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Dominican Republic: Opposition to Barrick Gold Mining Operations

by Rocio DiazGlobal Voices
March 28th, 2010

In 2009, the Dominican people stood up to fight against a cement factory that would be installed in the Los Haitises National Park. In 2010, it appears that another cause is mobilizing thousands of young people and adults - the presence of the mining consortium Barrick Gold in Cotu�, the head municipality in the province of S�nchez Ram�rez, which is home to one of the largest gold mines in the world: Pueblo Viejo (Old Town), with estimated reserves of 24 million troy ounces of gold. Activists are concerned about the terms of the agreement with the Dominican State, as well as environmental impacts on the region.

The contemporary history of the Pueblo Viejo gold mine, which produces gold oxide at the top and gold sulfide at the bottom, begins in 1975 with Rosario Resources Corporation, a company that later passed into the hands of the Dominican State under the name Rosario Dominicana, and whose operations ceased permanently in 1999 because of economic and environmental factors. In 2002, the mine found a new leaseholder, the Canadian company Placer Dome, which signed a 33-year contract before being bought by another Canadian company, Barrick Gold, in 2006. Barrick Gold has been in the sights of the Dominicans some of the details about the signed contract were made public, a contract which was approved at the end of 2009 in Congress by the vast majority of legislators.

Marihal, of the blog Desde la Rep�blica Dominicana [es], emphasizes the following details about the renegotiated contract:

La Barrick Gold es la empresa minera m�s grande del mundo, en materia de oro, y adquiri� a la Placer Dome en el a�o 2006, esta �ltima compa��a ten�a un contrato que firm� en el 2002 con el Gobierno dominicano donde se hab�a establecido que el Estado dominicano iba a recibir un 25% de las utilidades, sin incluir los impuestos y otros beneficios que alcanzaban el 3.2%. Sorpresivamente, la Barrick Gold consigue unos cabilderos (�) que logran que el 25% que recibir�a el Estado dominicano con la Placer Dome subiera a 28% con la Barrick Gold, pero siempre y cuando se recupere toda la inversi�n y que la tasa de retorno sea superior al 10 por ciento.

The Barrick Gold mining company is the world's largest, in terms of gold, and acquired Placer Dome in 2006; the latter company had signed a contract in 2002 with the Dominican government which established that the Dominican State would receive 25% of the profits, without including taxes and other benefits that amount to 3.2% Surprisingly, Barrick Gold obtained some lobbyists (�) which were able to achieve that the 25% that the Dominican State would receive with Placer Dome would rise to 28% with Barrick Gold, but only when the entire investment  has been recovered and the return rate exceeds 10%.

The renegotiation of the contract with the Dominican State when Barrick Gold acquired Placer Dome followed the movement of gold prices in the stock market, which has risen substantially since 2002 in response to successive food and financial crises - both of a global reach- until it reached a price of more than US$1000 an ounce, where it currently stands. The original contract signed with Placer Dome held the State's profits to the price of gold, which meant that the higher the price on the market, the greater the profits for the Stage. Geologist and blogger Osiris de Le�n explains it this way [es]:

(�) como el precio del oro ha ido en ascenso r�pido y ha superado los 1,000 d�lares por onza, ello implicar�a una participaci�n del Estado en las Utilidades Netas (PUN) de US$194 millones por a�o, fruto de que la Barrick piensa producir en Pueblo Viejo un mill�n de onzas de oro anualmente, y al multiplicar 1,000,000 de onzas de oro por US$775, que es el diferencial entre el precio del oro en este momento (US$1,050/onza) y el costo de producci�n (US$275/onza), y luego multiplicarlo por el 25%, obtenemos unos 194 millones de d�lares anuales para el Estado. Y la Barrick se niega a entregar tanto dinero.

Por tal raz�n la Barrick Gold ha obligado al Estado Dominicano a una renegociaci�n del contrato original, a fin de que esa participaci�n estatal del 25% de las utilidades netas sea llevada a cero, �igase bien, a cero, mientras ellos no hayan obtenido una tasa interna de retorno (TIR) de un 10% y hasta haber recuperado los US$2,585 millones invertidos para desarrollar el proyecto, y a partir de ah� pagar un 28.75% como PUN, con lo cual la Barrick le quita 194 millones de d�lares anuales al pueblo dominicano, durante al menos los primeros 6 a�os de operaci�n, lo que implicar�a que durante esos 6 a�os el pobre pueblo dominicano dejar�a de percibir unos 1,164 millones de d�lares, a los precios de hoy.

