El Salvador in legal battle with mining company

Local resident looks over a valley in Cabañas, where Oceana Gold proposes to establish a gold mine against the wishes of farmers in the area. Photo: Jeff Deutsch/Oxfam

$300 million and the health of El Salvador’s rivers are riding on arbitration at World Bank tribunal 

Zenayda Serrano says she is worried that a proposed gold mine in Cabañas, in northern El Salvador, will pollute the Titihuapa River there.  “The river is sacred to us,” she says, explaining that most of the people in the area rely on farming for their income. “To fight for the river is to fight for life itself.”

Serrano works for an organization called MUFRAS 32. She says that protecting the Titihuapa should be a concern for all Salvadorans, not just those in Cabanas, as the river flows into the Rio Lempa, the main source of water for the entire country of six million.

The government of El Salvador is also concerned about the river. It has not approved a mining permit originally requested by Pacific Rim, which was later acquired by Oceana Gold. Government officials have said that the company’s application for its El Dorado project in Cabañas lacked three out of five legal requirements, and that the project posed a risk to the country’s supply of water. Water quality in El Salvador is already very poor:  90 percent of surface water is already polluted, according to government environmental studies.

In the meantime, widespread opposition to mining for metals in El Salvador, led by a coalition called the Mesa Nacional Frente a la Mineria (National Roundtable on Metalic Mining), has led Salvadorans to question what sort of economic development El Salvador should pursue – and to recognize that not all forms of investment are necessarily good for the country. In 2010, then President Mauricio Funes stated publicly that he was against industrial metal mining in the country, and vowed to continue a moratorium on mining started by his predecessor Antonio Saca.  The Mesa Nacional has proposed that the legislature in El Salvador pass a law banning metal mining, first in 2006 and again in 2013.

In 2009 Pacific Rim filed a complaint against El Salvador at the World Bank’s Center for the Settlement of Arbitration Disputes (ICSID), originally citing articles in the Central America Free Trade Agreement (CAFTA) that protect foreign investments. In 2012 ICSID ruled this case could not be arbitrated under CAFTA, but that it could go forward on the basis of El Salvador’s foreign investment laws. The company is demanding $301 million. In 2013, the Australian company Oceana Gold acquired Pacific Rim’s project for $10 million and is pursuing the case at ICSID.

In the meantime, local activists and opponents of the mining proposal in Cabañas have been threatened, attacked, and even killed, including environmentalist Dora Sorto, who was eight months pregnant when she was shot and murdered in 2009.

Oxfam provides grant support to the Mesa Nacional, and has published research findings indicating the costs of mining in Central America would likely exceed any benefits. The research report encourages governments and mining companies to work closely with communities to get their full support before going forward with any projects.

On September 15, 2014, the ICSID tribunal is conducting a hearing on the Oceana Gold/Pacific Rim case against El Salvador, and a coalition called the International Allies against Mining in El Salvador (including Oxfam) is holding a demonstration at the World Bank to demand that Oceana Gold drop its case against El Salvador. “The stakes for Salvadorans are high,” a statement on the International Allies web site says. “The legal costs and a potentially negative outcome of the suit, could deteriorate the government's capacity to prevent further migrations, curb the chronic insecurity in the country and implement policies for sustainable economic growth.  A democratically elected government should not be punished for standing up for the common good.”

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