefton Mine into nearby waterways. The company said that it had since fixed the problem with discharges and was working with the local council on a restoration program (Glanville 2010). In the Philippines, the community near the Didipio mining project claim they did not give their informed consent to the mine proceeding, and have since sustained a number of related grievances against OceanaGold (Martin, Vettori and McLeod 2007:14, 24). Philippines law requires free and informed consent from peoples indigenous to mining areas, but does not consider the local population to be indigenous to that specific area. According to a Melbourne law academic: Melbournebased OceanaGold has come under fire, for allegedly illegally and violently demolishing almost two hundred homes in 2008 and 2009 to clear land for its operations. According to a report by the Commission on Human Rights of the Philippines, the company s scheme has been one of demolish now, negotiate later The Commission has recommended to the Philippine Government that it revoke OceanaGold s right to mine in the area (Kyriakakas 2011). The Didipio mine site has been linked with reports of community division, intimidation and harassment of community members, and bribery of local political officials, although such claims have been rejected by OceanaGold (Martin et al 2007). Similar issues have been reported in connection to the proposed El Dorado site (see 3.2 Social Impacts and Mining-related Violence and 3.3 Allegations of Corruption). OceanaGold acknowledged that the Didipio mine may have caused contamination of Diduyon River by the solid and liquid wastes of the construction personnel, sediments and rock from the excavation, and oil and lubricants from the drilling and earthmoving equipment. (OceanaGold Environmental Impact Statement, quoted in Martin et al 2007). The company did not, however, mention the leakage of waste from on-site processing of ore. Moreover, initial drilling for the Didipio project led to the drying up and later sedimentation of local water supplies (Martin et al 2007) an experience repeated by members of the communities surrounding the proposed El Dorado project in Cabañas (see 3.1 Environmental Impacts). According to OceanaGold s spokesperson Andrea Atell, the company partnered with the International River Foundation in 2013 to identify opportunities to improve the river ways near Didipio which for the past 30 years have been polluted by the harmful effects caused by small scale alluvial mining and from lack of infrastructure in the communities whereby the residents have disposed of their waste into the local river. She also said the company was working with the government to address environmental destruction caused by small scale miners. Ms Atell explained that the company s newly installed water treatment plant at the Didipio project had a throughput of 2,000 litres per hour, returning 90% of the water used. She stated that the returned water was cleaner than the water initially collected and used at the mine. Ms Atell asserted that water pollution problems in the area of the El Dorado mine were a consequence of local residents using waterways as a means of extracting waste and that the company wished to work with others to assist local residents to effectively manage their local river ways (2014). 11

12 At the proposed El Dorado site, more than 660 exploratory holes have been drilled, with sample results indicating high grade ore. The proposed mining is to be primarily undertaken underground. Pacific Rim had initially estimated that the mine had reserves of just under a half a million ounces of gold and more than 3 million ounces of silver. The cost of extraction was put, at that time, at $63 per gold equivalent ounce (Moran 2005:2). A later estimate, produced by OceanaGold, suggested that the mine was expected to produce 1.3 million ounces of gold and 9.48 million ounces of silver over its total life of around 10 years, including just over six years in full operation, using around 328 million litres of water a year (OceanaGold 2014). 2.3 The Legacy of the San Sebastian Mine The San Sebastian mine near Santa Rosa de Lima is emblematic of the environmental disaster that can follow gold mining. The San Sebastian Mine, owned by the US-based company Commerce Group since 1968, originally opened in the early 1900s. It closed around 1977 and remained closed during the civil war, re-opening in However, it was closed again in 2005 following a damning audit by the Ministry of the Environment and Natural Resources, with its permit being formally revoked the following year. As of 2014, there were 25 to 30 informal or artisanal mines at the San Sebastian site, employing people each, or about 400 people in total. One mine produces about $250 per person per year, although the number of artisanal miners is in decline due to reduced output. The conditions at these informal mine sites are basic, with little to no health or environmental safeguards in place. The operations involve crushing and washing the ore by hand, releasing arsenic, which slowly poisons the miners involved. The miners also rent nearby land; despite the contaminated waters, they allow their livestock to drink from the local waterways, saying that so long as the animals do not die, they do not see an immediate problem with continuing mining. As part of the San Sebastian site, there are two shipping containers sitting exposed on open soil, showing signs of rust. The containers house 23 barrels of cyanide and iron sulfate. It is clear that attempts have been made to access the containers a lock on one of the containers is broken, while the others show signs of having been tampered with. The locks could be considered as being medium-security, at best. According to San Sebastian community leader, Jose Vicente Hernandez, there is community concern over the possibility of a cyanide spill from containers. The main concern, he said, is that the cyanide will pollute the water, pollute the air. That much cyanide will impact on the whole community. The whole community would have to relocate and then there would have to be mitigation action. It is better to do something now to stop contamination from the cyanide. The company never communicated about the mine with the community, Mr Hernandez said. The community only learned about the cyanide from the government and through the law suit the company had against the government of El Salvador. 3 The San Sebastian River has become useless for consumption, for domestic use, by the community, he said. At the top of the river where most of the community is, it is contaminated by cyanide where the company dumped contaminated soil. The company planted cashew trees, but the community walks on that soil and breathe[s] the dust from that soil. People have died here from kidney disease and a lot of people suffer a high incidence of stroke and heart problems. Also there is a high incidence of a neurological disease called Guillaine-Barré [Syndrome] that is usually found in one in 100,000 people, but in this community there are ten cases of that disease among 4 5,000 people. Mr Hernandez acknowledged that no testing has been done to link the diseases to the actual mine. But, he continued, we know we have a much higher incidence of those diseases than other communities outside this municipality, and the one factor we have is the contamination from that mine, which other communities do not have. The community of San Sebastian has a number of sources of water, including from wells, which are also contaminated. It is good enough for domestic use but not for drinking, Mr Hernandez said. There is also water from the rainy season, which can be enough for three to four months. But most water comes on trucks from El Limon community, eight kilometres away, which costs three to four dollars per barrel, or a whole truck tank for $50, which has 40 barrels. Mr Hernandez said, If I could ask for one thing on behalf of the community, the first would be to sue the company for all the environmental damage here. 3 US-based Commerce Group Corp. The law suit, previously before the International Centre for the Settlement of Investment Disputes (ICSID), was for cancelling the company s operating permit. 12

13 They took all the gold 4 and didn t leave any mitigating works, they did not leave a clinic, they did not leave a school, all they left was contamination. If we could go back to the beginning, we would say we don t want the company here. Even though they gave some employment, they have left nothing except contamination. My advice to another community where a company was planning a gold mine, we would recommend they do not let the mine open. They do not leave anything and we run the risk of more contamination of the rest of the water we have. We don t have any resources and we can t purchase water. So my advice to another community is [to say] No to mining. 2.4 Mining in the Surrounding Region While El Salvador has had limited mining generally and mining of gold in particular, other countries in the region have had much greater exposure to the industry over a longer period. It is important to note here, too, that while regional mining in some instances impacts upon El Salvador, this issue is being addressed as separate to that of internal mining. It is, however, important to consider as part of a larger intention to improve El Salvador s environment, and in particular its drinking water. There are dozens of mines operating in Central America, marking a dramatic increase in overall numbers since This rapid increase in the number of gold mines in the region has reflected the rise in the price of gold. As with El Salvador, the experiences in Guatemala and Honduras with the impact of gold mining have often been negative, in some cases devastating. As noted by Moran: [A] large percentage of similar, modern gold mining operations throughout the world do generate negative environmental impacts to some degree, especially to water resources. Most degrade water quality to some degree and/or contribute to an increase in the competition for water. These impacts often do not become visible until after a mine closes (Moran 2005:3). However, both countries have had less accountable governments. Honduras has suffered from having a chaotic government, military interventions and coups and a highly active and interventionist Supreme Court. Rule of law is incomplete, regulation weak and impunity rife. The hills around the capital, Tegucigalpa, have long been mined for gold, usually unregulated, often illegally and almost always in very poor conditions. Mine collapses and resultant deaths of miners have been common. 4 Estimated in current values to have been worth $7 billion. honduras Guatemala El Salvador Nicaragua Costa Rica Panama Deposit size (ounces gold) more than 1,000, ,000 to 1,000,000 Principle mining sites in Central America. Map not to scale. 13

