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Canadian Mining Companies Helping Themselves to Others’ Wealth

Canadian Business

Like a thousand other domestic mining companies operating abroad, Glamis is supported through Canadian stock exchanges, the world’s biggest source of capital for mining. Canada’s laws protect investors by imposing reporting, disclosure and other obligations on corporations. These laws, however, do little to protect people in developing countries from mining risks, including the human-rights abuses that often accompany such mega-projects. And for opponents of the mines, the question is not just about the rules of the game it’s about the questionable benefits of participating in the first place.

The Glamis gold mine in Guatemala began processing gold in December, 2005, and already the local subsistence farmers have seen social tensions caused by the mine re-opening wounds still raw from 36 years of bloodshed, which only officially ended with the 1996 peace accords. Last year, when opponents of the mine blocked a truck bringing in equipment, the police and army arrived in force. One person was killed and twenty injured. The farmers of the area are worried that cyanide and other mining toxics will contaminate their water supply.

A 2005 referendum in the communities near the mine overwhelmingly rejected the project. But the company’s legal challenge of the process has mired the vote’s result in the bizarre workings of the country’s highest court. And rampant corruption among police, judges and lawmakers devalues Glamis’ assurance that it need comply with all local laws.

Open-pit mines, which are common for gold extraction, are violent intrusions on the environment. Mountains are crushed. The exposed rock can release heavy metals locked inside. The dangerous chemicals used to extract the gold can escape. Massive tailings areas, which hold waste rock and chemical sludge, are left behind. Acids from the rock may leach into rivers even centuries after a mine has closed. The use of enormous amounts of water competes with the needs of local people. The mineral benefits of mines are measured in ounces or grams, while the waste rock generated is measured in tonnes and while the land, forests and wetlands that are destroyed are measured in square kilometers. Individuals and groups that oppose such projects often face brutal repression from their own governments and military or paramilitary organizations which negotiated the company’s entry into the country.

The Canadian Roundtables: Strengthening the Rules of the Game

Joe Danni, vice president of corporate relations for Glamis – which became Goldcorp Inc., after a recent merger – says that what best protects Guatemalans from bad behaviour by foreign companies, “starts with corporate reputation. The last thing you want to do if you want to stay in business is to leave something inappropriate behind, because that means you won’t be able to do business elsewhere.” Next, says Danni, come the standards, systems and financial bonds (and relationships among parties) put in place by international institutions like the World Bank – from which Glamis borrowed $45 million – or by the host government. The safeguards mentioned by Danni, however, are voluntary or without legal consequence at the international level, and weak or non-existent at the local. Government institutions in Guatemala can’t be trusted even to provide basic services like education and health care, let alone a trustworthy regulatory system for mines.

Although Danni says Glamis has set up local organizations to monitor its mine, there is little chance that non-compliance will be prosecuted. The country has yet to bring to justice even the perpetrators of the genocide against Indigenous people that occurred just over twenty years ago.

A Canadian Parliamentary Committee recently studied the issue of regulating Canadian mining companies abroad to prevent the well-documented cases of death threats, assassinations, toxic accidents and destruction of protected areas. The Committee called for new laws that would empower the federal government to punish corporations on evidence of environmental or human-rights abuses. It also called for policies that would see the government withdraw advocacy and financial support on evidence of wrongdoing.

Instead of acting on these recommendations, the government responded by setting up new roundtables to study the problem further! Grahame Russell, a co-director of Rights Action, which works with communities in Guatemala and other developing countries, says the roundtables are “a delaying tactic to talk the issue to death again instead of acting upon concrete recommendations to have binding law put in place.”

“At a bare-bones minimum,” says Russell, “we need strong civil and criminal law in countries like Canada and the U.S. whereby affected parties individuals, communities collectively, or their NGOs can come to Canada to sue straight up in our courts for environmental harms associated with their projects and businesses, or human-rights violations, labour standards” and other abuses.

Jamie Kneen, who directs the Latin American Program of Mining Watch, a Canadian advocacy and research group, says the objective is to establish binding international standards in Canada that would allow us to pressure other countries to adopt the same. Ultimately, “you could actually have an enforceable body of international law.”

Whose Gold Is It?

