San José, Costa Rica, since 1956

Oxfam America: Mining Reaps Few Benefits

An open-pit goldmine may not be quite the, well, goldmine it’s made out to be. A study on mining in Central America focusing on Guatemala, El Salvador and Honduras was released this week by the international aid and development organization Oxfam America. According to the findings, the economic and social benefits from the mining industry are often overstated and outweighed by the costs.

“Despite its long history in Central America, mining has never played a significant role in the economies of Guatemala, Honduras, and El Salvador,” the report said.

“Meanwhile, large-scale open-pit mining poses environmental risks ranging from acid mine drainage to tailings dam leaks,” it said.

“Although some of the worst environmental outcomes are preventable, mining companies often ignore environmental rules – or circumvent them in nations with relatively high standards, such as the U.S.”

Though Costa Rica was not included in the study, because Oxfam does not work here, the report comes at a time when the government’s support of a controversial open-pit gold mine has put it at odds with community and environmental organizations.

President Oscar Arias and Environment, Energy and Telecommunications Minister Roberto Dobles are also the subject of a criminal investigation related to their support for a mine called Las Crucitas, located near the border with Nicaragua.

In April 2007, Arias announced he was repealing a six-year moratorium on openpit metal mining put in place by former President Abel Pacheco, and the same day gave the Las Crucitas mine the green light after it had been held up for years by environmental appeals.

Arias and Dobles later signed an executive decree declaring Las Crucitas, “of public interest and national convenience.” The decree exempted the mine from some environmental regulations and expressly authorized the mining firm to clear-cut nearly 200 hectares of forest, including endangered tree species (TT, Oct 24, 2008).

Shortly after, Chief Prosecutor Francisco Dall’Anese announced he was investigating whether the decree violated national law.

The news of the decree set off fierce protests cross the country, and the mine is currently suspended while the Constitutional Chamber of the Supreme Court (Sala IV) reviews suits filed against it. The Arias administration has also announced it has suspended granting new mining concessions until further notice.

“We have seen in many developing countries around the world that mining has not contributed to development or poverty reduction and has generated a lot of conflict,” said Keith Slack, manager of Oxfam America’s Extractive Industries Program, in a phone interview from El Salvador this week.

“What we are hoping to do is promote an informed public debate about the costs and benefits of mining in Central America, particularly in El Salvador, which is considering opening itself up to mining investment,” he added.

The Arias administration has cited promises of infrastructure investment, increased tax revenue and job creation in the impoverished region around the mine site as reasons why it has thrown its full support behind the Las Crucitas mine, to be developed by Industrias Infinito, the Costa Rican subsidiary of the Canadian mining firm Infinito Gold, formerly Vannessa Ventures.

“This mine is of national convenience, and the government maintains its position that it must operate, unless the Sala IV says otherwise,” said Mario Zaragoza, a spokesman for Dobles, who was out of the country this week.

Representatives of Industrias Infinito have promised the project will create 300 jobs during the construction phase and more than 200 during operations, and will pour tens of millions of dollars into local and national tax coffers. The mine would operate for five years, pulling an estimated 76,000 ounces of gold a year of from a 65-meter deep pit, for a total of 380,000 ounces. At gold’s price this week, that would yield nearly $367 million.

The Oxfam report notes that gold prices have increased, and made gold mining “the primary thrust of mineral development” in the region.

“Gold prices have also fluctuated widely, leading to a gold boom in the 1970s, a gold bust in the 1980s and the late 1990s, and now another boom of uncertain duration,” the report said.

Slack added that with higher prices, gold deposits that were previously too costly to access are now more feasible, increasing the interest in the region.

But as many of these companies look to extract the precious metal, they turn to open-pit mining, where up to millions of tons of earth are removed, leaving a gaping pit. According to the Oxfam study, open-pit mining can have the biggest environmental risks with the least amount of benefits for the local communities.

“Modern open-pit mining creates relatively few jobs – especially for those without very technical skills; and the life cycles of open-pit mines are short, offering a small window of opportunity for integration with local economies,” the report said.

“It doesn’t require that much labor,” said Slack. “It’s more of a technological labor with heavy machinery, not requiring very much labor force.”

The Oxfam report also questioned the safety record of metal mining and the environmental risks these mines pose, noting that a study of 183 large mines in the United States, for which environmental impact statements were prepared since 1975, found that for 84 percent of the mines the actual pollution they created violated the water quality standards they were required to meet.

The Las Crucitas mine, which will remove gold from ore by processing it in vats of cyanide, has sparked international concern because it lies just a few kilometers from the San Juan River, which is Nicaragua territory and forms the natural border between the two countries. Environmentalists have warned that any spill or leak could quickly find its way into that river, which runs through a series of national parks and wildlife refuges before draining into the Caribbean.

Nicaragua has also decried the mine and demanded to have a say in approving its environmental impact studies. But even when environmental reports assure safety, the reality is often different, the Oxfam study said.

“In order to get a permit, most mines must demonstrate on paper that they will avoid pollution problems,” it said. “The actual performance of those mines, however, almost always involves substantial pollution and near-permanent surface disturbance. Despite this fact, each new mine asserts that it will do things differently this time and that this particular mine will have no significant environmental problems. Such projections of pollution-free mining are rarely realized.”

In Costa Rica, the country’s only operating open-pit gold mine, known as Bellavista, collapsed in October 2007 under heavy seasonal rains, destroying a $1 million processing plant, shutting the site down permanently and sparking concerns that cyanide could leak into the nearby waterways and the groundwater.

Bellavista, owned by another Canadian firm, Central Sun Mining Inc., had received approval from the Environment, Energy and Telecommunications Ministry despite warnings from environmentalists that such a disaster might happen. Border agents, alerted by activists in the area, later caught trucks attempting to carry heavy equipment from the site to Nicaragua, despite orders from the Costa Rica government to not remove anything from the mine.

Dobles spokesman Zaragoza dismissed the Bellavista accident, saying the mine was approved in a previous administration.

“Currently, we have very strict regulations, some of the strictest regulations in the world,” he said.

However, a recent report from President Arias’ own Peace with Nature panel, created to advise him on environmental policy, noted that Costa Rica’s mining regulations are “widely recognized” as “obsolete.”

As environmentalists and government officials have battled it out in San José, residents in the small towns surrounding Las Crucitas have held opposing marches in favor and against the mine.

“If mining is to realize any of its promise, it must be done with the full sanction and support of local communities. The mining industry must respect local communities’ right to free, prior, and informed consent,” the Oxfam report concludes.

“Furthermore, it must integrate tightly into local economies and allow for cooperative decision-making on a continuing basis. If these circumstances do not exist, communities have grounds to reject mining projects – because the costs will likely outweigh the benefits.”


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