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The problem of mining in the Andes? You have to move glaciers

Corporations digging for gold in South America must show proper concern for local communities and the environment, argues Oliver Balch

by Oliver BalchGuardian Unlimited
Contact: o_balch@hotmail.com
May 3rd, 2006

High up in the Andes, the diggers are preparing to move in. The Pascua Lama mine, situated on the border between Argentina and Chile, promises to become one of Latin America's largest gold mines.

But mining gold at 4,600 metres above sea level has its problems. The original plans of Canadian mining giant Barrick Gold included "relocating" three huge glaciers - a decision since blocked by Chile's environment authorities.

Farmers and local community members in the Huasco valley below fear that the massive open-pit gold mine, due to come on stream in 2009, will cause water shortages and contaminate their fields.

These are some of the hidden costs behind today's soaring gold prices. Gold futures at the New York Mercantile exchange this month hit $645 (�360) an ounce, their highest level for more than two decades.

Uncertainty in the Middle East and a weak dollar are fuelling the price of gold, which is considered an alternative investment to the US currency.

Barrick maintains that the $1.4bn mine will operate in "full compliance with all environmental regulatory requirements". But the history of gold mining in Latin America does little to inspire the local community with confidence.

This week, representatives from the Andean region of Cajamarca in Peru travelled to Denver to voice their complaints to Newmont, the world's largest gold mining company.

As the majority owner of the 22,000-acre Yanacocha gold mine, Newmont has been accused by local community members for the contamination of water supplies, a decrease in farm production and an influx of migrants into the region.

Father Marco Arana of the Peruvian campaign group Grufides accuses the company of not providing long-term health coverage for the victims of a mercury spill near the mine in 2000. Six years on, residents continue to report health problems such as memory loss and skin irritations, he says.

"It sounds like a joke, but Newmont paid out individual compensation according to the quantity of mercury that people suffered. Those that had the highest [contamination levels] got the equivalent of around $2,300," explains Father Arana.

"But, as part of the deal, they had to sign away their rights to any further claims in the present or the future."

Residents are now campaigning against the expansion of the mine to a nearby mountain that contains an estimated 4.2 million ounces of gold. A site of spiritual importance as far back as the Incas, the mountain also sits atop the watershed that supplies the nearby city of Cajamarca.

Access to land and community consultation represent two of the most contentious social issues related to gold mining, explains Keith Slack, senior policy adviser at Oxfam America.

"Mining is going into new areas now and into places that are not used to mining, which has led to tension between companies and communities, particularly with regard to indigenous peoples", he states.

A case in point is the Marlin mine in Guatemala's western highlands. The mine, owned by Nevada-based Glamis Gold, is one of over 250 mining concessions to have been granted by the Guatemalan government over the last five years. Ninety percent of this land is occupied by indigenous peoples, according to US environmental rights group Earthworks.

Critics claim that neither the government nor Glamis' local subsidiary Montana Explorada consulted sufficiently with the affected communities, which include representatives of the indigenous Mam and Sipacapa peoples.

Glamis spokesman, Joe Danni, admits that initial consultations could have been "more expansive and inclusive". The company has since established an independent monitoring committee consisting of community residents, church representatives and local universities.

Other mining companies are beginning to take on board social and environmental criticisms, admits Earthworks' president Stephen D'Esposito.

Australian-owned BHP Billiton, for example, has publicly committed not to expand its Tintaya mine in southern Peru without prior community consent. The move follows its pledge not to invest in any new mining projects that dispose of waste rock or tailings into rivers.

Even Newmont, which last week reported a first-quarter income of $209 million, boasts what it calls its "five star" management system to mitigate its social and environmental impacts.

"The leading companies in the industry are engaged in a serious discussion about how to get standards and a certification system in place", says Mr D'Esposito.

The ability to independently assess mines against commonly agreed standards would enable both consumers and investors to identify the leaders from the laggards, environment groups argue.

Industry leaders say that they set up the International Council on Mining and Metals (ICMM) to achieve just that. Under ICMM's rules, corporate members such as Anglo American and Rio Tinto commit to report publicly against 10 "sustainable development" principles.

"Our members recognise the importance of informative public reporting and the need to meet the interests of particular stakeholders including investors, customers and affected communities", says Paul Mitchell, ICMM general secretary.

Mr Mitchell concedes, however, that reporting can only ever be credible when backed up by sound performance.

"Only through demonstrating superior business practices can the mining industry be widely welcomed", he admits.

Father Arana agrees: "All we want is for mining not to be a threat, but an activity that contributes to the economy of the region without abusing the rights of the local population."

 

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