14 Critically, since 1999, Honduras has had very lax mining laws. The General Mining Law introduced in that year has advantaged international mining companies over local communities, which in some cases have been evicted from their homes to make way for new mines, and limited compliance with already weak environmental controls. In 2003, for example, there was a massive cyanide spill at the San Andres mine in the department of Copan, which contaminated the Lara River, poisoning drinking water for the town of Santa Rosa de Copan (Cuffe 2011). Guatemala has perhaps an even worse social and environmental record with gold mining than does Honduras. Guatemala introduced a new mining law in 1997, which reduced income to the government from 6% to just 1% and allowed 100% foreign ownership of mines. There has been a high level of conflict in relation to the Goldcorp-operated Marlin mine, and widespread disputation with Guatemala s indigenous population (van de Sandt 2009, esp. pp 8 15). Despite attempts by mine operators to block a community referendum in the area of the Marlin mine in 2005, the result of some 45% of eligible voters showed that 98% of participants were opposed to the mine continuing to operate. Several similar referenda have since been held by other Guatemalan communities affected by gold mining. The problems identified with gold mining in Guatemala are similar to those in El Salvador: contamination of water ways, lack of public consultation, lack of respect for indigenous peoples rights, limited returns to local communities, coupled with longer-term negative outcomes and the consequent generation of social conflict (Zarraga 2014). There is growing opposition to mining in other Latin American countries, with mining in Argentina, Peru and Chile sparking local disputes. Leading the way in terms of controlling the negative impacts on mining (while not instituting a complete ban), Costa Rica banned all further open cut mining in Costa Rica is a country that has dedicated itself to protecting the environment, said Costa Rica Environment Ministry s Jose Castro. We think it is contradictory to promote the environment and continue to pursue mining activity. (quoted in Leff 2010) However, the impacts of mining are not contained within one country s borders. The Cerro Blanco mine in Guatemala poses a particular threat to El Salvador. Pollution from this mine runs into the Ostur River in Guatemala, which in turn feeds Lake Guija (Zarraga 2014:29 30). Lake Guija shares its border with El Salvador, which owns 44 square kilometres or 77% of Guija Lake, with some 17,000 people living in its immediate vicinity (Zarsky and Stanley 2011). That lake in turn feeds the Lempa River, which is the principle source of water for more than 60% of the country. The Lempa River also passes more than 40 mining projects in Honduras before crossing the border into El Salvador (Rivera N 2014). Edgardo Mira, member of the Board of Directors of Centro de Investigación Sobre Inversión y Comercio (Centre for Research in Trade and Investment or CEICOM) expressed concerns about the impact of the spill-over from regional countries into El Salvador s water catchment, and their own problems with gold mining. We need to develop a treaty between Central American countries, Mr Mira said, to manage the sustainability of cross-border waters. This would mean that Honduras, Guatemala and El Salvador would be responsible for the quantity and quality of their shared waters. A condition of this treaty would be no mining in the border zones. Deputy Human Rights Ombudsman for the Environment Yanira Cortez also said that it was necessary for El Salvador to work with Honduras and Guatemala to address the issue of water. If international mining impacts on the local population then we can make statements on that, she said. Our strategy is to work with other human rights offices in the region to express concern at cross-border impacts of mining on El Salvador. But, as Mr Mira acknowledged, [There] is no indication that these countries would participate in this treaty. We want the El Salvador government to take this idea to the Council of Central American Integration (CICA). But the Guatemalan government does not accept the idea of water sovereignty. They believe that the water in their country is theirs, and they can take the decision they want, even to the detriment of the Salvadoran people. El Salvador s Vice-Minister for the Environment, Angel Ibarra, was more confident of reaching an agreement with the country s regional neighbours. We will also take on mining on the border with Honduras and Guatemala with El Salvador, he said. Borders don t divide us, but unite us in a fraternity of knowledge. We need a regional agreement We will approach this issue from a position of peace and dialogue and having the dream of Francisco Morazan [a united Central America]. Mr Ibarra continued: Before the Spaniards, we were all the same people. If we have the same origin, we can have the same future. And this is the approach we will take, even with conflicts with other governments in the region. It is a realistic vision, and pragmatic. It is not a utopian vision, it is a necessary vision. 14

15 2.5 El Salvador s Water Crisis Despite receiving high annual rainfall, it is widely accepted that El Salvador faces a water crisis. As a tropical country, El Salvador experiences distinct dry and wet seasons, with rainfall of up to 2000 millimeters on the southern facing hills. However, the country has little water storage capacity. El Salvador is also one of the most physically degraded countries in Latin America, with only 3% of its original forest remaining, contributing to the silting of waterways and a rapid reduction in sub-surface water resources (Steiner 2010:5). A program to build dams has been limited by local protests, with the El Cimarron dam project being cancelled as a result of the expected displacement of some 35,000 people. Other dams exist on the Lempa River and its tributaries, while further dams are under construction or planned for construction, including El Chaparral Dam on the Torola River and the expansion of a dam called 5 de Noviembre on the Lempa River. The water that is stored is, however, not potable and is primarily used for energy generation (60% of the country s electricity is generated by two dams on the Lempa River). As noted by the World Bank, almost 20% of El Salvador s population does not have any access to potable water (WB 2014). According to a government report in 2010 (MARN 2010), none of El Salvador s surface water can be classified as excellent and only 2% of total surface water was classified as good for supporting aquatic life (with approximately the same amount being regarded as potable). This represents a decline from 17% in 2006 and can reasonably have been expected to decline further in the subsequent four years. Improving, though, from 13% in 2006, only 6% of El Salvador s surface water was regarded as impossible for the purpose of supporting aquatic life (MARN 2010). This improvement in part reflects the government s continuing campaign to improve the quality of water in El Salvador. Having noted this improvement, however, testing of 124 sites in 2010 proved that only 10% had water that was able to be made fit for human consumption by boiling, chlorination or filtration. The rest 90% of surface water tested was too badly contaminated with fecal coliform, discoloration and biochemicals to be able to be made fit for human consumption using conventional means (PDDH 2012:3 6). Part of the problem with surface water contamination derives from poor sanitation, with only 2% of rural households being connected to sewers. Only 6% of surface water was of sufficient quality to allow recreational use, e.g. swimming (MARN 2010). In relation to the environmental impact of the proposed El Dorado project, Pacific Rim claimed that such concerns were overstated because the country s waterways were already polluted and, as a consequence, attempts to stop such mining were not based on environmental concerns but were simply antidevelopment (Newsfile 2012). The rivers and the water are chemical-laden. Why are they asking all these environmental things of us when they don t have them in their own economy. Our process would actually end up with cleaner water... These people purport to be environmentalists, they re not. They re anti-development. They are not pro-environment, if they were, they would support this mine, said Pacific Rim chairman Catherine McLeod-Seltzer (quoted in Moore et al 2014). Spokesperson for OceanaGold, Ms Andrea Atell, claimed that, Quality water and mining are not an either/or proposition and to suggest a modern mine pollutes local waterways unequivocally shows a lack of attention to the facts on modern mining operations. She cited OceanaGold s Macraes project in New Zealand, where the company operated a trout hatchery below the Macraes mine tailings dam. The trout were then released into the local rivers. She said that at the Macraes project, 87% of water was recycled and at the Reefton project in New Zealand, 67% of water was recycled. Ms Atell said that the company intended to use rainwater for the processing facility at the El Dorado project and would further expect to recycle a large amount of this water for our operation. Any water discharged would be treated through an on-site water treatment plant prior to being discharged into the waterways, similar to Didipio (see 2.2 El Dorado, OceanaGold and Pacific Rim). However, OceanaGold said that the Didipio may add to contamination of the nearby Diuyon River, (Oceana Gold Environmental Impact Statement, quoted in Martin et al 2007:29), so OceanaGold s acknowledged similarities between the two projects could imply the potential for contamination of the Lempa River. Given that more than two-thirds of El Salvador s population replies on drinking water from the Lempa River basin, any impact on that water supply would have disproportionate consequences for El Salvador s population. Unsurprisingly, therefore, perceived or real threats to access to clean water are critical issues for many in El Salvador, and have been central to the concerns expressed in Cabañas about the proposed El Dorado mine. 15

16 3 Impacts of El Dorado Pedro Cabezas, coordinator of International Allies Against Mining in El Salvador, is adamant that the concerns about mining arise from possible impacts in a wide range of areas. In El Salvador, [the] impacts [on the environment, the society and the economy by mining] are magnified by the local conditions, which include the size of the territory, density of population, degraded environmental condition and a history of intense environmental phenomenon. It is geologically unstable, he said. All these elements combine to generate a national opposition to the mining industry, Mr Cabezas added, because of the impacts the industry has in the country the communities that are opposed to mining in different parts of the country, organized social movements that are opposed to mining, national institutions such as the church and the human rights ombudsman s office, and some parts of the government, which has maintained a moratorium on mining despite the risks to trade and investment. There has already been some environmental impact from the El Dorado project in Cabañas. Moreover, experiences in water-stressed environments elsewhere has demonstrated that, unlike some other countries, El Salvador generally (and Cabañas in particular) is vulnerable to a high level of impact from even minor environmental damage. High levels of environmental impact would then have disproportionately higher levels of social and political impact. 3.1 Environmental Impacts While all mining is to some extent environmentally destructive, the extent and type of environmental impact can vary depending on the location, type and scale of mining, along with the regulatory environment that is applied to mining activities. Common consequences of mining, however, include deforestation, soil erosion, sedimentation, reductions in water quantity and quality, acid mine drainage and chemical leaks and spills. Gold mining is particularly environmentally dangerous, given the toxicity of the chemicals used in the extraction process and the long-term negative impacts that have arisen with a number of gold mining projects. Chemicals used in gold extraction include one of the world s better known poisons (cyanide). Along with acid mine drainage, this means that run-off from gold mining extraction which could flow from the proposed El Dorado site to the country s main water supply, the Lempa River is regarded as the world s second most hazardous after nuclear waste (Perlez and Johnson 2005). Pacific Rim had intended to use cyanide leaching techniques to extract gold ore as part of operations in the El Dorado project (Moran 2005:2). A spokesman for Pacific Rim had, infamously, tried to tell a local community meeting in Cabanas that cyanide was not poisonous but, in a challenge for him to drink some in water, he backed down. I am just a humble peasant who hasn t studied, said Antonio Membreno at a community meeting on mining near Ilobasco, El Salvador. But they are not going to convince me that cyanide isn t poison. I know it is (quoted in Powers undated:18). Acid mine drainage the other major environmental threat posed by gold mining can be equally damaging to water quality, long after a mine s operation has ceased. Acid mine drainage is considered one of mining s most serious threats to water resources [having] the potential for long-term devastating impacts on rivers, streams and aquatic life (Earthworks undated). Even with attempts to clean up former gold mining sites, with existing technologies, acid mine drainage is virtually impossible to stop once the reactions begin. To permit an acid generating mine means that future generations will take responsibility for a mine that must be managed for possibly hundreds of years (Earthworks undated). In contrast to this concern, OceanaGold s spokesperson Ms Andrea Atell said that: the El Dorado project presents with a system of quartz and calcite veins with gold and silver which contain no additional toxic or detrimental minerals. The vein system has favourable characteristics insofar as it is a low sulfidation system and does not allow for generation of acid drainage. The rock contains a significant amount of calcite which overrides the possibility of developing acid mine drainage in the short, medium and long-term (Atell 2014). Despite such reassurances, local resistance to the mine project continues. Miguel Rivera founder of the Asociación Amigos de San Isidro (Friends of San Isidro Association) and worker for the Asociación de Desarrollo Económico Social Santa Marta (Santa Marta Association of Economic and Social Development or ADES) spoke about the existing water crisis in Cabañas. 16

