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

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. dlk@deakin.edu.au

Published September 2014 Author: Professor Damien Kingsbury Editor: Sarah McLaren Designer: Cameron Goodwin Oxfam Australia 132 Leicester Street, Carlton VIC 3053 Australia Tel: +61 3 9289 9444 Fax: +61 3 9347 1983 www.oxfam.org.au 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 www.oxfam.org.au/explore/mining

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

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

Contents Foreword...3 About Oxfam...4 Acknowledgements...4 Methodology...4 1 Introduction...6 2 Background...9 2.1 El Salvador...9 2.2 El Dorado, OceanaGold and Pacific Rim...10 2.3 The Legacy of the San Sebastian Mine...12 2.4 Mining in the Surrounding Region...13 2.5 El Salvador s Water Crisis...15 3 Impacts of El Dorado...16 3.1 Environmental Impacts...16 3.2 Social Impacts and Mining-related Violence...18 3.3 Allegations of Corruption...20 3.4 Economic Impacts...21 4 Legal Dispute...23 5 Alternative Development Model...25 6 Conclusion...26 References...28 Interviewees...28 Other references...28 Appendices...32 Appendix I List of Acronyms...32 Appendix II History of Conflict...33 5

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

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

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

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 $3,720.00 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

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

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

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 2001. 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 10 20 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

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 1990. 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 1,000,000 500,000 to 1,000,000 Principle mining sites in Central America. Map not to scale. 13

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 2010. 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

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

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

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 2008. 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