MITSUBISHI AND THE WORLD BANK COME TO INTAG
Exploration for metallic minerals began in the Junín area with the arrival of Bishimetals in the early 1990s. Junín is a community located in Intag, a 2,200 km2 expanse of cloud forests and farms in northwestern Ecuador (Cotacachi County, Imbabura Province). Bishimetals, a subsidiary of Mitsubishi Corporation, received financing from the Japanese International Cooperation Agency (JICA) to explore for minerals in Junín. The effort led to the discovery of large deposits of copper and other minerals in the Junín-Cuellaje project area, located in the exceptionally biodiverse Toisán Range.
Interest in the mining potential of Intag was further fanned by the Project for Mining Development and Environmental Control (Spanish acronym: PRODEMINCA), financed with a loan from the World Bank (now part of Ecuador’s foreign debt) and implemented in the second half of the 1990s. The goals of the PRODEMINCA project were two-fold: to produce maps of Ecuador’s mineral deposits (thus saving mining companies the need to invest time and money in locating minerals) and to rewrite the mining law in order to attract foreign investment in this sector. The World Bank has provided the same “service” to dozens of so-called developing countries.
Ecuador’s law now offers the following incentives to mining companies: low or no taxes, no need to share revenues with the state, apart from a modest per-hectare annual fee ($1.00-$16.00, depending on mining phase), the right to repatriate 100% of profits, minimal provisions designed to protect the rights of labor and communities or to mitigate and correct damage to the natural environment. The law further gives companies the right to use any and all resources within the concession needed for mining; this includes water, which is required (and polluted) in massive quantities during mineral processing. Compensation for privately owned land/resources (only subsoil minerals belong to the concession holder) is determined by the Ministry of Energy and Mines; farmers whose land is appropriated by the company and who are dissatisfied with the compensation offered do not have the right to appeal to a court of law.
WHAT BISHIMETALS DID DURING ITS STAY IN JUNIN
Bishimetals paid little attention to the laws of Ecuador while exploring in Junín. Among the most serious violations, the company:
- did not prepare the Environmental Impact Statement (EIS) required prior to exploration (the EIS quoted below was prepared for the production phase);
- did not inform communities about the project;
- did not consult communities affected about whether they wanted the project;
- built its latrines right on the banks of the Junín River and dumped its garbage into the river, the major source of water for communities downriver;
- damaged private property during drilling;
- contaminated the Junín River during drilling with toxic substances; residents who bathed or swam during drilling activities developed skin diseases.
Defensa y Conservación Ecológica de Intag (DECOIN), a local environmental organization founded in response to the mining threat, lodged repeated complaints about these and similar problems with the Ministry of Energy and Mines (MEM). Employees of the MEM were never able to find evidence of wrongdoing.
HOW MUCH COPPER IS THERE IN JUNIN?
Eventually, Bishimetals discovered mineral deposits in three of Intag’s seven townships. According to JICA, mineralized areas in the Toisán Range contain 318 million tons of copper ore, with a 0.7% concentration. In other words, the Toisán Range will yield a total of 2.26 million tons of pure copper. Molybdenum is also present in a concentration of 0.03%, and there are traces of gold and silver in the ore.
How much copper is 2.26 million tons? Not enough to satisfy the annual demand of China, whose citizens consume three million tons per year. Not even enough for the United States, where people consume 2.3 million tons per year.
An interesting bit of data: on average, 75% of all mineral production in Latin America is exported to the industrialized North. What stays in the South is the devastation resulting from the mining of those minerals. Bishimetals’ scientists predicted the devastation that Junín would suffer if the copper there were ever mined.
ENVIRONMENTAL AND SOCIAL CONSEQUENCES OF COPPER MINING IN JUNIN
According to Bishimetals’ scientists, a copper mine will produce severe environmental and social impacts in Junín.
As noted, the Junín concession is located in the Toisán Range. The copper lies under farming communities and primary forests which adjoin the Cotacachi-Cayapas Ecological Reserve, one of the world’s most biologically diverse protected areas. The Toisán is exceptionally rich in water resources, upon which farmers downstream rely, and its primary forests are within two of the world’s 25 biological hotspots: the Tropical Andes and the Chocó-Western Ecuadorian. Biological hotspots are areas noted for exceptional levels of biological diversity and exceptional numbers of endemic species, and they face serious threats, in many cases from extractive industries.
