At the recent Pacific Rim Mining Company shareholders' meeting in Vancouver, BC, shareholders voted to extend repayment on $6.7 million of stock-like warrants for another year. About $800,000 of the extended warrants belong Pacific Rim Executive Board members themselves, so the move sent a clear signal to investors that the company is committed to carrying through with its $77 million investment arbitration claim against the government of El Salvador.
Pacific Rim has spent millions on exploration costs in hopes of re-opening the El Dorado mine in eastern El Salvador, close to the town of San Isidro. The company's hopes were all but dashed in July 2008 when massive public outcry against the mine forced then-President Tony Saca to suspend permits for Pacific Rim's continued operations there.
Initial Win for Corporation in Trade Agreement Attack on Environmental Policy Poses Complications for Obama Administration as It Tries to Revive Korea FTA
WASHINGTON, D.C. – An international tribunal’s decision to allow a controversial suit against El Salvador under the 2005 Central America Free Trade Agreement (CAFTA) will fuel demands by many in Congress that the Obama administration alter the foreign investor terms in three North American Free Trade Agreement (NAFTA)-style trade pacts inherited from the George W. Bush administration and new pacts under negotiation, Public Citizen said today.
“The fact that an attack like this would even be possible highlights what is wrong with our current trade agreement model,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The same crazy investor rights are in Bush’s leftover trade deal with Korea that President Obama wants to move forward. Unless they fix Bush’s deal, the hundreds of Korean firms operating here would get new rights to skirt our court system and laws and use foreign tribunals to demand taxpayer compensation for laws that they do not like, just like Pac Rim is doing to El Salvador.”
Pac Rim LLC vs. Government of El Salvador Arbitration Details (ICSID Case No. ARB/09/12)
The mining company Pac Rim LLC is claiming investor rights violations by the Government of El Salvador and demanding a minimum of $77 million in compensation in a case brought in front of the International Centre for Settlement of Investment Disputes (ICSID) through stipulations in the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA).
The case is being heard by a panel of three arbitrators:V.V. Veeder (from Great Britain), Brigitte Stern (from France) and Guido Santiago Tawil (from Argentina).
The company filed a Notice of Intent for Arbitration on December 9, 2008 and a Notice of Arbitration on June 15th.The hearing on preliminary objections was held in Washington D.C. from May 31 to June 1, 2010.The tribunal found in favor of the company and the second round of hearings, on the jurisdiction of the case, were held from May 2 to May 4, 2011.The tribunal has yet to release their decision on this round.
During the jurisdiction hearing both Nicaragua and Costa Rica submitted non-disputing party claims in the case, in favor of the Salvadoran government.The Department of State also made a submission questioning Pac Rim’s use of DR-CAFTA.
Also, the National Roundtable against Metallic Mining in El Salvador together with the Center International Environmental Law (CIEL) submitted an Amicus Brief, supporting the Government of El Salvador position.
On Thursday December 15, 2011 over one hundred people gathered in solidarity with the Salvadoran people in front of the World Bank headquarters in Washington D.C. to denounce the actions of Canadian mining company Pacific Rim. The protest included participants from United Mine Workers of America, the Institute for Policy Studies, the American Federation of Teachers, the AFL-CIO, the International Brotherhood of Teamsters, the Farm Labor Organizing Committee, the Communications Workers of America, the Steelworkers, the International Longshoremen's Association and CISPES (the Committee in Solidarity with the People of El Salvador.), among others
The National Roundtable against Metallic Mining in El Salvador sent the following greeting that was read at the protest:
The Salvadoran people, on the front lines against the abuses of transnational mining companies, join in spirit the protest that unions and civil society organizations are holding today in front of the World Bank to reject the unjust trade policies that the United States promotes in our country and Latin America. We are convinced more and more that the number of voices are growing who demand political and trade policies that respect the sovereignty of every country to the decide the way in which it wants to build its own destiny. We are pleased and excited by the strength you, as civil society, are showing today because together we are telling the world that human rights, labor rights, and environmental rights are non-negotiable and we will do everything within our reach to ensure they are respected.
To date, those who have promoted metallic mining in our country have hidden most of the reality that communities face where previously there was mining. As is the case of Mr. John Machulack, the owner of the mining company Commerce Group, who recently said that the San Sebastian river in the state of La Union in eastern El Salvador, didn't show any signs of water pollution, even when there are local scientific studies that show toxic levels of pollution in the river that far exceed minimum sanitary and environmental standards in any part of the world.
Those who promote metallic mining hide the unsuitable and unsafe working conditions and low wages that would characterize jobs in the extractive industry in our country. In El Salvador, like the rest of Latin America, workers have few possibilities to access workers comp or job security in the case of accidents, which is not fair. Today we are saying: Enough!
