San José, Costa Rica, since 1956

Mining Company Files $276 Million Claim

A Canadian mining company has made a $276 million claim against the state of Costa Rica for the government’s alleged delay in allowing the company to begin extracting gold from an open-pit mine. Vannessa Ventures, the operator of Las Crucitas mine, near the Nicaraguan border, is seeking international arbitration in the case, claiming that the government is impeding its rights to the gold.The firm, the parent company to the Costa Rica based Industrias Infinito, alleges that the National Technical Secretariat of the Environment Ministry (SETENA) has failed to come to a decisive resolution over the past three years regarding the mine’s environmental impact report. Without SETENA’s approval of the report, mining cannot begin, explained Jesús Carvajal, general manager of Industrias Infinito.Environmentalists have long charged that the mine, particularly its use of cyanide, will destroy what little remaining wildlife still exists in the area and could contaminate the San Juan River (TT, July 23, 2004).LAS Crucitas is one of two mines declared exempt from the 2002 moratorium on open-pit mining signed by President Abel Pacheco as one of his first acts in office.“It’s no secret that this administration is against mining and against Las Crucitas,” Carvajal said.However, this does not exempt SETENA from making a decision based on the scientific evidence in the environmental report, he added.Vanessa Ventures has filed a request for arbitration with the International Center for Settlement of Investment Disputes (ICSID) in Washington, D.C., an institution tied to the World Bank. If SETENA approves the report, Vannessa may drop the request for arbitration.However, if the Las Crucitas mine cannot be advanced, the firm is seeking damages amounting to $276 million, which includes $36 million in out-of-pocket expenses and $240 million in lost profits, according to the company’s Web site. COMPANY representatives say the mine will yield 724,000 ounces of gold during eight years of operation (TT, Sept. 3, 2004).It costs Industrias Infinito $1.3 million a year just to maintain its operations in anticipation of the mine’s opening, with 40 employees based at Las Crucitas working on reforestation projects. The Las Crucitas project first began 13 years ago after a call in 1998 from the government, during the administration of President Oscar Arias (1986-1990), for foreign companies to invest in gold mines here, Carvajal said.After the Las Crucitas area was found to be worth mining, a request for a concession to mine the area was granted in December 2001, during the final months of the administration of Miguel Angel Rodríguez (1998-2002).Before mining could begin, Vanessa Ventures had to request environmental approval from SETENA. On March 12, 2002, company officials handed in their environmental impact report to secretariat officials.“There began the problems,” Carvajal said. “We have been waiting three years and four months for a response to the same study.”DURING those three years, the case has bounced around in both SETENA and the Constitutional Chamber of the Supreme Court (Sala IV).In March 2003, SETENA rejected the mine company’s reports, saying studies were missing. Carvajal says the studies in question were never requested. The company appealed the decision and won. In February 2004, a new SETENA review process began, lasting until January of this year.At that point, SETENA requested additional information – an annex to the environmental report. The company gave that information to the secretariat in April and a third commission was formed to evaluate it.Environment Vice-Minister Allan Flores said last week he thought SETENA would make a decision in “very little time.” He added that all projects of this nature must be analyzed by the secretariat, and this one is “very complicated.”SETENA representatives did not return phone calls from The Tico Times. However, a representative who wished not to be named said the Las Crucitas report is “under analysis.”When an environmental report is presented to SETENA, it is analyzed by various professionals – biologists, geologists and sociologists. They make a technical recommendation, and a commission of seven representatives of various government institutions makes the final decision.THE Sala IV has also repeatedly faced the Las Crucitas question. Most recently, in December of 2004, the Sala IV responded to a complaint filed against the mine by saying the concession should be annulled. However, according to Carvajal, the decision was not based on environmental issues, but rather on a technicality Industrias is asking the court to reconsider.The Sala IV is studying the request for reconsideration.Despite these delays and Pacheco’s anti-mining stance, Carvajal hasn’t lost hope and isn’t waiting for the President’s term to end next year.“I hope they make a decision in the short term. They are Costa Rican, just like we are at Industrias Infinito. We don’t want international arbitration,” he said. “The investors were invited to Costa Rica and we opened our doors; the expectation is that the mine will be able to continue.”WHILE Vanessa Ventures has waited more than three years for SETENA approval, they could wait even longer for an arbitration settlement. Representatives of the ICSID said they could not comment on the case. They did say that it has not yet been officially registered with the arbitration center. According to cases listed on the ICSID Web site, once cases are registered, it can take more than five years before a final settlement is reached.

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