17 There are two holes which have high concentrations of arsenic, Mr Rivera said. One was made by Pacific Rim and the other was made by the local water supply company. This was for public consumption, but they found the water had a high concentration of arsenic and could not be used. The well made by ANDA 5 was made during the mayoral election period in But the water in this well has six times the allowed quantity of arsenic in the water. By the time this was discovered, however, Mr Rivera said that between three and four thousand people had already drunk this water. A government office, SIBASI 6, did research which said 18 people in this town and 7 people in the next town had kidney failure from drinking this water. But he acknowledged, like so many other problems in El Salvador, that there was no final report on the cause of the kidney failure. In summing up, Mr Rivera did, however, make the most basic point: For the conditions to live in El Salvador, water is key. The water that runs through San Isidro comes from the mountain above, where the mine is, about a kilometre and a half. If all our water gets polluted, where would we go? What would we do? We would have to buy our water that would be too expensive. That is why we have taken a stand, taken a position [against gold mining]. Local lawyer acting in the El Dorado project case, Hector Berrios, also identified access to clean water as the critical issue in objections to the development of the El Dorado mine. This fight is from a very specific point of view, he said. The human rights to life, specifically the right to water, the use of the earth, the right for food and the right for life. He said he believed that if the El Dorado project proceeded, they will be threatening the lives of the people present and future generations, through polluting the soil and the water. He was particularly concerned that, the chemicals they use for mining will pollute all the surface and underground water that we still have. There is no company that doesn t use chemicals that don t pollute the environment when they process gold, he continued. The first process is deforestation, then breaking the rocks, then they throw water into it and then use chemicals. They extract the gold and leave behind the polluted water. That practice is used throughout the Americas. 5 Administracion Nacional de Acueductos y Alcantarillados (National Water and Sewerage Administration) 6 Sistema Basico de Salud Integral (Basic Integrated Health System), part of the Ministry of Health. Mr Berrios also expressed concerns about the El Dorado project s location in an area that is a watershed for the Lempa River, which provides most of the water in El Salvador. So the problem is, if Pacific Rim destroys the local environment, the local water, from the Titihuapa River will pollute the Lempa River. When the companies use cyanide to extract gold, they leave pools. When it rains those pools run to the rivers. Because there are many earthquakes, the water also runs through the surface to the underground water, which threatens the human rights of the whole community. Vidalina Morales, board member of Asociación de Desarrollo Económico Social Santa Marta (Santa Marta Association of Economic and Social Development or ADES), says that the El Dorado project has already impacted negatively upon local water supplies. When [Pacific Rim] came, Ms Morales said, there were natural water supplies that went dry because of the exploration the company made In 2007, there was a well in town, but it went dry. So the company started buying water to supply the local community. But the company never accepted responsibility for the water going dry. Ms Morales said she believed that, The company provided water so the people would not get mad and tell the company to stop what they were doing. They provided water for two months. After that the wet season came in so there was less need to continue providing water. However, because Pacific Rim did not accept responsibility for the loss of water in the first instance, Ms Morales said that it had not provided water since then. So here water is a really big issue, as many communities still don t have drinkable water and they use water from rivers and wells, she said. The well filled up again in the next wet season, but the water quality wasn t the same after the company started drilling in the area of the community. According to a review of Pacific Rim s environmental impact assessment in 2005, the El Dorado Environment Impact Assessment (EIA) lacks detail about water availability, stream flows and water quality, with such data collected being from 1995 and hence too old to be used (Moran 2005:4 6). The review also noted that there is little reason to believe these estimates are quantitatively reliable for predicting the extent of impacts to local water resources while other details are largely useless for predicting long-term water quality (Moran 2005). Such data that there is indicate[s] that the public should be concerned with general long-term water quality degradation that will likely result from the release of contaminants (Moran 2005). 17

18 In summary, the review said that This EIA would not be acceptable to regulatory agencies in most developed countries (Moran 2005). However, OceanaGold spokesperson Andrea Atell refuted the inadequacy of the EIA, saying The EIA that was submitted regarding the El Dorado project was one of the most detailed and robust EIAs ever submitted in the country. This may, however, be more a reflection of the poverty of previous EIAs and the rubber stamp process they were said to be a product of rather than the adequacy, as such, of the Pacific Rim EIA. OceanaGold did acknowledge that with all development, including gold and silver mines, there were impacts. In this case there will be land that will be disturbed, infrastructure that will be built, roads upgraded and this will bring likely migration of workers to the area, Ms Atell said. The El Dorado project carries very high grade ore for a modern precious metals mine and what this means is that the amount of rock that is extracted is small and the size of the infrastructure is also small, she added. To put it in perspective, on a per annum basis, El Dorado would mine approximately 1% of the amount of rock that was mined from our Macraes mine in its peak years. El Dorado is a very small impact operation. 3.2 Social Impacts and Mining-related Violence While it is difficult to precisely determine all of the social impacts of mining in El Salvador, there is no doubt that the community of Cabañas is divided over the issue, in particular over the El Dorado project, and that this division has been at best socially corrosive and, at worst, the cause of considerable violence and intimidation. The divisions which have opened up in Cabañas have, to some extent, reflected deeper and longer-standing political divisions, reflecting some of the bitterness that characterised social relations during the civil war (see Appendix II History of Conflict). But some families which were ideologically united in that time have since fallen into conflict over the mining issue. It is common (indeed, in many cases required), for major projects in developing countries to undertake extensive socio-anthropological studies to determine the appropriateness of their proposed projects in relation to affected communities. A simple study would have quickly shown that the Cabañas community remained extremely fragile, deeply vulnerable to posttraumatic responses to negative stimuli and potentially oppositional and combative in relation to proposed major change. Tensions that led to violence flared when Pacific Rim started test drilling for gold at and near the El Dorado site in According to Miguel Rivera company representatives entered properties in opposition to landholder requests that they stayed out. In El Salvador, mining companies cannot go onto private property to explore without permission of the landowner. An elderly woman, Luisa Velasco, who protested strongly against these incursions onto her land in the Santa Rita area, had a stroke and died afterwards. While she may have had a stroke in any case, many people in her community attributed her death to the confrontation she had with Pacific Rim employees over access to her land. The company said the government gave permission to go in, so they did not need permission from the private owners to go into the land, Mr Rivera said. Another time, the son of the woman who had the stroke 7, kicked them out. Then the company accused him of threatening [the] company and the workers. After a confrontation between Mr Menjivar and an employee of Pacific Rim, in which a camera was broken 8, Mr Menjivar was arrested and charged with a number of offences. Fermin Menjivar s legal defence was provided by Louis Francisco Lopes, the environmental legal adviser to Frente Farabundo Marti para la Liberacion Nacional (Farabundo Marti National Liberation Front, or the FMLN). Mr Lopes claimed that the charges against Mr Menjivar were laid after he refused to sell his land to Pacific Rim. He said that Mr Menjivar was visited in prison by a white man who said you can sell the land or spend years in jail and have to sell your land anyway. Mr Lopes said that the person who was laying the charges was offered $400 to replace the camera, but that a lawyer acting in the case refused, instead insisting the matter go to court. Mr Menjivar was jailed for nine months until the court case was held. Mr Lopes defence of Fermin Menjivar was successful but, according to him, That is when the company then intensified its pressure and that is when the violence started. 7 Fermin Menjivar, cousin of pro-mining activist Oscar Menjivar 8 Mr Rivera claims that the camera was broken when it was used to strike Mr Menjivar. 18