Companies, like Pacific Rim, that promote metallic mining in El Salvador are trying to subvert the will of the population that has been saying NO since 2008 to mining. We, Salvadorans, believe that mining is not ecologically or environmentally friendly; it does not represent a significant source of jobs for the majority of the country; and economically it represents misery and is a joke that we reject with dignity based in our most profound beliefs.
We will continue united in this struggle. We are sure that because of our actions a new dawn is coming that will improve everyone’s future.
A BRIEF CONTEXTUAL ANALYSIS OF THE LEGAL SUIT OF PACIFIC RIM MINING COMPANY AGAINST THE GOVERNMENT OF EL SALVADOR
Andrés McKinley, Oxfam America
Metallic mining in Central America:
In the past several years in Central America, mineral extraction, especially of gold, silver and nickel, has increased dramatically in the face of rising commodity prices on the world market and neoliberal reforms designed to attract foreign investment. Mining has existed in the region since pre-hispanic times, but more than 90% of existing concessions have been granted since the year 2000.Reliable data on mining in the region is difficult to access, but it is generally agreed that more than 30% of the region´s territory is now under concession to transnational corporations, in the majority Canadian, for the exploration and/or exportation of minerals. In spite of these numbers, the mining industry contributes little to national economies, paying royalties of between 1% and 2%, contributing less than 1% of GNP and generating less than .2% of employment.
Important deposits of gold and other minerals have been discovered throughout Central America in concentrations that have become economically viable to mine (between 1 and 10 grams per ton), given the dramatic rise in the price of these commodities.The relatively low concentration of minerals, however, requires the application of technologies that are highly damaging to the environment and generate high social and cultural costs.Processing of a single ounce of gold (the size of a finger ring) can require the removal of up to twenty tons of rock.In the process, forestlands, mountains (sacred to Mayan peoples) and landscapes are destroyed.
The mining of metals requires exorbitant quantities of water, a commodity that mining companies rarely pay for.It is calculated that the Marlin Mine in the department of San Marcos in Guatemala uses 250 thousand liters of water per hour and indigenous communities around the mine have reported that in the two years since this mine began operating, over 40 community wells have dried up.The Fenix Project, a nickel mine on the shores of Lake Izabal in Guatemala, is scheduled to utilize 16 million liters of water per day, the equivalent of the entire volume of this lake (the largest in Guatemala) every 19 days.In the Siria Valley of Honduras, a cattle-raising area and producer of basic grains, 8 years of gold mining have dried up 19 of the valley´s original 23 rivers.
Apart from the exorbitant use of water, independent studies have demonstrated that metallic mining in Central America has contaminated surface and ground waters with cyanide and heavy metals in Guatemala (Tzala River in San Marcos), El Salvador (San Sebastian River in La Union), Honduras (Valle de Siria, Valle de Angeles, Valle de San Andrés) and Nicaragua (Bambara River on the Atlantic Coast).
Metallic mining in Central America is destroying traditional livelihoods based on small scale agriculture, fishing and cattle- raising.It also threatens important sectors of national economies, such as tourism and agro-exportation. In the face of this reality, key sectors of society, including environmental groups, NGOs, affected communities, the Catholic Church and important members of the business community, are demanding legislative reform in an effort to prohibit open pit mining, the use of cyanide and other toxic chemicals and to assure the rights of affected communities to free, prior, informed consent (FPIC).In some countries, like El Salvador and Costa Rica, bills have been introduced prohibiting all forms of metallic mining.
A variety of civil society actors in all of the countries of the region are building broad based alliances to advance these policy agendas in the pursuit of sustainable development models for the region and the respect of basic rights.
The case of El Salvador:
The rapid and aggressive incursion of foreign mining companies in El Salvador is particularly worrisome.This small country, with a geographical area of only 21,000 square kilometers and the highest population density in the western hemisphere (approximately 300 people per km2) has no sparsely populated or remote areas in the country appropriate for mining.The country also suffers from the worst levels of environmental degradation in the Americas, after Haiti.Over 95% of original forests have been destroyed by over population, logging and intensive agriculture.Over 90% of surface water is already contaminated with industrial waste and heavy metals and, according to a recent report by the Salvadoran Foundation for Development (FUSADES), the water table has diminished by 20% in the past 23 years and continues to drop at an alarming rate. A World Bank study released in 2007 concluded that environmental degradation and pollution were costing the country approximately $500 million per year.
