The most controversial incident with regards to the Marlin mine in Guatemala took place at the year-end of 2004-2005. The population of the village of Sololá had learnt that mining companies were going to come to their community and they were on guard. When the equipment to the mines rolled into the village and got problems in passing under a bridge, the population blocked the road. Approximately 2,000 inhabitants participated and demanded that the authorities negotiate and withdraw all the mining licences. The government responded by sending 1,500 police officers and 300 soldiers to clear the road for the transportation of the equipment. During the disturbances that followed on January 11th, one villager died and 16 police officers were injured.
Resistance against the Mine
One of the cooperating partners of the Norwegian Church Aid, Madre Selva, was already in 2003 very sceptical to the planned Marlin mine. There was a fear of similar problems as those at the company’s mine in Honduras, from which civil society institutions reported of an increase in skin diseases and polluted water.
The first referendum on mining operations was held in 2005. According to the ILO Convention 169 on indigenous rights, local referenda can be held on the extraction of natural resources. Since then, 25 referenda have been held, in which half a million people have participated. The result has been overwhelmingly against mining operations – 99 per cent have voted against it.
Guatemala has signed the ILO Convention and could therefore have chosen to recognize indigenous people’s right to influence on their own areas. However, the Supreme Court has chosen to put the country’s interests above those of indigenous people and has stated that such polls are only intended as a guide.
This kind of a treatment has had the result that the Jantzi index – a list of companies ethical to invest in – has chosen not to recommend investments in Goldcorp. Together with funds in Canada, the Swedish AP Funds have initiated an investigation in order to assess whether Goldcorp contributes to the violation of human rights. The study currently carried out by Goldcorp has not yet been completed. One of the reasons is that at times there is great unrest around the mines due to the huge resistance.
Environmental Problems
Gold extraction is a dirty industry. There are mainly three problems relating to the Marlin mine: The risk of cyanide emission – an important component in gold extraction, “acid rock drainage” (ARD) and water consumption. The ARD is a result of sulphur contents in the crushed stone from the opencast mine. The sulphur combined with water becomes an acid – a kind of acidic precipitation – which acidifies the environment. The acid may extract other heavy metals (than gold) from the crushed stone.
Like most gold mines, the Marlin mine is an opencast mine where problems with ARD may arise if the crushed stone contains sulphur.
COPAE, another of the cooperating partners of the Norwegian Church Aid in Guatemala, has for several years taken water samples and measured the contents of heavy metals in the water. They find occurrences of heavy metals – copper, iron, arsenic, aluminium and magnesium – that at the most are 8 to 10 times higher than the standards of the World Bank for opencast mining. The company contests these findings.
An increase in skin problems – rashes, blisters and wounds – has also occurred – not very different from those found in Honduras and Tanzania. The population believes this is due to the mining operations, whereas the company claims it is because of bad hygiene.
Another problem is that the mine uses enormous quantities of water – 250,000 litres per hour. This may affect the subsoil water and other water sources, for example rivers. The company disputes that this is a problem, whereas independent experts claim that it probably is a problem. The local population in the surroundings of the Marlin mine see that water sources are becoming empty and that every day there is less water in the river. For them the correlation is obvious.
Incomes to Guatemala
Goldcorp started to pay tax to Guatemala in 2006. Until then, the company was exempt from taxation. One percent resource tax is being paid, as well as corporation tax on the surplus. According to the company’s 2008 figures, it seems that 12.5 percent corporation tax was paid on the surplus of 100 million USD. In total, the company paid 20.4 per cent of the turnover in taxes and duties, if we are to believe in the company’s own figures.
This is not too bad compared with other companies in the extraction industry. In Zambia for a long time the copper companies paid 0.6 percent tax and in Tanzania the total tax burden on the gold mines is around 10 percent. Nonetheless, Guatemala has no reason to be happy with this. The production cost at the mine is 190 USD per ounce. Today the gold price is just below the record level of about 1,000 USD per ounce. This provides Goldcorp with a huge profit.
Coldcorp must clean up its act
Environmental problems as well as insufficient consultations could give grounds for the Council on Ethics and the SPU to consider withdrawing from Goldcorp if the company does not endeavour to clear up the situation. It does not seem that Goldcorp does this. On the contrary a new controversial mine is being planned – Cerra Blanca – from where reports are coming on another round of deficient consultations and lack of respect for indigenous people’s rights.
As such, it will not be the first time that the SPU sells itself out of a mining company. Mining companies have always been the most controversial investments of the SPU. The SPU has withdrawn from as many as 7 companies within this sector – 20 per cent of all divestments. This is a dilemma. The rules for withdrawal are stringent. Most companies will be able to demonstrate improvement and thereby avoid withdrawal. This has not been the case for the mining sector.
At the same time, the minerals that are produced are extremely important parts of a wide range of products that we use. The fact that it is difficult to invest ethically in such a crucial sector is unacceptable.
In the Doghouse
The observation list, used against Siemens, is a tool SPU should use actively in sectors with particularly poor standards. The mining industry is such a sector. The SPU should put large parts of the mining industry in the doghouse by placing these companies on the observation list. Including clear demands for improvements this will generate added pressure on mining companies and make SPUs active management more effective. At the same time companies will know that without improving they will be excluded from SPU.
Goldcorp is without a doubt a candidate for the observation list and should in no uncertain terms be told that SPU is now assessing whether the company is consulting local communities in transparent and binding way and that independent studies of environmental problems are being conducted.
Experiences from this work must be used to assess if it is needed to go one step further and introduce an inverted observation list for the mining industry, i.e. that only companies that satisfy certain basic demands for environmental conduct and human rights are included in the investment universe. Today we cannot be sure that any of the many investments by the SPU in mining companies are ethically sound.
- Article author: Kjetil G. Abildsnes, Adviser, Political Development Issues, Norwegian Church Aid, .