According to JICA’s preliminary Environmental Impact Study (EIS), forests, farms and water resources throughout the Toisán Range would be severely impacted by the planned copper mine. Among the environmental impacts predicted by Bishimetals’ scientists:
- massive deforestation leading to desertification;
- contamination of water sources by lead, arsenic, cadmium and chromium (metals associated with the copper ore) in levels up to 100 times greater than those naturally existing;
- the flight of large mammals due to noise pollution from dynamiting the ore;
- the disappearance of dozens of bird, mammal and reptile species in danger of extinction;
JICA’s scientists also predicted a series of social impacts:
- the “relocation” of at least 100 families whose farms are in the way of the proposed mine and related infrastructure;
- the creation of a mining town of 6000 inhabitants (the largest population centers in Intag are seven parish seats, each with fewer than 500 inhabitants);
- increased crime and traffic accidents;
- increased alcohol and drug use;
- prostitution and sexually transmitted diseases.
[The mining company currently in possession of the concession claims that there is four times more copper than the figure presented by Bishimetal. While this estimate has raised eyebrows (see below), if it is correct, it is safe to assume that the impacts will be even more severe than those predicted by Bishimetals should the metal ever be exploited.]
The mere presence of Bishimetals in Intag produced significant impacts. People began to inform themselves about the impacts of mining on forests and communities. Then, alarmed by what they learned, residents began to organize. Thus was DECOIN founded. Through DECOIN, often in coordination with other national and international non-governmental organizations (NGOs) working in the fields of human rights and the environment, residents in the communities immediately threatened and throughout Intag began to mobilize.
Local opposition to the mining project finally resulted in the burning of Bishimetal’s mining camp on May 15, 1997. Hundreds of local residents from seven communities participated in the protest. The government singled out three community leaders for prosecution. Eventually the charges were dropped. Finally, after recommending that further studies be done in the hope of identifying more copper and thus making the mine more attractive to investors, Bishimetals pulled out of the project.
Victory was sweet, while it lasted.
RESISTANCE TO MINING GROWS
Between 1997 and 2002, in spite of the absence of an immediate threat, the opposition to mining in Intag increased dramatically. This was due, primarily, to the growing awareness about how human well-being requires a healthy natural environment and about the destructive nature of mining, in social, economic and environmental terms. DECOIN was key in creating this awareness, and also in creating and/or supporting alternatives to mining, such as the Río Intag Agroartesanal Coffee Growers Association (AACRI), women’s craft groups and community tourism projects. During this same period, the County Board passed an ordinance declaring Cotacachi an “ecological county” where mining and other activities incompatible with the conservation of natural resources are forbidden.
As a result of environmental consciousness-raising, Intag was ready for the next round in the anti-mining struggle: the Ministry of Energy and Mine’s (MEM) auction of the Junín concessions. In spite of protests by the presidents of the six parish governments of Intag, most community boards and more than 20 organizations working in the county, the MEM not only went ahead with the auction on August 15, 2002, but awarded the concession to Roque Bustamante, the only bidder, a trafficker in mining concessions, who paid $18,005 for the right to mine 7,000 hectares for 30 years.
The mayor of Cotacachi, with the backing of parish governments, grassroots organizations and the majority of residents, took the MEM to court in 2003. According to the plaintiff, the auction violated article 88 of Ecuador’s constitution which requires that local communities be consulted before the onset of activities that are likely to affect the natural and social environment. The judge who heard the case agreed. Bustamante appealed to the nation’s Constitutional Tribunal. Two of the three judges on the panel assigned to the case once again decided in favor of county government and the communities of Intag, but because it was not a unanimous decision, the case went to the court’s full nine-judge bench. There, after less than 24 hours, five judges decided against the county and in favor of the defendant. Before the case had made its way through the appeals process, Bustamante sold his concessions to Ascendant Exploration.
Lawyers for Cotacachi County have requested that the judges ruling in favor of Bustamante explain their decision. The judges are required to comply with this request. To date they have not done so. This means that the original decision of the lower court, declaring the sale of the mining concession invalid on constitutional grounds, remains in force.