According to its web site: Pacific Rim Mining Corp. is a gold exploration company in the process of advancing its high grade El Dorado gold project in El Salvador. The Company focuses its exploration efforts on epithermal gold deposits in the Americas because of their typically high gold and silver grades, low environmental risk and propensity to occur in veins that can be mined underground. Environmental stewardship and social responsibility are core values of the Company…
The El Dorado gold project in El Salvador is Pacific Rim's flagship exploration asset and has received the bulk of the Company's exploration efforts over the past 7 years. El Dorado is an advanced-stage gold project with high-grade gold and silver resources. Pacific Rim's other exploration projects include the Santa Rita and Zamora-Cerro Colorado gold projects in El Salvador and a number of very early stage grassroots properties elsewhere in Central America. Pacific Rim maintains a generative program focusing on gold projects in the Americas that have the potential to enhance the Company's growth profile…
Pacific Rim Mining Corp has offices in Vancouver, Canada, Reno, Nevada and Sensuntepeque, El Salvador. The Company's shares trade on both the Toronto (TSX) and NYSE Amex exchanges under the symbol PMU.” ( see web site: www Pacific Rim.com).
Pacific Rim´s flagship project, El Dorado, in the municipality of San Isidro, department of Cabañas, has been the site of gold mining since colonial times.In more recent history, it was owned and mined by the New York based El Salvador Mining Company, subsidiary of Rosario Mining (1948-1953).Between 1993 and 2002, the project was under exploration by the Mirage mining company.Dayton Mining Corporation acquired the project in 2002, investing $13 million in its development.During that same year, Pacific Rim and Dayton Mining fused and ownership of El Dorado passed to Pacific Rim.
In the year 2004, Pacific Rim presented its Environmental Impact Assessment (EIA) to the Ministry of Natural Resources of El Salvador and in December of that year the company formally applied for a license to exploit gold and silver.In 2005, the Ministry of Natural Resources presented a series of observations on the EIS to Pacific Rim, and Pacific Rim responded in an effort to resolve the concerns put forth by the ministry.The company had suffered a series of multi-million dollar losses for several years running (see Pacific Rim web site) and the El Dorado project became essential to its survival.In the face of rising opposition from civil society organizations and growing concerns on the part of the Salvadoran government, however, the latter decided to postpone the approval of all further mining concessions in the country until a Strategic Environmental Study could be carried out at the national level.In response to the continued delays in the approval of its application for a license to exploit, Pacific Rim announced in 2008 its intent to sue the Salvadoran government for “indirect expropriation” in the context of Chapter 10 of CAFTA.On April 30th of 2009, Pacific Rim took its case to the International Center for the Settlement of Investment disputes (ICSID) of the World Bank.
The Environmental Impact Study of Pacific Rim:
The Environmental Impact Assessment on the El Dorado mining project, presented by Pacific Rim to the government of El Salvador in 2004, is central to the government´s decision to postpone and later deny a permit to exploit gold and silver in San Isidro.It was a document of over a thousand pages.Some portions were in English.The affected populations of Cabañas were not allowed to photocopy or remove the document from the Ministry of Natural Resources and they had only 10 days to present their objections to the project.
In a “Technical Revision” of the EIA prepared in October of 2005 by hidrogeologist and geochemist, Robert E. Moran, Ph.D, an expert in mining with over 30 years of experience with US government regulatory bodies, with mining companies and as an independent consultant on mining and the environment, the following weaknesses were documented:
The Environmental Impact Assessment of the El Dorado project was found lacking in adequate studies to determine base line data related to water quantity and quality.It was found especially weak in areas related to water tables.The study simply states that there will be no significant impact on water resources without presenting any factual basis for this claim.
The process of consultation with affected communities was clearly lacking in terms of levels of participation and transparency.
The basic data of the EIA was poorly organized and poorly summarized for general consumption.
Independent sources of information and analysis were lacking.
The EIA ignored a series of threats to the environment common to many other similar mining projects around the world.
The real cost of water as a commodity was ignored.
In conclusion, Doctor Moran stated that the EIA of Pacific Rim would not be acceptable for regulatory bodies in the majority of developed nations, including the US and Canada (see Revisión Téncia del Proyecto Minero El Dorado Estudio de Impacto Ambiental (EIA), El Salvador, 19 de Octubre, 2005).
Mining and the threat of violence in El Salvador:
Seventeen years after the end of the bloody civil war in El Salvador, the country remains highly polarized.Communities struggling with this reality and attempting to reconstruct their lives in harmony find themselves again threatened by confrontation and violence from the moment that a mining project inserts itself into community life.Individual family members are pitted against each other, as they often were during the war. Entire communities enter into conflict with neighboring communities and the citizenry in general finds itself in growing confrontation with local and national authorities.
An opinion poll on metallic mining in El Salvador was conducted in 24 municipalities affected by mining in the northern portion of the country in 2007.The study was carried out by the highly accredited Instituto Universitario de Opnión Pública(IUDOP) of the Central American University.Among the key findings of the study:
80% of those polled considered that mining in El Salvador would have a grave impact on water;
85% of those polled felt that mining would be harmful to the environment;
67% of those polled expressed the view that mining would contribute little or nothing todevelopment in their municipality;
85% of those polled expressed “no interest” in working for a mining project;
70% of those polled were opposed to initiating a mining project in their municipality;
70% of those polled felt that mining would have a detrimental impact on the lives of their children and grandchildren;
62.5% of those polled expressed the view that El Salvador is not an appropriate country for mining.(See:” Encusta Sobre Conocimientos y Percepciones Hacia la Minería en Zonas Afectadas por la Incursión Minera en El Salvador”, IUDOP, Octubre, 2007.