19 Tensions and violence continued to rise throughout 2006 and In 2007, Pacific Rim offered to pay Radio Victoria a community-operated radio station the sum of US$8000 per month for advertising and public relations (Steiner 2010:15). Radio Victoria has been actively opposed to the El Dorado project following research trips to other mining sites in the region. After Radio Victoria rejected the offered money, the radio station began receiving threats that explicitly mentioned its reporting of the mining issue. Oscar Beltran, who is a member of the board of directors of Radio Victoria and President of Asociación de Radios y Programas Participativos de El Salvador (Association of Radio Programs in El Salvador or ARPAS), said: It made a lot of people stand for the defence of natural resources. We are a communication medium, but we as human beings also need a clear conscience. So we can t be neutral on a situation like that, because our lives depend on it. We have to take a stand, we can t be like the palm tree when the wind blows we bend over. Mr Beltran said that death threats had been left in writing under the radio station s door and at the homes of people who work for the radio station. Radio station staff have also received threatening text messages and s from Extermino. They have been to the houses of members of the radio station very late at night with guns, asking them to come out, saying they only want to talk, Mr Beltran said. No-one comes to a house at 11pm just to talk. They ve been looking for other members of the radio station. We had to relocate colleagues from their houses because they were being followed. So we had to go to the houses with members of the community to take them out of their houses. The most recent threat, he said, was in late Mr Beltran claimed the people who had left the threats were hired thugs who were usually not from the Cabañas region. [W]e tracked where the s were sent from. Some s came out of San Miguel, others came from San Salvador. No-one from the radio station has been killed, not because of the lack of threats, but because we have changed the way we live. It s not because they didn t want to kill us. Mr Beltran said that radio station staff had provided the police with extensive information on the sources of the threats against them, but that none of the investigations have yielded satisfactory results. Even though we have facilitated everything, phone calls, texts, s, the government hasn t given us any information on these issues for the last three years, he said. A police officer came to the radio station to take one member out because he was on [a] list [of people to be killed], Mr Beltran said. We asked how could he know a member of the radio station was on the list for killings? The environment of fear and intimidation has continued and intensified since 2007, and has affected the lives of every person at the radio station. It was difficult at the beginning, Mr Beltran said. But when you have clarity in what you are doing, and the community responds with protection, the people don t want the station to be closed, which is the objective of the people making the threats. We have lost many lives for the social movement against this project, so we are not going to stop now. The lives lost include Miguel Rivera s brother, Marcelo Rivera, who was an outspoken opponent of the El Dorado project and community organiser. On 18 June 2009, Marcelo was kidnapped and murdered. His fingernails were removed and his hands bound to his disfigured face. Following what has been described as a slow and inept police search (Steiner 2010:13), his body was found in a 30 metre-deep well. Then, on 24 June 2009, just one week after Marcelo Rivera s murder, an unnamed assailant used an M16 to shoot at Domingo Miranda Portillo, president of the Environment Association of La Maraña. Mr Portillo survived the attempt. On 7 August 2009, Ramiro Rivera (no relation to Miguel and Marcelo Rivera) was shot seven times in the back by pro-mining activist Oscar Menjivar 9. Mr Rivera survived the attempt and Mr Menjivar was arrested, but Mr Rivera continued to receive death threats. On 20 December 2009, Ramiro Rivera was ambushed by at least three gunmen, said to be armed with M16 assault rifles and a shotgun, while driving a truck near his home at Trinidad. Mr Rivera was allegedly under police protection at the time. He was killed, along with passenger Felicita Escheverria, while 13 year old Egenia Guavara was wounded. As a result of Mr Rivera s death, the evidence he was to give against Mr Menjivar was unavailable and he was subsequently released. Less than a week after Mr Rivera s death, Dora Alicia Recinos Sorto who was eight months pregnant with her seventh child was returning from washing clothes at a nearby spring, when she was fatally shot with a high powered rifle. Her two year old son was also wounded in the attack. Her husband, Mr Rodriguez who had been attacked with a machete in May 2008, losing two fingers and the use of his right hand was adamant about the cause of the violence and tension. 9 Cousin of Fermin Menjivar, and nephew of LuisaVelasco who were both opposed to mining. 19

20 It is all the fault of Pacific Rim, he said. We used to live in peace with our neighbours; [Pacific Rim] came to divide groups, families, friendships, because they sold themselves for a little money. They came here to screw up the country. So we ask for that company not to come here. We told them to leave us alone. But they used force. Everything I had, I lost it because of Pacific Rim. They killed my wife and tried to kill me with a machete, Mr Rodriguez continued. The company brought the people to fight with us because we were trying to stop mining. They knew that [by] taking us out, they could work. If they had been successful, this river right here would be contaminated. They left me without a wife and left them, Mr Rodriguez said, pointing to his six children, without a mother. (Rodriguez 2014) While the violence has declined since the peak in 2009, the threats and killings have not stopped. On 27 February 2010, about 400 meters from where Ramiro Rivera was killed, his uncle Jacinto Santamaria was also shot and soon after died from a heart attack. On 30 June 2010, police arrested Jose Alexander Perez Guerra, for organizing and carrying out the murders of Ramiro Rivera, Felicita Escheverria, Dora Recinos Sorto and her unborn child. Other people were also arrested and charged with accessory roles in the murders. Despite these arrests, the violence and intimidation of anti-mining activists has continued. On 2 June 2011, Juan Francisco Duran Ayala was harassed for putting up anti-mining posters by men driving the car of Eliseo Castellanos, ARENA-affiliated mayor of Ilobasco. He disappeared soon after and his body was found by police early on the morning on 4 June 2011 with two gunshot wounds to the head. The Deputy Human Rights Ombudsman for the Environment, Yanira Cortez said: There is a correlation between mining company activities and violence in those areas [of Cabañas]. Our research shows that six people died directly related to that violence and there are death threats. In those communities there is still fear. But because of a lack of proper investigation, we don t know formally who are the [instigators] of the conflict. But, she said, We can attest that there has been a rise in violence due to the presence of the mining company. We have requested a government investigation on the correlation between the presence of the company and the violence against anti-mining activists. However, at the time of this writing, there has been no formal investigation into the link between the El Dorado project and violence in Cabañas. Speaking for OceanaGold, Ms Andrea Atell said that the people who had been involved in this violence were unknown to OceanaGold or to the predecessor companies, and to our knowledge there has been no formal investigation process or findings into these allegations. She added that: We strongly condemn any criminal activities, threats or behaviour intended to intimidate both in general terms, and even more specifically, at any of the communities in which we currently operate or seek to operate. Furthermore, we are aware of instances where some opponents to resource development in El Salvador who are from outside the general area of San Isidro and Sensuntepeque, have elected to further their agenda through intimidation of local communities. We strongly condemn these actions. Santos Rodriguez signalled that, if OceanaGold were to continue attempts to mine in the area, the violence would only escalate. [The community members] have decided if the mining company comes back we are going to fight and not give up and do what [we] have to do without compassion, because Pacific Rim did not show any compassion [to us], he said. The people say, if the company comes back, we would rather die with guns and bullets than with pollution. Mr Portillo seconded this sentiment. We are not afraid and we will keep fighting to protect our communities, everything we have, corn, beans, the water, he said. I would tell them [not to] try to look for a way to come here to El Salvador. We really don t want the same problem we had with Pacific Rim. If they come here to Salvadoran territory we will have a conflict with them, because we are going to defend our soil and our waters. They need to leave us alone to live in peace in our community. In El Salvador, fear was lost, it will be their problem, so they better stay away. 3.3 Allegations of Corruption Adding to the social tensions in the region are allegations and perceptions of corruption amongst supporters of the proposed El Dorado mine. While this writer makes no claim of corruption against OceanaGold or Pacific Rim, politics and business in El Salvador has been marked by high levels of corruption and perceptions of corrupt behaviour. El Salvador was ranked 83 of 177 countries in Transparency International s 2013 Corruption Perceptions Index, with minimal budget transparency (TI 2014, see also Bargent Martes 2013). Perceptions of corruption have swirled around aspects of the El Dorado project, including individuals who have actively promoted the project. 20

21 According to an anonymous report, Pacific Rim provided local communities and institutions with financial support which had the effect of giving people a financial stake in the mining debate, and a reason to support mining. 10 Some activists, including Vidalina Morales, have been critical of payments made by Pacific Rim to the mayor of San Isidro, Ignacio Bautista. He was asked if it was good for a company like Pacific Rim to come to San Isidro, Ms Morales said: He said, as mayor, I can t help a community too much. But if there are companies willing to come here to help the community, he favoured that. The company has paid for a lot of local celebrations, everything was for free. There was no way the local mayor, the local government, could afford that. While no charges of corruption have been laid, instances of politicians accepting funds from private companies to promote local social activities and then actively supporting that company s projects do raise questions about potential conflicts of interest. It s resource management, Mr Bautista said. We send notes to companies asking them to sponsor activities, and there are many activities in the cantons. I don t call that corruption (quoted in Moran 2010). Mr Bautista has indeed been a vocal supporter of the El Dorado project in the past. By 2013, however, Mr Bautista had changed his view on mining, saying: The benefits [of mining] in terms of taxes go nationally, but the social and environmental problems stay here (quoted in Eulich 2013). Legislative Assembly member Lourdes Palacios has raised similar concerns about the way in which Pacific Rim purchased political goodwill in the Cabañas department. The company behaved in a very unethical way, Ms Palacios said, by purchasing political will of members of the community in a number of ways, financing municipal festivities, buying school books, building water tanks. The company would offer money so the mayors would offer support. Miguel Rivera echoed these concerns, saying it was part of a larger problem. These companies come to El Salvador because our laws are very weak and they take advantage of them, and local people can t do anything against big companies, he said. The companies avoid legal processes in indirect ways. They bribe the local church leaders, by helping to build something in the church. If there is a problem, 10 The report in question was written in 2011, but its authors requested that it not be made public due to fear of persecution over its contents. the church leader would say it is God s will, not the company s fault. With the bribes, they just take advantage of the people. Saul Banos, coordinator of the Program for Economic, Social, Cultural and Environmental Rights, links this tactic of using financial incentives to gain goodwill to the social unrest and conflict that has arisen in the region (see 3.2 Social Impact and Miningrelated Violence): We do have signs that Pacific Rim started the whole problem [in Cabañas], he said. It came and it broke the peace that the communities had. The company promoted and gave away things that the towns and the people needed That caused the friction between proand anti-mining people within the communities. So in that way we say that the company created the base for the fighting within the communities. 3.4 Economic Impacts The economic consequences of mining in El Salvador, and of gold mining in particular, are fraught with more than the usual number of problems associated with economic modelling. In the first instance, there is a high level of disagreement about what impact the Cabañas project would have on the local and wider environment. OceanaGold suggests the impact would be relatively limited while the economic benefits would be substantial. Anti-mining lobbyists and the government, however, claim that the immediate costs of mining would outweigh any possible benefit and that the long term consequences would be disastrous and on-going. One of the major problems with making any assessment about these competing claims is that one cannot know until after the event which is more correct. If the concerns of the anti-mining lobbyists and the government are correct, the costs would not only be substantial but profoundly debilitating. The question, then, can only be framed as a risk-benefit analysis, with the risk part of the equation being at best contested and at worst entirely unknown. Lawyer Hector Berrios claims that the benefits that might be accrued by the Cabañas communities would be minimal. He said that, of the 11,000 people in the area of the El Dorado mine, the company would only hire 600 over the 10 year life-span of the project. The first 300 would build the plant, Mr Berrios said. It would only be a few people who go with the technicians to work. The rest of the people will work when they close the mine. Generally, the technicians are not Salvadorans. 21

