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El Salvador: Mining conflict deepens
NewsNotes, March-April 2010
Vol. 35 No. 2

The conflict over gold mining in Cabañas, El Salvador has become increasingly violent with the murder of three activists in the past few months. Pacific Rim, the Canadian corporation responsible for the mine, has denied any involvement in the killings or the well documented history of threats and violence against those who oppose the mine. The conflict portends to continue as residents near the mine will not accept poisoned water and loss of their livelihoods, while the tremendous financial difficulties facing Pacific Rim make the El Dorado mine essential for it to remain in business.

In October 2006, Pacific Rim submitted its plan to mine for gold in the El Dorado site. Two years later, when the plan had still not been approved by the government, the company used its U.S. subsidiary Pacific Rim Nevada to sue El Salvador through the Central American Free Trade Agreement (CAFTA), the first such lawsuit under the agreement. The company had to use its subsidiary because Canada is not a signatory to CAFTA. The company claimed that it was entitled to approval because it filled out the paperwork completely and within the time frame established by Salvadoran law. The government responded that it was under no obligation to provide approval, pointing out that an application merely “triggers an administrative decision process that may result in the denial of the application at different stages.” The International Center for the Settlement of Investor Disputes (ICSID), an organ of the World Bank, could take up to three years to decide the case.

Meanwhile, opponents of the mine face threats and violence and have suffered the recent assassinations of three leaders, including Dora Alicia Sorto Recino, who was eight months pregnant at the time of her murder. In a full page newspaper ad, Pacific Rim denied any connection to the violence while complaining of a “defamation campaign” run by “radical non-governmental organizations that are designating resources and efforts against the investment of Pacific Rim in the country.”

An extensive article in the prominent El Diario newspaper blamed the violence on long-standing family feuds in the region. Several social organizations responded in a statement, explaining, “Crimes like this did not happen before the arrival of Pacific Rim, rather arose when this transnational corporation began a strategy of buying people off, dividing communities and promoting violent acts against community leaders, environmental activists and religious representatives who rejected their extractive projects.”

Pacific Rim’s current financial difficulties make it unlikely that it will back down from the ICSID case. The company received a warning from the New York stock exchange that, because the company has stockholders’ equity of less than $6 million while sustaining losses from continuing operations and net losses in its five most recent fiscal years,” it will be delisted from the exchange on May 11, 2011 unless its financial situation improves. Tom Shrake, president and CEO of Pacific Rim, blamed the company’s woes on El Salvador: “Our current Exchange non-compliance is yet another damage the company has suffered due to the failure of the government of El Salvador to follow Salvadoran law and international law.”

Perhaps Pacific Rim would benefit from a recent World Resources Institute report, Development without conflict: The business case for community consent, which uses case studies to show that companies that guarantee the free, prior and informed consent of communities affected by their development projects ultimately save money. Clearly, continuing with the El Dorado mine without the consent of the local people will result in further conflicts. Those negatively affected by the mine will continue in their struggle to stop the operation because, as signs in a recent march of over 2,000 people protesting the mine stated, “We can live without gold, but we can’t live without water.”

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