Hidden Hegemony: Canadian Mining in Latin America

By: COHA Research Associate Daniel Whalen

 


  • Canada’s mining industry is the largest in the world, with a sizable presence in the developing world.
  • In Latin America, Canadian mining companies are often involved in environmentally destructive and socially irresponsible practices.
  • One Canadian mining company, Pacific Rim, is accused of killing activists opposed to its ongoing mining activities in El Salvador.
  • To date, the Canadian government has not taken measures to hold its mining industry to human rights and environmental standards abroad.
  • A grassroots protest in Peru, which unfortunately turned violent, may represent a policy shift with regard to foreign mining on indigenous lands.

Canada’s mining industry is the largest in the world, and in 2004 its world market share accounted for 60 percent of all mining companies. In fact, the entire Latin American region is second only to Canada in terms of the breadth of its mining exploration and development activity.[i] In what some call the “halo effect,” Canadian industries have been perceived as the more conscientious alternative to their U.S. equivalents. Since Canadian industries are understood to have socially responsible practices, especially in contrast to those of American companies, they are typically welcomed abroad.[ii] Nonetheless, recent accusations that the Canadian mining company Pacific Rim played a role in the death squad killings of anti-mining activists in El Salvador has brought this reputation into question, while further investigation into the Canadian government’s regulation reveals that the government has mandated no true restrictions on its industry’s mining practices abroad. Left to its own accord, the Canadian mining industry has no problem destroying landscapes, uprooting communities, and even resorting to violence to promote its interests; for this reason, only government regulation can affect true change. A recent move by the Peruvian government to protect citizens near the city of Puno demonstrates that Latin American governments may finally be willing and able to regulate Canadian mining companies operating within their nations.

The Evolution of Canadian Mining in Latin America

In the period from 1990 to 2001, mineral investment in Latin America increased by 400 percent, and by 2005, the region was receiving 23 percent of total worldwide exploration investments.  The Canadian mining industry’s share of the Latin American market is the largest of any country, at 34 percent in 2004.[iii] However, even with a substantial flow of Canadian investment in the mining sectors of these countries, living standards have not tangibly improved for those in proximity of the mines, despite the image portrayed by the mining industry.

For a large part of the 20th century, the majority of the mineral wealth in Latin America was government property. Beginning in the 1980′s, the regional shift to neo-liberalism also saw the transfer of state property to transnational corporations. [iv] The immediate entry of the Canadian mining industry into the Latin American market corresponds with this neo-liberal shift. The Canadian government used various means to facilitate and promote the Canadian mining industry’s entry into the region including funds from the World Bank, IMF and incentives provided by Canadian foreign policy initiatives themselves. Since the 1980s, structural adjustment programs implemented in Latin America have opened the region’s markets to incentivize investment from the world’s wealthiest nations. Canada has been a particularly vocal advocate of these measures, hoping to expand its economic interests in Latin America. [v]

Canada also promotes its economic reach in Latin America through Free Trade Agreements. In addition to its leadership role in NAFTA, Canada has established Free Trade Agreements or Foreign Investment Protection Agreements with many Latin American states, and has been a principal proponent of the Free Trade Area of the Americas.[vi] Canada’s Free Trade Agreement with Peru allowed the country to become Canada’s third-largest trading partner in Latin America by 2007.[vii] This increase is largely attributed to the rising price of mineral resources, especially since, “Gold and other precious metals constituted more than 53 percent of Peruvian exports to Canada in 2007.”[viii]

The Canadian government’s most controversial means of promoting its mining interests in Latin America is through foreign aid. Under the pretext of foreign aid, the Canadian International Development Agency or CIDA awarded Peru with a CAD 9.6 million, USD 6.2 million[ix] investment to the Mineral Resource Reform Project in a move meant to promote Canadian mining interests in the nation.[x]

One Canadian Mining Company’s Response to Resistance

Canadian mining companies often resort to extreme measures to promote their interests. The Canadian government has failed to regulate its mining industry abroad, but accusations that Pacific Rim, a mining company based in Vancouver, played a role in the deaths of anti-mining reporters in El Salvador demonstrates the extent of destruction that mining can reach in the region when left unchecked. In a July 12, 2011 statement, Senator Patrick Leahy of Vermont condemned the killings of anti-mining activists in El Salvador following the June 14, 2011 discovery of Juan Francisco Duran Ayala’s body; he was last seen posting flyers critical of gold mining in the region. His death is the most recent of numerous violent attacks against anti-mining activists in the country’s Cabañas region. [xi] In 2010, three anti-mining activists in the region were gunned down, after receiving numerous death threats citing their activism regarding the El Dorado mine in El Salvador. As a result, the Inter-American Commission on Human Rights demanded that the Salvadoran government protect the rights of journalists and the media. [xii]

One radio station in El Salvador, Radio Victoria, reports receiving death threats as well as threats on family members unless they curb their anti-mining expression.[xiii] Reporters without Borders described the station’s critical role, saying, “For nearly a decade, Radio Victoria has been the mouthpiece of local communities and environmental activists opposed to the mining operations of Vancouver-based Pacific Rim Mining Corp. The station has played a key role in providing the local population with information about the dangers that the mining poses to their health and even their survival.”[xiv] Given Radio Victoria’s strong anti-mining stance, one reporter said, “We don’t trust the men who are protecting us. The mining company has connections with the local authorities. I don’t trust the local police.”[xv] The Prosecutor General’s Office is in charge of this investigation, but despite the national and international attention surrounding the events, no report was issued as of June 2011.[xvi] The failure to produce any real answers surrounding these threats and murders suggests that Pacific Rim’s influence may reach beyond local death squads to the Salvadoran government.