In light of this fact, and in the lack of interest demonstrated by national authorities in guaranteeing the constitutional right to prior consultation, residents of Junín have decided to take their case to the Organization of American State’s Interamerican Human Rights Commission.
AND NOW WE HAVE ASCENDANT
As noted, Roque Bustamante sold his rights to the Junín mining concessions to Ascendant Exploration. Ascendant Exploration, S.A., a wholly owned subsidiary of Ascendant Holdings Ltd. The formers company was founded in Quito, Ecuador in 1999, whereas the latter is registered in the Turks and Caicos Islands. According to its web page, “Ascendant Holdings Ltd. is a world-class and rapidly growing junior exploration mining company”.
According to a press release issued by the company on October 13, 2004 (dateline Hamilton, Bermuda), Ascendant Holdings plans to place its Junín and Chaucha copper concessions under a new company, Ascendant Copper Corporation, based in British Colombia, Canada and “to prepare the company for an IPO on a major international exchange”. According to the release, the Junín property satisfies the Toronto Stock Exchange’s requirements as regards merit.
Ascendant’s arrival has coincided with conflicts in the communities directly affected and throughout Intag. Here are just a few examples of clashes between anti-mining residents and company supporters.
- Ascendant employees tried to establish a camp in Junín’s community forest reserve contrary to the wishes of residents; they were forced to leave by a women’s group from Junín.
- Death threats to anti-mining activists are a constant.
- In November 2004, three anti-mining residents, including a woman who heads a crafts group, were assaulted by bodyguards employed by pro-mining ex-congressman during a public meeting organized by Ascendant.
- Ascendant is carrying out a smear campaign against DECOIN which includes a web page intended to discredit the environmental organization’s members.
- Ascendant has initiated four lawsuits to date, in its strategy to intimidate and wear out the opposition. Community leader Polibio Pérez and lawyer José Serrano are being sued for libel, as is Periódico INTAG (in the latter case, the company is demanding that INTAG pay a million dollar settlement for damages, as well as legal and court costs).
Ascendant’s strategy to convince locals that mining will bring only good things features a $16.5 million “local development project” for five communities close to the mining area. The project includes 30 kilometres of road building and maintenance; new bridges over two rivers; a fully equipped and staffed health clinic; an ambulance; 1,000 new homes; computers for 37 grade schools; a new high school, and training in organic agriculture. Needless to say, the project is tied in to the community’s acceptance of the mining project.
But even if communities were to say yes to mining, would the project ever be implemented? There are reasons for skepticism. To begin with, Ascendant has yet to explain where the millions will be coming from. In addition, the address for the foundation listed as the entity in charge of the project is also Ascendant’s address and company president Paul Grist has admitted the foundation hasn’t been incorporated to date. Finally, and most important, the ambitious development project allegedly planned for Junín is at odds with Ascendant’s policy in other communities where, the company assures investors on its Web page, due to poverty, “small communal contributions have gone a long way in facilitating a favorable atmosphere for mining.” Ascendant notes financing the following social programs it has sponsored in the Napo province where it has been mining gold: creation of a soccer league and donation of equipment and uniforms, Christmas baskets for 500 children in 12 communities, assistance in legalizing land titles, funds for Carnival celebrations in Misahuallí, and facilitating the formation of community organizations. That last is particularly important: here in Intag, Ascendant has founded so-called community organizations, including a development committee and a committee to foment the creation of a new county. The purpose of these is to counter grassroots organizations in Intag and throughout Cotacachi which, together with county authorities, are opposed to mining.
In addition to all of the above, there are other reasons to view Ascendant and its crew with a healthy dose of skepticism. These include:
- Chris Werner, Ascendant’s Chief Financial Officer, was fined by the U.S. Securities and Exchange Commission for illegal trading of stocks in 1998. According to the SEC’s decision, Werner was involved in a company called Aqua Buoy with Joseph and Constance Pignatiello, in which the couple named “made materially false and misleading statements concerning the Company’s financial condition and sold their own Aqua Buoy stock at inflated prices.”