22 The technology they bring reduces employment in the community. The main materials they use are not bought in the local community. Some materials are bought in San Salvador, some bought outside the country. The salaries are also not proportionately arranged, so we don t see an economic benefit. More importantly, Mr Berrios said, If you look at a ten year span, the money they give to people is insignificant. We see it from the point of view of the impact on the local environment and the local community. So it is fair to ask, who is achieving the benefit of this development, who is taking the earnings? Out of 100% of earnings, 1% will be invested in the local community and another 1% given to the government. So from one dollar we get two cents, and the pollution will be really big, huge, that will take hundreds of years to get rid of. Nellie Rivera, member of the board of directors for Centro de Investigación Sobre Inversión y Comercio (Centre for Research in Trade and Investment or CEICOM) expressed particular concern about the potential costs of banning mining in El Salvador especially if OceanaGold is successful in its legal dispute with the government. If El Salvador is sued, I don t know if that money is a lot for OceanaGold, but it is for us, she said. The OceanaGold claim is for $301 million, or roughly 17% of El Salvador s government budget (based on 2011 figures). But, Ms Rivera said, we should not have to pay OceanaGold not to come to pollute our resources. The costs associated with normal environmental reclamation have run into billions of dollars over many years and have even generated whole new industries. None of these, though, have generated environmental waste as potentially hazardous as that which can be generated by gold mining. Studies of clean-up operations after gold mining environmental disasters elsewhere, have shown that costs can run to billions of dollars for a single site, and that the impact can last across generations. Given that mining companies can also close down after an operation has ceased, or declare bankruptcy after profits have been removed, there is also little likelihood that companies which might leave long-lasting and costly problems will be around to remain responsible for the cost of clean-up. However, according to OceanaGold s Ms Atell, On a national level the government of El Salvador would benefit from a strong, reliable tax base, the local communities would benefit from more direct and indirect employment and from continued training opportunities intended to build capacity for today and for beyond the mine life cycle. Additionally, local businesses would benefit from the large investment made into developing this resource. Assuming that the El Dorado project does not have any long-term environmental consequences which would be unusual for a gold mine then its long-term costs would be relatively small. However, many older mine sites have considerable long-term costs associated with either cleaning them up or, as in the case of Canada s Giant Mine near Yellowknife, the cost of just maintaining the mine so that it does not become a major environmental and human disaster. 22

23 4 Legal Dispute The legal dispute regarding the El Dorado mining project was initiated by Pacific Rim after then-president Antonio Saca instituted a de facto moratorium on all mining permits during the February 2009 presidential elections. The framework for the current legal dispute over mining in El Salvador rests on mining laws implemented by the conservative ARENA party 11 in The environmental legal adviser to the left-wing FMLN party 12, Louis Francisco Lopes, said that, at that time, many laws that were created had a neo-liberal economic slant. Under that legal framework, Pacific Rim submitted its environmental impact assessment for the proposed El Dorado site to the Ministerio de Medio Ambiente y Recursos Naturales (the Ministry of Environment and Natural Resources or MARN) at the end of 2004, and everything appeared on track (Eulich 2013). Soon after, however, in response to growing environmental concerns, MARN began taking a more cautious stance towards mining permits. The Ministry revoked two environmental permits for the San Sebastian mine in 2006 and in 2007, and delayed granting permits for the El Pescadito gold and silver mine. These moves marked a turning point in political acceptance of mining in El Salvador (Power undated:13). Despite the fact that it had failed to receive an environmental permit from MARN, Pacific Rim filed an application for a mining permit with the Ministry of Economics on 22 December In February 2005, MARN responded with a request for further information and concerns, to which the company responded in April MARN asked for yet further information, to which the company responded in September The Environmental Impact Assessment was released for limited public access and comment in March MARN then asked the company to respond to public comments received, with a further request for information in July Pacific Rim responded in October 2006 and then filed a final wastewater treatment plan in December Saying it had fulfilled these requests, Pacific Rim asserted that it was entitled to receive a mining 11 Alianza Republicana Nacionalista, or Nationalist Republican Alliance 12 Frente Farabundo Martí para la Liberación Nacional, or Farabundo Martí National Liberation Front permit from the Ministry of Economics. After receiving no further response, Pacific Rim initially sought recompense, through the World Bank s International Center for Settlement of Investment Disputes (ICSID), of USD $77 million for money spent on the project plus damages for lost potential earnings. Following the government of El Salvador s decision not to grant a mining permit, in April 2009, Pacific Rim filed for arbitration under the Central American Free Trade Agreement (CAFTA). Pacific Rim intended to sue the government of El Salvador for over USD $300 million, and OceanaGold has continued to pursue the suit. The case is currently before the ICSID, under El Salvador s investment law, with proceedings expected to commence on 15 September The basis for the company s claim against the government of El Salvador rests on the government s improper failure to finalize the permitting process as it is required to do and to respect Pacific Rim s and the Enterprises legal rights to develop mining activities in El Salvador. The claim goes on to state that the government acted in an arbitrary and discriminatory manner, and that the government suddenly changed its entire body of laws and regulatory framework for mining without justification after [the company] had invested many tens of millions of dollars in the country in reliance on the laws and regulatory framework that existed in the country at that time (quoted in Steiner 2010:8). Pacific Rim further claimed in its suit against the Salvadoran government that it had a right to exploit the resources of the site it had explored and that the government was required to grant a permit for this exploitation (Steiner 2010:8). Under existing law, there are five criteria for granting a mining exploitation permit by the Ministry of Economics: 1. a description of the area for which the permit is requested; 2. proof of authorization to use the land in question; 3. the granting of the relevant environmental permit accompanied by a copy of the Environmental Impact Assessment; 4. a feasibility study; and 5. a five year development plan. MARN has not yet approved the mining exploitation permit on the grounds that Pacific Rim s Environmental Impact Assessment was inadequate. However, this now also conforms with a hardening of the government s position against mining more generally. 23

24 The Government of El Salvador s primary objection to granting a mining permit to Pacific Rim (and hence OceanaGold) is based on there being no automatic right to a concession under El Salvadoran law, contrary to Pacific Rim and hence OceanaGold s claim. Moreover, the government of El Salvador says that Pacific Rim failed to provide an adequate Environmental Impact Assessment as well as comply with other requirements for the granting of a mining permit. Beyond that, the Salvadoran government believes that even if the company did comply with all relevant requirements, this would only give the company a right to have its application considered for approval (GES 2010). The Government of El Salvador has also argued that ICSID does not have jurisdiction to hear the case (Dewy and LeBoeuf 2010) an argument it has successfully used in the past, against a Spanish company in 2006 (ITA 2006). The lack of jurisdiction was, in part, argued on the grounds that Pacific Rim changed its national registration location on 13 December 2007, from the well-known tax haven of the Cayman Islands to the United States, specifically in order to access the provisions of CAFTA and ICSID jurisdiction over the dispute (Parada 2011). Moreover, there remains an explicit requirement that such an application for a concession must meet all domestic legal requirements. In this sense, then, the government of El Salvador is not obliged to grant a mining concession to a company that does not provide an adequate Environmental Impact Assessment statement, or to a company which has a demonstrated record of bad character in relation to similar projects. Not all persons are qualified to be granted a concession. It is important to distinguish between being qualified to obtain an exploration license and being qualified to obtain a mining concession (Otto 2013:13). The government of El Salvador disputes the claim that it is obliged to grant a mining permit and has, as noted, in effect declared a moratorium on the granting of mining licenses, based on the country s environmental fragility and in particular its limited potable water supplies, the high density of its population relative to potential or actual environmental impacts, and the very limited benefits from mining to the state or its people, which is currently at just 2% of profits. Further, the Salvadoran government states that its mining law does not obligate the State to grant a mining concession. It merely states the procedural sequence that is to be followed in the application and approval process for a concession, (Otto 2013:11 13). Article 37D clearly indicates that a mining concession must meet the legislative requirements regarding environmental permits, and that absent such a permit [sic], an application for a concession is incomplete and cannot be accepted (Otto 2013:16). El Salvador s constitution clearly states that the minerals in the ground belong to the State (Otto 2013:8). Constitution, article 103: The subsoil belongs to the State, which may grant concessions for its development. Otto otherwise argues that the while the State may grant a concession to mine, it remains the owner of the sub-soil minerals until such time that they are extracted. A concession to mine does not imply that sub-soil deposits are owned by the concession holder (Otto 2013: 9 10) and, further, that granting a concession to explore does not imply granting a concession to mine. The position is, then, that mining exploration may be undertaken in the hope or, indeed, reasonable expectation that a mining concession will be granted. 24

