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Home > English > Alternatives International Journal > 2011 > December 2011 > Paying the High Price of Gold

Paying the High Price of Gold

Wednesday 30 November 2011, by Brooke Denmark

It is no secret that open-pit gold mines wreak havoc on the environment. Less widely known is the incredible amount of power free trade agreements have granted to gold-mining corporations to cause this damage.


lang=EN style='font-size:11.0pt;font-family:Calibri;color:#333333;mso-ansi-language:

Pacts such as The North American Free Trade Agreement (NAFTA) and the font-family:Calibri'>Central American Free Trade Agreement (CAFTA)<span
lang=EN style='font-size:11.0pt;font-family:Calibri;color:#333333;mso-ansi-language:
EN'> Calibri'>include chapters that allow corporations to sue signatory nations for
lost profits in the event that new laws, such as environmental or health regulations, threaten the corporation’s investment. This is exactly what is happening now in El Salvador.

A decision is imminent in the first case of its
kind to be heard under CAFTA: <a
Rim Mining Corp. vs. El Salvador. Anti-mining groups, environmentalists and
trade justice activists throughout the Americas are poised for a response from
the CAFTA tribunal, which could set a precedent for mega-projects throughout
the region. 
<span lang=EN

Pacific Rim, a Canadian-based mining corporation, is suing
the government of El Salvador for violating its investor rights under Chapter
10 of CAFTA. The company claims
that the government of El Salvador violated its investor rights by failing to
issue a permit to begin operations. Since Canada is not a member of CAFTA,
Pacific Rim is suing El Salvador under a U.S. subsidiary. The government of El
Salvador acted in response to calls from a wide network of civil society
groups, including communities potentially affected by the mine,
environmentalists and the Catholic church, who rallied together to block the
mine. They argued that the mine will contaminate El Salvador’s already limited
water supply and cause serious environmental and health issues. Individuals
involved in the movement have met violent repression for their opposition and
the case is already stained with blood. 
Salvadoran anti-mining activists have been assassinated over the past two years.
Those cases remain unresolved.

As Pacific Rim struggles to open its gold mine in El
Salvador, another Canadian based company, Goldcorp, is closing up shop in
Honduras after over a decade. In the mine’s wake, surrounding communities face chronic
health problems and depleted natural resources. The situation is a testament to the kind of destruction the
anti-mining movement in El Salvador is fighting to avoid.

The striking jade greens and golden yellows visible in the
stream photographed above are a result of <a
href="">acid drainage that will last for
up 100 years. This is the water that communities near the San Martine mine
use daily to bathe and wash laundry. According to a recent report by Honduran
human rights leader Dr. Juan Almendares, the Honduran government has documented
high levels of arsenic in the blood and urine of children living near the
mine. Almendares’ report also
shows that the Honduran government dragged its feet in revealing information
about the contamination and in doing so, allowed the gold mine to continue
harmful operations. Now Almendares
and other human rights groups are calling for Goldcorp to pay for the
environmental and health problems it left behind.

are many international actors at play in the corporate web of gold mining.
To trace the genealogy of the San Martin mine in Honduras, for example, we
begin with Honduran company Entre Mares. Entre Mares used to operate as a
subsidiary of Glamis Gold, a formerly Nevada-based gold company <a
was bought out by Goldcorp in 2006 to form the world’s third largest gold
mining company. Three years before merging with Goldcorp, Glamis Gold was
entangled in a similar struggle as Pacific Rim.  

href="">In 2003 Glamis Gold began a suit
against California under NAFTA’s Chapter 11 for $50 million in damages. <span
style="mso-spacerun: yes"> Glamis Gold brought the case against
California after the state denied the corporation the right to construct an
open pit mine. California reacted to outcry from environmental and indigenous
rights groups arguing that the mine would cause environmental destruction and
encroach on sacred sites. In this
case, in order to a submit a claim under NAFTA, Glamis Gold attempted to file
as Canadian company even though it was based in Nevada at the time. <a
href="">The tenuous nature
of this claim is one of the reasons why it failed. <span
style="mso-spacerun: yes"> 

Ultimately, the tribunal ruled in favor of California. While
the United States is not immune to being sued by corporations under these free
trade agreements, so far it has been on a winning streak. Not all nations and
states attempting to block damaging mega-projects have been as lucky. <a
tribunals have already awarded over $200 million to investors claiming lost
profits.  NAFTA’s Chapter 11
provided the model for CAFTA’s Chapter 10 and similar measures in other free
trade agreements. <a
Citizen calculates that there are currently $12 billion in pending claims under
NAFTA-style tribunals related to the environment, health and transportation.

the price of gold reaching record highs in light of the global financial crisis,
gold mining will remain a hot issue. One analyst quoted in <a
U.S. News and World Report article on gold mining states that “if gold
prices continue to remain elevated, then [gold] prices are up, costs either
stabilize or go down if the economy weakens further, and that could be <span
style='color:black'>a recipe for fat profit
margins [for gold mining stocks]." As the gold mining industry stands to
further benefit in the coming years, those being poisoned by its deadly
practices, such as children in living near the San Martin mine, will continue
to suffer. 

For now, social and environmental justice groups hope that
the Pacific Rim decision will fall on the same side as the NAFTA tribunal’s
ruling in the Glamis Gold case. A
win in El Salvador would show the international community that groups resisting
invasion of these mines stand a chance against a Goliath.


Photos of open pit gold mine in Valle Siria, Honduras courtesy of Fernando Reyes

Brooke Denmark, Witness for Peace International Team member based in Nicaragua.
Witness for Peace is a grassroots organization whose mission is to support
peace, justice and sustainable economies in the Americas by changing U.S.
policies and corporate practices that contribute to poverty and oppression in
Latin America and the Caribbean.