(�) As the price of gold has been growing rapidly and has exceeded US$1,000 per ounce, that would mean State participation in net income (PUN) of US$194 million per year, resulting in that Barrick thinks Pueblo Viejo will produce one million ounces of gold annually, and multiplying 1,000,000 ounces of gold by US$ 775, which is the differential between the price of gold at the moment (US$1,050/ounce) and the production cost (US$ 275/oz) and then multiplied by 25%, we get about 194 million dollars annually for the State. And Barrick refuses to deliver that amount of money.

For this reason, Barrick Gold has forced the Dominican State to renegotiate the original contract, so that the state share of 25% of net profits will be brought to zero, pay attention, to zero, while they have not obtained a rate of return of 10% and until they had recovered the US$2,585 billion invested to develop the project, and thereafter pay a 28.75% as PUN, which means Barrick takes away the US$194 million annually from the Dominican people during at least the first 6 years of operation, implying that during those 6 years the Dominican people would stop earning of US$1,164 million at today's prices.

While some people believe that the contract leaves the Dominican Republic at a clear disadvantage, this is not the only reason for protest. There is concern about the effects that the operations of Barrick Gold will have on the environment, due to the bad reputation the consortium has on a global scale, which has not escaped the attention of Dominicans. Indeed, there have been public protests [es] and various groups have utilized groups on Facebook [es]. There is also a blog called Domincana Contaminada [es] (Contaminated Dominicana) dedicated to detailing cases in which Barrick Gold has been involved with environmental damages, such as Pascua Lama [es] in Chile and the pollution of Lake Cowal in Australia. The blog also provides details of the contract approved by Dominican lawmakers, forced evictions for area residents, and the work currently being performed by Barrick Gold in the readjustment of the mine, which has made headlines in recent days for the intoxication of over 300 workers for reasons still unexplained. While the company talks about food poisoning [es], others insist that the poisoning was due a a boiler explosion [es].

Barrick Gold has felt a lot of pressure in the Dominican Republic that it has seen the urgent need for a public relations program, which includes the publication of statements in paid advertisement spaces in national newspapers and on national television. Their representatives leave no doubt the benefits that their presence is having in Cotu�.

Despite the public relations efforts, people are continuing to protest. For Holy Week, there is a planned 4-day pilgrimage walk that will depart from Km. 9 of the Duarte Highway towards the mining installation in Cotu�. March organizers expect more than 10,000 people to walk the 105 kilometers to protest against Barrick Gold and to protect the environment in Cotu�, which has been damaged by the operations of Rosario Dominicana, as explained by Alexander Medina, who has 30 years of experience in the mining sector [es].

Una vez procesados los �xidos de oro, los sulfuros quedaron expuestos y la mina fue abandonada a su suerte, permitiendo que esta drenara hasta la Presa de Hatillo aguas �cidas del r�o Margajita, producidas por la mezcla del agua de lluvia y el mineral de los sulfuros de oro que qued� al descubierto. Otro impacto ambiental negativo legado por Rosario es la acumulaci�n de metales pesados como el hierro, cobre y mercurio en el sitio de la vieja planta y en los lodos del lecho de los r�os Mejita y Margajita.

Once the gold oxide was processed, the sulfides were exposed and the mine was abandoned to its fate, allowing acidic waters from the Margajita River to drain away to the Hatillo Dam. The acidic water is the result of a mixture of rainwater and the minerals from the gold sulfides that have remained exposed. Another legacy of negative environmental impact from Rosario is the accumulation of heavy metals like iron, copper, and mercury at the site of the old plant and the sludge from Mejita and Margajita Rivers.

Paola Mej�a Sandoval, of the group NO A LA BARRICK GOLD, BATEALA Y SACALA DEL PAIS [es] (No to Barrick Gold, bat them and kick them out of the country) summarizes the feelings from some Dominicans towards Barrick Gold:

Si no peleamos ahora por defender lo que es nuestro quizas manana dej de pertenecernos entonces, por que lucharemos??? nosotros debemos plantarnos en favor de nuestros ideales. NO A LA BARRICK GOLD EN REPUBLICA DOMINICANA.

If we do not fight to defend what is ours, maybe tomorrow it may stop belonging to us. Why do we fight?? We should stand up for our ideals. No to Barrick Gold in the Dominican Republic.
Translation by Eduardo �vila


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