25 5 Alternative Development Model While most developing countries have either sought to industrialise or have otherwise transitioned towards a neo-liberal economic framework, some countries have rejected such development approaches. Instead, they have opted for greater self-sufficiency and equity, and focused more on the basic needs of life. Natural resource exploitation does not always, or even often, imply economic development, much less the development of satisfying basic needs. Sachs and Warner s pioneering survey on the economic impact of resources on development showed that, across a study of 95 countries, resource exports were consistent with lower than average per capita GDP growth (Sachs and Warner 1995). While there was no direct evidence in this study that resource exports directly led to lower GDP growth, such exports were associated with a range of other factors that led to consistently lower GDP growth. In the case of El Salvador, concerns were raised in the Sachs and Earner study about the impact of mining on access to clean water, its impact on agricultural output, the diversion of national investment into remedial works, social dislocation and the cultivation of corruption, all of which could be equated to being significantly greater than the limited economic returns of proposed mining projects. Within this context, and in particular recognising that exploitation of natural resources may not provide the best development outcomes for El Salvador, current President Sánchez Cerén outlined an alternative development model in his good life manifesto, ahead of the 2014 presidential elections. The manifesto discussed a fundamental shift in the orientation of Salvadoran society, focusing development away from neo-liberalism, and instead moving towards a social democratic paradigm (Sánchez Cerén 2014:149). In particular, without outlining it in detail, Sánchez Cerén noted that it was necessary to respect nature as central to universal human development. CIECOM s Edgardo Mira said: We believe in the possibilities of our own economic model, to construct a new economic model that sustains necessities and not the market. It s a different mission that we have and we are convinced that kind of mission does not need those type of investments and we don t want them. We have the opinion that as a mid- to long-term, those investments are not important. Part of that commitment entails finding alternatives to minerals mining in order to promote development and growth in the country. We are going to keep the promise that our president Salvador Sánchez [Cerén] made, said Vice-Minister for the Environment, Angel Ibarra, that there is not going to be mining in El Salvador. We want to improve the quality of life of our people. It doesn t matter how much gold is in the ground mining is not a viable industry. So we, as functionaries, have to keep this promise. At the centre of this is the protection of the quality of life of the people and to keep them from projects that could endanger that. Mr Ibarra described the government s program as being integrated between all ministries. Differing from the past, the Ministry of the Environment would no longer be a rubber stamp for decisions made by the Ministry of the Economy but would conduct full and formal assessments of Environmental Impact Statements to ensure they fully complied with Salvadoran law and the needs of its people. Contrasting the Sánchez Cerén administration s development orientation to those of the past, Mr Ibarra identified sustainability and the water issue as central issues. The principle objective is to overcome vulnerability and face climate change. Echoing comments by others, Mr Ibarra identified access to potable water as a basic human right. It makes us equal if the principle services are made public. If we have better health, better education, if we want this country better and more safe, we have to institute policies of water towards sustainability and the human right for water. For that we need to get better quality of water. FMLN legal adviser Louis Francisco Lopes said that the anti-mining struggle should be understood as part of a larger, 20 year plan for sustainability of the country. Within that context, he said, Sustainable mining does not exist. But, he said, the government was not opposed to mining companies as such, because in many ways investment is necessary. But what we know is if we allow industrial mining, we destroy economic growth in the longer term. We need to take an approach that looks at sustainability in the longer term. They [conservative parties and mining companies] argue that doing something on this is antidevelopment, said Mr Lopes. There are some people in the right who understand the issue. 25

26 But the ideological position of the party is that anything that is opposed to investment is opposed to development. They say there is poverty on a mountain of gold, with the profits we can pay off our debt. With 2% royalties that is impossible, but that is the discourse. Available data does not support the conservative rhetoric. In 2006, mining contributed just 0.4% of El Salvador s GDP, compared to 9% for agriculture, 21.4% for manufacturing, 14.8% for public utilities and 54.5% for services (Power undated:8). Since this study was undertaken, manufacturing in special economic zones has increased. We have a solid base to work a public policy that goes through a creative, sustainable alternative for communities that have been threatened by mining, talking concretely about Chalatenango and Cabañas, Mr Ibarra said. He also said that the government would actively work to close the artisanal mines in San Sebastian. Technically, we have closed them, he said, but socially there are a few hundred who are living by mining, polluting themselves with mercury. We need a social answer, to give them another kind of life. Environmental considerations also play a key part in the Salvadoran government s policy vision. The issue of water is not an isolated issue but is incorporated into the larger issues of government, said Mr Ibarra. This is our vision of the good life, where nature and natural resources are a matter of right. That policy is not implemented from a table, but is a struggle, some steps forward and some steps backwards, but with the determination of the government. Mr Ibarra described the long-term impact of neo-liberal economic policy as a heavy burden. we carry that burden from the past, he said. But he said the Sánchez Cerén government was not against private enterprise as such. We welcome OceanaGold to invest in renewable resources, he said. 6 Conclusion As noted at the outset, El Salvador is a country that faces a confluence of difficult legacies. It is small, under-developed, densely populated and has historically been subject to both outside pressures and the depredations of a small ruling elite. The bitterness, division and social trauma arising from the country s civil war, though now more than two decades on, continue to have a profound impact on the conduct of public life. There remains a sense of winner take all, despite the reality that the electoral process has been successfully used to mediate political outcomes on several occasions. Nevertheless, many issues, including mining, are still often viewed through an ideological lens, which does not assist in rational decision-making. Mining has proven to be particularly controversial, given the considerable profits that it can generate for the mine owner, the low levels of employment relative to profits, the other low levels of return on sovereign resources and its often long-term environmental destruction. The experience of gold mining in neighbouring Honduras and Guatemala has been especially problematic, indicating that, despite the profits that can accrue to some, the practice does have significant costs associated with it. Water pollution in particular has been shown to be a problem with gold mining, and in a country that has such limited potable water supplies this aspect becomes even more critical. Given that the government is now attempting to address the country s polluted waterways, the possibility of adding to that pollution by approving a mining operation appears to be counterproductive. The issue of mining has become inextricably linked with deeply held and divisive ideologies, leading to local expressions of concern over the potential impact of mining, the role of mining companies in this case Pacific Rim in engaging directly with some local stakeholders and the consequent social conflict that has ensued. It is fair to say that, no matter what the initial causes of conflict over the El Dorado project, the whole issue has become so mired in controversy that it would appear all but impossible for it to now proceed without erupting into even more violent confrontation. Related to this have been allegations of corruption in what is already a corruption-prone political environment. This, too, has added and would continue to add to the potential for social conflict. Given the fact that Pacific Rim and OceanaGold have less than unblemished records in relation to both the El 26

27 Dorado project and projects elsewhere in the world, it seems reasonable to express doubts about whether the company s various promises and commitments can be taken at face value. The current government of El Salvador intends to pursue an alternative development model, aimed at meeting the basic needs of the people, including providing a clean and sustainable environment. This type of development model is at direct odds with the environmentally hazardous and unsustainable practice of minerals mining. As a result, the current government has declared a de facto moratorium on the granting of mining permits. In response to the government s refusals to grant permits for the El Dorado mining project to proceed, Pacific Rim and, in turn, OceanaGold, have pursued legal action in order to either have the mine site made available for exploitation or to be compensated for expenses they have incurred in exploring the mine site. This legal suit has the potential to set an international precedent that will determine whether a multinational corporation can, with legal impunity, impoverish a small and vulnerable country because it has not been allowed to proceed with a practice that, potentially, could be highly destructive to the country while providing relatively little benefit to any but the corporation. If the Salvadoran government wins the case, it will establish a precedent for controlling corporate rights and corporate influence in El Salvador. It appears that a majority of Salvadorans have made it clear, and their president agrees with them, that they want a positive resolution to the issue, in which they have the right to determine their economic development on their own terms, without bowing to the dictates of a corporation. But if El Salvador loses the case, it will mean that the government may have to compensate the company for hundreds of millions of dollars from the public purse. The Salvadoran government may then be compelled to issue mining permits rather than face further claims for compensation and impoverish an already impoverished nation. Furthermore, with the potential to set international precedent, the same choice may be faced by governments of other developing nations around the globe meaning that multinational corporations may be given the power to dictate policy in countries in which they have no citizenship or stake, which could have severe environmental and social consequences for generations to come. 27