- It is probably only a coincidence that Mr. Werner is again involved with a company whose estimate of its assets (copper ore) some believe to be inflated. To whit, though it has yet to do any studies beyond those done by Bishimetals, Ascendant claims that there is more than four times the copper ore estimated by the Japanese company. According to a letter written on December 15, 2004 by Dr. Al Gedicks, addressed to the Finance and Audit Committee of the Toronto Stock Exchange (where Ascendant hopes to be listed soon), Ascendant’s figure is so far beyond the original estimate “as to raise serious questions of misleading and inaccurate information provided to stockholders.”
- Among retired Ecuadorian military personnel associated with Ascendant’s board is Gen. César Villacís, a man who believes that those in favour of human rights, indigenous rights and workers’ rights are part of a “triangle of subversion;” it comes as no surprise that the general is a graduate of the School of the America’s, now located in Fort Benning, Georgia, where some of Latin America’s worst human rights violators have been educated;
- Paul Grist’s father is a adventurer-fortune seeker with prior dealings in a shady Canadian mining company in Ecuador’s Amazon (see www.stangrist.com).
- Michael R. Lee, member of Ascendant’s board of directors, has been personal physician of the king of Saudi Arabia, one of the wealthiest, most repressive and most corrupt Middle Eastern regimes.
- And then we have former congressman Ronald Andrade. Andrade comes from a family of modest means. Nevertheless, he has managed to amass a fortune which has paid for three (or six, depending on the source) haciendas covering thousands of hectares of land, sprawling homes and apartments in various cities, luxury cars, bodyguards, and much, much more. Andrade is the mining company’s major defender. His bodyguards have been the protagonists in the incidents described above.
ALTERNATIVES TO MINING
Communities in the mining area and throughout Intag are developing alternatives to mining. For example, Junín owns a 2,500 hectare forest reserve, the centerpiece of its Community Ecological Tourism project (located right over the mineralized area). Fifty men and women from two communities run the project. Junín, as well as the rest of Intag, also benefits from a shade-grown, fair trade coffee project, carried out by AACRI, the local coffee grower’s association. These are only two of the many sustainable projects residents have developed in response to the mining threat. These initiatives, and the model of sustainable development being created in Cotacachi County, are supported by a County ordinance, which in 2001, declared Cotacachi County the first Ecological County in Latin America. The Ordinance promotes local, community-based development, full respect for human rights; sustainable use of renewable resources and cultural and biological diversity, to mention a few of its objectives. In other words, a copper mine threatens far more than four communities, primary forests, endangered species and pristine rivers.
[Originally published at www.decoin.org/history.html]
FOR MORE INFORMATION ON THE ISSUES DISCUSSED IN THIS SUMMARY, SEE:
Information on Ascendant Holdings Ltd comes from the following sources (note that in January 2005 Ascendant removed references to Junín from its web page):
• Ascendant’s web page: www.ascendantholdings.com
• More company info: http://www.ascendantexploration.com/report_q.html
• Also http://www.ascendantexploration.com/annual_report1.html
The decision by the U.S. Securities and Exchange Commission in the case involving Ascendant CEO Christopher Werner can be read at: http://www.sec.gov/litigation/litreleases/lr16084.txt
The press release on Ascendant’s plans to form a new company for Junín is available at: http://www.bsx.com/NewsArticle.asp?ArticleID=1097699749
If you would like to get in touch with us, write to DECOIN: decoin(at)hoy.net.
Consejo de Desarrollo Comunitario, the grassroots organization based in Junín, can be reached at (only in Spanish, please): ecojunin(at)yahoo.es*
* For English, contact DECOIN. Also note that the Community Council and Junín cannot regularly check their e-mail (no nearby phones). You can copy us and we’ll try our best to contact them.
DECOIN - DEFENSA Y CONSERVACIÓN ECOLÓGICA DE INTAG
Casilla 144 Otavalo, Imbabura Ecuador
Tele/fax: 593 6 264 8593
DECOIN is a grass-roots environmental organization founded in the Intag region in 1995. All members of DECOIN live in Intag. Our main objectives are: to conserve the area’s unique natural resources, with emphasis on forests, biodiversity and water, and to promote and support sustainable productive initiatives. One of our most important activities has been building and supporting a strong opposition to mining activities.