It is important to note that this poll was conducted in the midst of a highly aggressive propaganda campaign by Pacific Rim which filled the airwaves of El Salvador for more than six months in an attempt to win hearts and minds with the promise of “Green Mining”.
Resistance to metallic mining in El Salvador also came from other key sectors, including:
the Episcopal Conference of El Salvador (see: “CUIDEMOS LA CASA DE TODOSPronunciamiento de la Conferencia Episcopal de El Salvador sobre la explotación de minas de oro y plata”)
the Salvadoran Association of Religious;
the presidential National Commission on Development;
three national universities;
the ex-minister of Natural Resources;
the ex-Minister of Education;
over 80 communities organized in the National Network of Communities Affected by Mining;
civil society organizations of the National Roundtable on Metallic Mining in El Salvador;
the president of the Association of Industry;
the Confederation of Religions for Peace;
the Human Rights Ombudsman;
the outgoing president of the republic;
the newly-elected president of the republic.
With the current correlation, any effort to award money or mining rights to a foreign corporation in the context of a highly controversial free trade agreement will inevitably generate dangerous levels of confrontation and violence in El Salvador and will violate the fundamental right of the Salvadoran people to be adequately informed about the impacts of mining in their country and to say “yes” or “no” to this industry.
On Tuesday, December 9, 2008, Pacific Rim Mining Corporation, a Vancouver based mining company, issued apress releaseannouncing that the company has filed a Notice of Intent (NOI) to arbitrate against the Salvadoran government under the Central American Free Trade Agreement (DR-CAFTA).
On April 30th, 2009 the mining company officially filed arbitration in the International Center for Settlement of Investment Disputes (ICSID), an arbitration mechanism of the World Bank based in Washington D.C. Pacific Rim claims the Salvadoran government's failure to issue an extraction permit to the company for its El Dorado project is a violation of their rights as a foreign investor under DR-CAFTA, and has cost the company significant financial losses. Pacific Rim declares to have invested $77 million during its gold exploration in El Salvador, and argues that the company is entitled to an extraction permit.
Pacific Rim filed an Environmental Impact Study with the Salvadoran Ministry of Natural Resources and Environment (MARN) in September 2007, in its bid to secure a mining extraction permit for its El Dorado mine project in San Isidro, Cabañas in the Northern Zone of El Salvador. Pacific Rim claims to have met all the concerns expressed by the MARN, and that the Salvadoran government's refusal to grant the extraction permit is in violation of their rights as investors under CAFTA.However in his report on the Pac Rim case, Dr. Rick Steiner explains that Pacific Rim had failed to meet a number of requirements to be eligible for a permit, and the Environmental Impact Study alone was not sufficient for a permit to be granted.
Pacific Rim has shown that it is willing tomanipulate trade law to ensure a favorable outcome. The example of this being that Pacific Rim as a company is based in Vancouver, Canada, but Canada is not a signatory in DR-CAFTA. In order to get around this complication, Pacific Rim filed the suit through a subsidiary in Nevada called Pacific Rim Cayman LLC, a subsidiary that had not been active since Pacific Rim sold their only Nevada interest in October 2008.
In June of 2012, the ICSID tribunal hearing the case ruled that it did not have jurisdiction under Central American Free Trade Agreement (CAFTA) because Pacific Rim had not been a U.S. company long enough sue using that mechanism. However, the tribunal did consider the ICSID to have jurisdiction under Salvadoran Investment Law, due to the fact that Article 15 of Salvadoran Investment Law allows for companies to sue the Salvadoran government through ICSID. Therefore, the case will proceed to a third round of hearings.
A letter to ICSID officials in 2011 signed by 243 organizations from across the world said “Pacific Rim is using ICSID and the investor-state rules in a free trade agreement to subvert a democratic nationwide debate over mining and sustainability in El Salvador. These matters should not be decided by an ICSID arbitration tribunal. In the course of Pacific Rim’s intervention in the political affairs of El Salvador, four anti-mining activists have been murdered in the project area. We stand with these communities and the government of El Salvador in their demand that their domestic governance processes and national sovereignty be respected, and thus that this case be dismissed. We stand on the side of democracy.”
As the economic costs in the Pacific Rim case continue to mount, the dire social and environmental costs of Pacific Rim’s presence in El Salvador are taking their toll on the communities in the region of Cabañas.