28 References Interviewees Andrea Atell (Atell 2014), Spokesperson for OceanaGold, responses to questions by the author to OceanaGold, 8 August 2014 Saul Banos (Banos 2014), Coordinator, Program for Economic, Social, Cultural and Environmental Rights, interview with the author, San Salvador, 15 July 2014 Oscar Beltran (Beltran 2014), Member, Board of Directors, Radio Victoria President, ARPAS, interview with the author, Victoria 13 July 2014 Hector Berrios (Berrios 2014), Local lawyer in El Dorado case, interview with the author, San Isidro, 9 July 2014 Pedro Cabezas (Cabezas 2014), Coordinator, International Allies Against Mining in El Salvador, interview with the author, San Salvador, 16 July 2014 Yanira Cortez (Cortez 2014), Deputy Human Rights Ombudsman for the Environment, interview with the author, San Salvador, 16 July 2014 Carlos Flores (Flores 2014), United National Ecology, interview with the author, San Salvador, 15 July 2014 Jose Vicente Hernandez (Hernandez 2014), Community leader, San Sebastian, interview with the author, San Sebastian 12 July 2014 Angel Ibarra (Ibarra 2014), Vice-Minister for the Environment, El Salvador, interview with the author, San Salvador, 14 July 2014 Louis Francisco Lopes (Lopes 2014), Legal adviser to FMLN, interview with the author, San Salvador, 15 July 2014 Xenia Marroquin (Marroquin 2014), Member, Water Forum, ASPROBI, interview with the author, 11 July 2014 Edgardo Mira (Mira 2014), Member, Board of Directors, CEICOM, interview with the author, San Salvador, 15 July 2014 Vidalina Morales (Morales 2014), Board member, ADES, interview with the author, Santa Marta, 9 July 2014 Lourdes Palacios (Palacios 2014), Member, Legislative Assembly, El Salvador, interview with the author, San Salvador, 15 July 2014 Domingo Miranda Portillo (Portillo 2014), President, Environment Association of La Maraña, interview with the author, La Maraña, 13 July 2014 Miguel Rivera (Rivera M 2014), Founder, Associacion Amigos de San Isidro, Campaigner, ADES, interview with the author, Santa Marta, 9 July 2014 Nellie Rivera (Rivera N 2014), Member, Board of Directors, CEICOM, interview with the author, San Salvador, 14 July 2014 Santos Rodriguez (Rodriguez 2014), Anti-mining activist, interview with the author, La Maraña 13 July 2014 Alejandro Guevara Velasco (Velasco 2014), Vice President, La Maraña, interview with the author, La Maraña, 13 July 2014 Other references Bargent Martes, J 2013, Corrupción en El Salvador: Altos funcionarios policiales utilizaron títulos falsos ( Corruption in El Salvador: Senior police officials used false titles ), InSightCrime, published 5 November 2013, accessed 5 August 2014 < corrupcion-en-el-salvador-altos-funcionariospoliciales-utilizaron-titulos-falsos> Bauman, W, Bohannon, R and O Brien, K 2010, Grounding Religion: A Field Guide to the Study of Religion and Ecology, Routledge, New York Blake Dawson 2011, Mining in Australia: An Introduction for Investors, Blake Dawson (now Ashurst LLP) Blanco, S and Diaz, F 2007, El funcionamiento del Sistema Penitencial: Manejo de Homicidas 2007 ( The operation of the Penitential System: Managing Homicides 2007 ), UNDP, San Salvador Burton, B 1999, BHP admits Ok Tedi mine is an environmental disaster, Asia Times Online, published 13 August 1999, accessed 6 August 2014 < CAFTA-DR 2005, Central America-United States Free Trade Agreement Dominican Republic, Office of the United States Trade Representative, Executive Office of the President of the United States of America, Washington DC Caldwell, J 2013, Mine shutdowns: who wears the cost?, Australian Mining, published 28 June 2013, accessed 12 August 2014 < 28

29 Cardoso, F 1982, Dependency Theory and development in Latin America, Introduction to the Sociology of Developing Countries, eds Alavi H and Shanin T, Monthly Review Press, New York, pp Cardoso, F and Faletto, R 1979, Dependency and Development, University of California Press, Berkeley Cuffe, S. 2011, The Investor s Oasis: Cyanide Pools in the Desert, Global Exchange, published 7 October 2011, accessed 18 August 2014 < mining> Davis, A and Diaz, O 2014 (trans. Greenblatt, S), Adaptation and Accumulation: Challenges, contradictions and implications for territorial governance in the Central American Dry Corridor, Prisma, San Salvador Dewey and LeBoeuf 2010, Letter to Members of the Tribunal, 3 August 2010, ICSID, Washington DC DGH undated, Radio Victoria: Chronology of Threats and Actions, Doctors for Global Health, Decatur, Georgia DGM 2012, Annuario Estadistico Minera ( Mining Statistical Yearbook ), Direccion General de Mineria, Guatemala Domingo, L 2013, Closure order on Vizcaya mine firm lifted, The Manila Times 18 July 2013 Dos Santos, T 1971, The Structure of Dependence, Readings in US Imperialism eds Fann, K and Hodges, D, Porter Sargent, Boston Dumlao, A 2013, OceanaGold in NuevaVizcaya shut down, The Philippine Star, 17 July 2013 Earthworks, undated, Hardrock Mining: Acid Mine Drainage, Earthworks El Nuevo Diario 2013, Oro genera $430 milliones en divisas ( Gold generates $430 million in dividends ), 4 November 2013 Emmanuel, A, Unequal Exchange Monthly Review Press, London Eulich, W 2013, El Salvador: Buried treasure or fool s gold?, Christian Science Monitor 10 September 2013 Ferraro, I 2008, Dependency Theory: An Introduction, in The Development Economics Reader, ed. Secondi, G, Routledge, London, pp FH 2012, El Salvador, Freedom House, published 25 October 2012, accessed 12 August 2014 < GES 2010, Government of El Salvador, preliminary objections, In The Matter Of An Arbitration Before The International Centre For Settlement Of Investment Disputes (ICSID), Brought Under The Dominican Republic- Central America-United States Free Trade Agreement (CAFTA) and the Investment Law of El Salvador (ICSID Cace No. ARB/09/12), between Pac Rim Cayman LLC, Claimant, v. the Republic of El Salvador, Respondent, 4 January 2010 glhermine 2014, El Salvador, World Elections, updated 11 March 2014, accessed 5 August 2014 < Glanville, B 2010, OceanaGold pleads guilty to NZ pollution, Radio Australia, 20 April 2010 Gunder Frank, A 1967, Capitalism and Underdevelopment in Latin America, Monthly Review Press, New York Gunder Frank, A 1972, The Development of Underdevelopment, in Dependence and Underdevelopment, eds Cockcroft, J, Gunder Frank, A and Johnson, D, Anchor Books, Garden City, New York Horvath, J and Grabowski, R 1999, Core and Periphery in the World Economy: An Empirical Assessmentof the Integration of the Developing Countries into the World Economy, International Economic Journal Vol 13, No 4, Winter 1999, pp ITA 2006, Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Investment Treaty Arbitration, published, accessed 1 August 2014 < italaw.com/cases/documents/564> Kyriakakis, J 2011, Why Australian firms should be made accountable for overseas crimes, The Conversation, published 15 April 2011, accessed 21 July 2014 < Leff, A 2010, Costa Rica lawmakers vote to ban open-pit mining, Reuters, 9 November 2010 Leong 2002, Exemption Orders (Discretionary), Dayton Mining Corporation to British Colombia Securities Commission 138, 13 February 2002 Lopes Piche, K 2009, No a la mineria: Saca cierrapuertas a explotacion de metals ( No to mining: Exploitation of metals draws to a close ), La Prensa Grafica, 26 February 2009 McClure, R 2001, The Mining of the West: Profit and Pollution on Public Lands, Seattle Post Intelligencer, 13 June

30 MARN 2010, Resultados del Informe de la Calidad de Agua en los ríos de El Salvador, 2010 ( Report Results of Water Quality in the rivers of El Salvador ), Ministery of the Environment and Natural Resources, San Salvador MARN 2012, MARN confirma presencia de cianuro y hierro en Rio San Sebastian, La Union ( MARN confirms the presence of cyanide and iron in San Sebastian River, La Union ), Ministry of the Environment and Natural Resources, San Salvador, 15 July 2012 Martin, S, Vettori, L and McLeod, J 2007, Mining Ombudsman case report: Didipio gold and copper mine, Oxfam Australia, Carlton. MDEQ 1997, Draft Environmental Impact Statement, Golden Sunlight Mine, Montana Department of Environmental Quality, Helena Moore, J, et al 2014, Debunking Eight Falsehoods by PacificRim Mining/OceanaGold in El Salvador, International Allies Against Mining in El Salvador, Boston Moran, R 2005, Technical Review of the El Dorado Mine Project Environmental Impact Assessment (EIA), El Salvador Water Quality/Hydrogeology/Geochemistry, Golden, Colorado Morin, L 2010, El Salvador s Misfortune in Gold: Mining, Murder, and Corporate Malfeasance, Alterinfos America Latina, published 21 April 2010, accessed 19 August 2014 < Munck, R 1999, Dependency and Imperialism in Latin America: New Horizons, in The Political Economy of Imperialism: Critical Appraisals ed Chilcote, R, Springer, Netherlands. Muth, T 2013, New wrinkle in battle over mining in El Salvador?, The Christian Science Monitor, 4 November 2013 Newsfile 2012, Pacific Rim Provides a Progress Report on Activities in El Salvador and Nevada, 30 April 2012 OceanaGold 2013, Pacific Rim Mining Acquisition, published October 2013, accessed August 2014 < filings/2013 Press-Releases/ Pacific-RimOGC- MasterPresFINAL.pdf> OceanaGold 2014a, About Us, published 5 December 2013, accessed 14 July 2014, < com/about-us> OceanaGold 2014b, Sustainability, published 5 December 2013, accessed 14 July 2014, < oceanagold.com/sustainability> OceanaGold 2014c, The El Dorado Project, published 2014, accessed 5 July 2014, < com/our-business/el-salvador/el-dorado-project/> Otto, J 2013, Expert Opinion of Eight Mining Law Questions, prepared for Foley Hoag LLP, pertinent to Pacific Cayman Versus The Republic of El Salvador, ICSID Case No. ARB/09/2, 19 December 2013 Parada, L 2011, Witness Statement of Luis Alberto Paradat, International Center for Settlement of Investment Disputes, Washington DC, 14 March 2011 PDDH 2013, Informe Especial sobre El Proyecto Minero Cerro Blanco y las Potencialses Vulneraciones a Derechos Humanos en la poblacion salvadorena ( The Special Report on Mining Project Cerro Blanco and Potential Human Rights Infringements against the Salvadoran Population ), Procuaduria para la Defensa de los Derechos Humanos, San Salvador PDDH 2012, La Situacion del medio ambiente y sus impactos en los derechos humanos en El Salvador ( The Situation of the environment and its impact on human rights in El Salvador ), Procuaduria para la Defensa de los Derechos Humanos, San Salvador PDDH undated, Statement by the Ombudsman for the Defence of Human Rights (PDDH) El Salvador. Subject: Situation surrounding the El Dorado mining extraction project and assassinations occurring in Cabañas, San Salvador, in Steiner 2010 Appendix 1 Perlez, J and Johnson, K 2005, Behind gold s glitter, torn lands and pointed questions, New York Times, 24 October 2005 Power, T undated, Metals Mining and Sustainable Development in Central America Oxfam America, Boston Prebisch, R 1950, The Economic Development of Latin America and its principal problems, Economic Commission for Latin America, Department of Economic Affairs, United Nations, Lake Success, New York Remy, F and McMahon, G 2002, Large Mines and Local Communities: Forging partnerships, building sustainability, Mining Department, World Bank Group, Washington DC Reuters 2014, Murders in El Salvador spike to record high for May, San Salvador, 26 May 2014 Sachs, J and Warner, A 1995, Natural resource abundance and economic growth, Harvard University, Cambridge MA Sanchez Ceren, S 2014, El pais que quiero: la esperanza en el buen vivir es en corazon de la gente ( The country I want: hope for the good life is in heart of the people ), platform statement ahead of 2014 presidential election 30

