Central American mining could undermine economic well-being

By Oxfam

WASHINGTON — The idea of "striking gold" conjures up images of endlessly flowing wealth and prosperity, but this may not necessarily be the case for proposed metal mining areas in Central America, says a new report from Oxfam America.

The report, Metals Mining and Sustainable Development in Central America: An Assessment of Benefits and Costs, looks at the current debate surrounding mining in Central America and the need for informed public discussion over the potential costs and benefits of aggressive development. Launched yesterday at a regional forum on metals mining, the report focuses on mining projects in El Salvador, Guatemala, and Honduras.

"Metals mining is often associated with vast wealth," said Raymond C. Offenheiser, President of Oxfam America. "Unfortunately, this is not the reality in many developing countries where natural resources continuously fail to contribute to the long-term reduction of poverty and communities have little say in how the industry affects their lands and livelihoods."

Despite a long history in Central America, mining has never played a significant role in the economies of Guatemala, Honduras, and El Salvador. Even if all the resources of these nations were developed, revenue from minerals would amount to only a small fraction of their broadly diversified economies.

But high gold and minerals prices in recent years have renewed mining companies' interest in Central American metals. The Oxfam report pays special attention to Pacific Rim Mining Corporation's El Dorado Mine in El Salvador, Goldcorp Inc.'s Marlin Mine in Guatemala, and Goldcorp's San Martin Mine in Honduras.

While mining companies and the governments that support new mining proposals have emphasized the benefits of mining, organized sectors of civil society are more concerned with the long-term costs. And there is a growing awareness of the decision-making role of communities near these projects.

"Mining companies must respect local communities' right to free, prior, and informed consent," said Offenheiser. "If they do not, a mining' project's costs will likely outweigh its benefits for local people."

While mining may create great net value, most of that value flows out of the country to the foreign owners of the mining company. Minerals commodity markets are highly volatile, modern open-air pit mining creates relatively few jobs, and the life cycles of open-pit mines are short, offering a small window of opportunity for integration with local economies.

Environmental risks include acid mine drainage and dam leaks. Although some of the worst environmental outcomes are preventable, mining companies have often not been held accountable for obeying environmental rules set out by the government or their mining contracts.

To date, community protests have delayed mining activities in Guatemala, prompted public scrutiny of exploration activities in El Salvador, and generated legislative reform in Honduras. The level and intensity of the resistance to metal mining in these three Central American nations demonstrates that local communities have judged the costs of mining projects to exceed the local benefits.

"Communities closest to the mines almost invariably suffer. This can be prevented if they have a voice in the decisions for the project," said Keith Slack, Extractive Industries Program Manager at Oxfam America. "What the mining industry could contribute to these communities must be balanced with the full scope of its costs, and communities are bringing legitimate concerns about financial, environmental, and personal costs to the table."

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