The Negative Effects of Canadian Mining Around the World

Canadian industries operating abroad have always benefitted from positive perceptions of the nation’s practices resulting from the aforementioned “halo effect.”[xvii] However, in truth, Canadian mining often has drastic consequences for local environments and communities; thus, recent activities, in reality, stand to dampen this image. Across the globe, Canadian mining companies destroy landscapes, contaminate the environment, and disturb the lives of locals.  Meanwhile, the Canadian government does little, if anything, to hold these companies accountable for their exploits. In effect, environmental groups recognize that Canadian mining firms are “just as bad as the most ruthless of American companies.”[xviii]

To illustrate, one Canadian gold mining company, Goldcorp, maintains mines in the following Latin America nations: Mexico, Guatemala, the Dominican Republic, Honduras, Brazil, Chile, and Argentina. Goldcorp represents just one of the many Canadian mining companies in Latin America, yet its mines have been associated with numerous infractions, including the destruction of archaeological sites, acid mine drainage, water resource depletion in drought-prone areas, polluting water resources with copper and iron, high levels of arsenic and lead in local inhabitants, mercury poisoning, pipeline bursts, and disregarding the pleas of locals.[xix]

The Effects of Mining on the Environment

Depletion of water resources and contamination are the principal negative ramifications of mining, in addition to physical destruction. Mining companies often forcibly monopolize water resources, as many mining techniques require large amounts of water. As a result, local communities are left with a profound shortage or impaired quality of water. For example, Goldcorp’s Marlin mine in Guatemala uses approximately 2,175,984,000 liters per year compared to the 153,300 used by an average North American citizen or the average 13,505 liters used by an African citizen.[xx] The problem is exacerbated in areas that receive as little as 150 mm of rainfall per year such as northwest Argentina, where the joint venture Alumbrera mine operated by Goldcorp, Xstrata and Northern Orion depletes the already precarious water supply, leaving locals in desperation.[xxi]

Water pollution has a more detrimental and long-lasting effect on the environment than water depletion. Acid Mine Drainage (AMD), the most common form of mining contamination, occurs when sulfides housed in the rock are exposed to air during excavation, forming sulfuric acid. This acid runs off into nearby streams and lakes, polluting the surrounding watershed. The acid dissolves other heavy metals it encounters such as copper, lead, arsenic, zinc, selenium and mercury, which further pollute the surface and ground water of the region.[xxii] AMD can continue for thousands of years after the mine is closed, as illustrated by a 2,000-year-old mine in Great Britain that continues to produce AMD today. Goldcorp mines have been associated with AMD in four Latin American countries: Mexico, Honduras, Guatemala, and Argentina.[xxiii]

Cyanide, used to extract gold and silver from the surrounding rock, makes large-scale processing possible, but when released into the environment, it can have serious consequences. On average, 70 tons of waste is created in the processing of 1 ounce of gold. At Goldcorp’s San Martín mine in Honduras, an average of .78 ounces of gold is extracted from every ton of ore, and an enormous amount of rock must be moved.  When chemically treated rock and ore, known as ‘mine tailings,’ spill during transport, the water supply can become contaminated with cyanide.[xxiv] Though mining companies report that cyanide is broken down by sunlight and transformed into a nontoxic form, it frequently harms, or even kills, aquatic life.[xxv] At the La Coipa mine in Chile, a former Goldcorp holding, mercury as well as cyanide was discovered in groundwater as a result of mine seepage. Blood samples taken from the local community population near Goldcorp’s San Martín mine in Honduras registered high levels of mercury, lead and arsenic.[xxvi]

False Hope and Canadian Bill C-300

The Canadian mining industry’s operations in Latin America have unquestionably harmed the surrounding environments and communities and influenced the policies of the host nations.[xxvii] Despite this, the Canadian government refuses to enforce any type of human rights regulations outside of Canadian territory; instead, the government supports the mining industry both financially and politically regardless of its practices. Several enlightened segments of the Canadian government took a stand against the government’s policy with respect to foreign mining practices, but to no avail. The parliamentary Standing Committee for Foreign Affairs and International Trade issued a report calling for reforms regarding mining in foreign countries. However, the government responded stating that no precedent for prosecuting or regulating practices outside of the Canadian territory currently exists. The government established a round-table to address the issue, viewed by many critics as an ineffective stalling tactic. [xxviii]