31 van de Sandt, J 2009, Mining Conflicts and Indigenous Peoples in Guatemala, Cordaid, The Hague Schipper, E 2006, Climate Risk, Perceptions and Development in El Salvador, International Water Management Institute, Colombo/Tyndall Center Working Paper 93, October 2006 Steiner, R 2010, El Salvador Gold, Guns and Choice, International Union for the Conservation of Nature, Comission on Environmental, Economic and Social Policy, Gland, Switzerland Sunkel, O 1969, National Development Policy and External Independence in Latin America, The Journal of Development Studies, Vol 6, No 1, October 1919 Tabb, W 1997, Globalization Is An Issue: The Power of Capital Is The Issue, paper presented to 1997 Socialist Scholars Conference Tremonti, A 2014, Gold: Why a mining company is suing El Salvador, The Current, Canadian Broadcasting Corporation, 16 April 2014 Ventura, C, Cortes, C, and Quitanilla, D 2011, Characterization of Environmental Impacts Linked to Mortality in Residents Living in the Vicinity of the San Sebastián Mine, Santa Rosa de Lima, Union Department, cited in Europe Third World Centre, Mining projects in El Salvador and impunity, violations of human rights, democracy and national sovereignty, cetim.ch/en/interventions_details_print.php?iid=384 accessed 3 September WB 2014, El Salvador, Data, World Bank, Washington DC, published 4 July 2014, accessed 14 July 2014 < Wilkes, M 2013, OceanaGold and Pacific Rim Mining complete plan of arrangement, statement to the Australian Stock Exchange and the Canadian Stock Exchange, 27 November 2013 Zarraga, A 2014, La mineria transnacional en Centroamerica: logicas regionals e impactos transfonterizos. El caso de la mina Cerro Blanco ( Transnational mining in Central America: Cross-border impacts and regional logistics. The case of the Cerro Blanco mine ), Paz Con Dignidad, Bibao Zarsky, L and Stanley, L 2011, Searching for Gold in the Highlands of Guatemala: Economic benefits and Environmental Risks of the Marlin Mine, Global Development and Environment Institute, Tufts University 31

32 Appendices Appendix I List of Acronyms Acronym Spanish English ADES ANDA Asociación de Desarrollo Económico Social Santa Marta Administracion Nacional de Acueductos y Alcantarillados Santa Marta Association of Economic and Social Development National Water and Sewage Administration ARENA Alianza Republicana Nacionalista Nationalist Republican Alliance ARPAS Asociación de Radios y Programas Participativos de El Salvador Association of Radio Programs in El Salvador ASPROBI Asesoria a Programas y Proyectos de Desarollo Advice to Programs and Projects on Development CAFTA Central American Free Trade Agreement CEICOM FMLN Centro de Investigación Sobre Inversión y Comercio Frente Farabundo Marti para la Liberacion Nacional Centre for Research in Trade and Investment Farabundo Marti National Liberation Front GANA Gran Alianza por la Unidad Nacional Grand Alliance for National Unity ICSID MARN OECD Ministerio de Medio Ambiente y Recursos Naturales International Center for Settlement of Investment Disputes (World Bank) Ministry of Environment and Natural Resources Organisation of Economic Cooperation and Development PCN Partido de Concertación Nacional Party of National Conciliation PDC Partido Demócrata Cristiano Christian Democratic Party SIBASI Sistema Basico de Salud Integral Basic Integrated Health System 32

33 Appendix II History of Conflict El Salvador s fragile economy had long been dominated by a small oligarchy (historically referred to as the 14 Families ), closely politically and economically aligned with the US in a conventional comprador elite relationship. The country s heavy reliance on indigo and then coffee as monocultural cash crops led to just 2% of the population controlling 95% of its income by the early 20 th century. The consequent marked inequalities in income led, in 1932, to a rebellion and massacre, culminating in a military coup. The coup reinforced the economic status of the 14 Families. This situation remained more or less in place until an armed conflict between El Salvador and Honduras in This short (four day) war led to the displacement of some 30,000 Salvadorans. Following the war and displacement, the country experienced widespread economic hardship (worsened soon after by the 1973 oil price crisis), as well as increased military spending and corruption. President Arturo Armando Molina attempted to quell rising social unrest by implementing a land reform program, but this was blocked by the landed elite. In 1977, in rigged elections marked by paramilitary violence and intimidation, General Carlos Humberto Romero was elected as president, sparking massive protests ahead of his inauguration which in turn led to further repression and, on 28 February 1977, the indiscriminate massacre of up to 1500 people by security forces. A coup in October 1979 and the killing of protesters sent a number of previously public organisations underground, including as armed guerrilla movements. In October 1980, these by now revolutionary organisations came together with the Communist Party of El Salvador under the banner of the Frente Farabundo Marti para la Liberacion Nacional (Farabundo Marti National Liberation Front, or FMLN) in an attempt to overthrow the US-backed government. The government responded by employing the army, the National Guard and the police against the FMLN. Even where the government tried to take a more moderate line towards some of the claims made by peasant and worker organisations, the country s army usurped political authority and ran an essentially independent internal security policy. This included the use of what were quickly dubbed death squads, which specialised in the assassination of suspected FMLN activists and sympathisers. Over the period of this particularly brutal war, some 75,000 people were killed, leaving the Salvadoran economy in ruins. Following a final offensive in 1989, the government and the FMLN negotiated a peace agreement in 1992, with the assistance of external brokers. This introduced reasonably free and fair elections in which the FMLN was represented as a legitimate political party. Despite its peace agreement, El Salvador remains a violent, dangerous and divided place. El Salvadoran society remains polarised around political parties that had their origins in the civil war, principally the FMLN and Alianza Republicana Nacionalista (Nationalist Republican Alliance or ARENA), with the ARENA breakaway Gran Alianza por la Unidad Nacional (Grand Alliance for National Unity or GANA) and other conservative parties aligning with ARENA to give it a majority in the Legislative Assembly. As with most post-conflict societies, El Salvador continues to suffer from aspects of socially dispersed but culturally embedded post-traumatic stress disorder, as well as the increased acculturation of violence and a culture of impunity from prosecution for political and economic crimes. Gang violence remains a major security problem and, although mitigated in recent times, continues to be manifested in high levels of armed robbery and a high level of gun violence. One outward expression of this continuing insecurity is the prevalence of armed guards, high levels of nearimpenetrable household fortification and the continuing activities of guns for hire. In the latter case, some of these professional thugs are remnants of former death squads or other civil war era pro-government militias which, along with members of El Salvador s highly organized street gangs, have been alleged to act on behalf of particular political and economic interests. Former FMLN President Mauricio Funes said that at least some of the violence had been caused by groups with political motivations. (Reuters 2014). As noted by Steiner, tensions that remain from El Salvador s civil war continue to divide elements of El Salvadoran society. Pro-junta sympathies are represented by the country s right-wing political parties ARENA, GANA, Partido de Concertación Nacional (Party of National Conciliation or PCN), the Partido Demócrata Cristiano (Christian Democratic Party or PDC) and smaller groupings and independents. In contrast, liberal and left-wing sympathisers align themselves with the FMLN. Reflecting alignments during the civil war, the country is politically divided between geographic areas that were pro and anti-junta. Cabañas is one of the districts that remains deeply divided between pro-junta and FMLN loyalties, which finds significant reflection in social positions on the issue of mining. 33

34 Cabañas is sometimes known as the Cradle of the Patriots for its strong links to and support for the El Salvadoran military during its era of rule by the wealthy elite and military dictatorship. A co-founder of ARENA, Mario Enrique Amaya Rosa, was the provincial representative to the Legislative Assembly for more than 20 years. ARENA has also controlled most municipal and legislative seats in the province since the 1980s. El Salvador is socially conservative so some, perhaps much, bitterness towards anti-mining activists reflects not only an expression of narrow economic interests or an alignment with (or patron-client relations with) such interests, but also a deeper mistrust of social activism in general and a sense of its alignment with the FMLN in particular. Reflecting its origins as the party that opposed US economic and military intervention in El Salvador and which was more socially progressive and community oriented, anti-mining activism is more associated with the FMLN. With its origins as the party reflecting the interests of El Salvador s pro-us elites, ARENA is generally pro-mining (even though then ARENA President Tony Saca initially introduced the mining moratorium), in particular among some individual members of ARENA. Given residual tensions from the civil war, especially in relation to amnesties for war crimes, these existing social divisions have been conflated with tensions over whether or not there should be mining in Cabañas. 34

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