Opponents of mining also question who benefits from the international system under which Canadians extract and sell the gold of Guatemala and other developing countries. Such opposition often leads them to be labeled as “anti-development” for rejecting multi-million-dollar investments. But past experience has made many Guatemalans suspicious about promises of economic development.

“Five hundred years ago the Spanish came to take our riches, wealth and resources,” says Mayor Arturo Mendez Portiz of a municipality in the neighbouring department of Huehuetenango. “Now they have found minerals in the mountains and they want to dispossess us again.” A recent referendum there rejected any new mines.

Uruguayan journalist Eduardo Galeano describes the international system, whereby multinationals exploit the resource wealth of countries like Guatemala, as “organized looting.” In his classic book, Open Veins of Latin America, he writes: “Our defeat was always implicit in the victory of others; our wealth has always generated our poverty by nourishing the prosperity of others.”

The Prosperity of Others

The World Bank promotes mining investment as a form of economic growth and development, but it is a claim that does not withstand serious scrutiny. Open-pit mining is not labour-intensive, and much of Glamis’ investment is for imported machinery. The farmers living nearby don’t possess the skills demanded by the venture; the best-paying jobs will go to engineers, managers and other experts from outside the area and outside the country. And in any case, mines are subject to boom-and-bust cycles that can throw people out of work suddenly.

For example, when mining giant Inco Ltd. left Guatemala in the early 1980s, it wasn’t because of strong local opposition or the rising violence in the region, including massacres perpetrated by the military. It left because the price of nickel was falling.

The Glamis mine will operate for ten years. Although it promised hundreds of jobs, many jobs have not lasted beyond the initial construction phase. What’s more, until recently Glamis paid no income taxes. It agreed to start paying only following public pressure.

“An investment in a mine say in a remote region of a country does little to assist the development transformation, beyond the resources that it generates,” writes Joseph Stiglitz, a Nobel Prize-winning economist and former senior economist at the World Bank.

In Latin America, Stiglitz argues, “growth has not been accompanied by a reduction in inequality, or even a reduction in poverty. In some cases poverty has actually increased.”

Guatemala’s people are not poor because they don’t have enough Canadian mines. They are poor in large part because of their country’s grossly unequal distribution of wealth. The national government collects very little income or other taxes. It spends very little on social programs, even though the majority of the country’s twelve million people are poor and twenty per cent live in extreme poverty. The nation’s elites have massive landholdings, while millions of peasants, representing half the workforce, try to squeeze livelihoods from small plots.

Glamis’ Joe Danni says the financial benefits of Guatemala’s gold that stay in the country can be gleaned from his company’s cash cost for an ounce of gold. The cash cost for the Guatemalan mine is $196 per ounce. This cost includes taxes paid, local purchases, wages and royalties, although the figures also include salaries paid to foreign personnel. When Glamis held its shareholder AGM in May, the price of gold was $650 per ounce.

Saying “No Thanks!” to Mining

Stopping a Canadian mining project supported by the World Bank is no easy task. Under international law, the Guatemalan government was required to consult with local communities before allowing the mine to go ahead. In the municipality of Sipakapa, where much of the mine’s gold processing takes place, the lack of consultation led to the referendum and its unequivocal result: 98 per cent of voters said no to the project.

The consultation requirement is vital in a country like Guatemala, where democratic means of influencing the national government generally don’t work. High illiteracy and poverty, together with the entrenched interests that dominate the country, make real democracy an illusion. And popular protests like the one mentioned above, when mine opponents blocked the truck simply justify the repressive measures for which the government has a notorious reputation.

An Alternative Economic Model

But if not mines, then what is the way forward to improve the lives of Guatemalans? “Resistence and the alternative plan,” says Roberto Morani, a community activist in Sipakapa. There, the local community has developed its own detailed plan to develop processing plants for fruit abundant and varied in the area’s three micro-climates to make jams, juices and other products. It’s an alternative, sustainable model that draws on local skills, participation and control one which stands in stark contrast to development imposed from above and beyond, wherein most of the decisions were already made when a company determined there was gold to be unearthed and that the risks were manageable.

This article appeared in the May/June 2007 issue of Canadian Dimension .


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