Canadian Bill C-300, also known as the Responsible Mining Bill, provided a glimmer of hope for increased accountability of Canadian mining industry practices in the developing world. The bill would have ensured compliance with the stringent international environmental practices the Canadian government claims to uphold, as well as reaffirmed Canada’s commitment to human rights. Additionally, the bill would have outlined environmental standards for the Canadian extractive industry, provisions for grievances to be brought before the ministers of Foreign Affairs and International Trade, and public reporting of any dismissed complaint in the Canada Gazette.[xxix] According to Bill C-300, any government funding for Canadian extractive companies abroad would be contingent upon compliance with the aforementioned standards and would require confirmation by the local Canadian embassy. C-300 was the legal apparatus to ensure acceptable practices by Canadian mining firms abroad. Although C-300 passed on the second reading in 2009, the bill ultimately failed to pass the final vote in the House of Commons on October 27, 2010.[xxx] This was an unfortunate victory for the Canadian mining industry, and was yet another sign that the current Conservative government does not support human rights and environmental health, at least not when Canada’s extractive industry could see its profit margin adversely affected in any way.

However, the government holds that it does in fact support human rights in developing nations through the controversial IMF and World Bank structural adjustments plans.[xxxi] In spite of Canada’s rather flattering reputation for high moral standards, at least in comparison to the U.S., Canada’s support for human rights appears quite dubious at times. Ottawa refused to sign the United Nations’ Draft Declaration on the Rights of Indigenous Peoples that requires consent from indigenous groups before any projects can commence on their land. Canada, along with Australia, called for revision, which significantly slowed the process and ultimately blocked its passage. [xxxii] The failure of this declaration was a certain victory for the Canadian mining industry in Latin America, which conducts its business almost exclusively on inhabited territory.

Nearly all new mine locations are located either on inhabited lands or close to established communities. Given the almost certain environmental degradation and pollution associated with mines, as well as the possible disruption in game and foul patterns, local communities tend to oppose mining. Though permission is technically required from indigenous communities before exploration or mining can begin on their lands, this is often a mere formality that does not even remotely protect the interests of the community. Because of this, mining is a persistent source of conflict in the region, pitting local and indigenous communities against large Canadian mining companies.[xxxiii]

Responses to Canadian Mining

Latin American resistance appears inevitable given the contradiction between the government’s policies and the citizens’ sentiments. Many Latin American citizens express little confidence in the private sector’s management of mineral extraction industries.[xxxiv] Local communities typically bear the brunt of mining cost, while profits are carted off to foreign headquarters of the mining company, leaving only a fractional percentage of profits within the capital or other major cities of the host nation.  Since neither the Canadian government nor the respective national governments protect the rights of local community members, these communities are forced to stand up for themselves through protests and blockades.

Changing Times– One Latin American Country Turns Feisty and Stands Up to Mining

Despite the efforts of Canadian mining companies to go to unacceptable lengths to ensure their interests seemingly at any cost, recent action taken by the Peruvian government may demonstrate a change in policy with regard to the Andean nation’s support of Canadian mining companies. In 2007, the Peruvian government granted a concession to the Canadian company Bear Creek Mining for rights to land near Puno, on the shore of Lake Titicaca. In early May of this year, protests broke out in the Puno region, demanding a halt to mining exploration and a revocation of the concession. Originally, protesters were relatively peaceful, blocking the Bolivian border crossing and other highways. However, in late May the protests turned violent, and participants began torching government buildings and threatening to interfere with the June 5 presidential election. The García government responded by putting a hold on all new concessions for twelve months, but this was not enough for the protesters; they later blockaded more roads and spread unrest throughout the entire Puno region, threatening other industries there as well. The government decided to revoke Bear Creek’s concession, despite outrage expressed on behalf of the company. Unfortunately, this decision was not made until the police fired on a group of protesters headed toward the Juliaca airport.[xxxv]

This decision by the Peruvian government symbolized a decisive victory for local interests and demonstrated a shift in government policy. Until recently, Peruvian government policy mechanically supported economic interests over those of its citizens. This policy shift was likely invigorated as a result of the June 5 presidential election, in which the left-leaning populist Ollanta Humala was elected. In the Puno department, Humala, a champion of rights and economic prosperity for all Peruvians, won the election decisively with 78 percent of the vote, the largest margin of all 26 of Peru’s departments.[xxxvi]

Conclusion

Canada, a country with a supposed commitment to environmental health and human rights, has the largest extractive industry presence in Latin America. Nevertheless, the Canadian government refuses to take any action when its extractive industry’s practices fail to guarantee an accord with the country’s broader allegiances to ethical practices abroad. Unchecked mining in Latin America has grievous repercussions for the environment and the populations in surrounding areas. However, given the large political and economic influence that the Canadian extractive industry wields, even at times resorting to violence, Latin American governments often neglect the best interests of their citizens and environment when they act to join forces with foreign multinationals against their own citizens. Fortunately, this trend seems to be changing, as seen with the Peruvian government’s revocation of Bear Creek Mining’s concession amidst the uproar from local communities. Sadly, this movement turned violent before the government reacted in the name of its own citizens. For this reason, it is imperative that Ottawa hold its industries accountable to some approximation of environmental and human rights standards, both at home and abroad.

References for this article can be found here.


Source: PhuThai Caterpillar