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Wikileaks: Weak governance and investor protections make CSR ineffective for overseas operations

Presentation for the Mining & Social Responsibility Roundtable Discussion
Queen's University, International Development Week

Jen Moore, 8 February 2011

First, thank you very much for extending the invitation to MiningWatch Canada to participate in today's roundtable discussion, and thanks to all of you for being here.

To begin, I want to clarify what I think we're talking about. When we refer to Mining and Social Responsibility - or CSR - I think what we're really discussing is Corporate Self Regulation. Guidelines that are not legally enforceable, nor implicate any potential sanctions if they're disregarded, and which principally enhance public relations for the mining industry.

Rather than a step in the right direction, I think this is a misstep. This is not to say that voluntary guidelines might not have some positive impacts... with some companies... some of the time. But I think their potential for addressing serious social and environmental impacts of mining that we are seeing in Latin America, for example, and to provide real channels to address conflicts, are so limited as to warrant serious questioning of the amount of time we spend discussing them.

On one hand, host countries that have adopted neoliberal mining policies in recent decades too often have weak institutions that are either unable, unwilling or simply lacking the resources to properly monitor and implement regulations, voluntary or not.

For example, Toronto-based Inmet recently submitted a 14,000 page plus Environmental Impact Assessment to the National Environmental Authority in Panama for its Panama Copper project. The copper, gold and molybdenum project proposes to open up nearly 6,000 hectares within an ecologically and culturally sensitive area within the Meso American Biological Corridor. It's an area that receives up to five metres of rainfall per year, and where a number of indigenous communities are living.

Aside from the difficulties that such a massive technical document presents for affected communities to examine, the Panamanian environmental authority itself has indicated that it lacks the capacity to carry out an independent review of the company's EIA. Instead, it's contracted a Chilean firm to do this on its behalf. Although the company is footing at least part of the bill, concerns have been raised about close ties between this firm and the oil and mining sector in the southern cone. [1]

Furthermore, as the Martinelli government tries to rush through mining code reforms to further open up the mining sector - despite broad based protests from indigenous and non-indigenous groups - Panama's National Ombudsman has urged for a moratorium on mining “until the country has the necessary institutional capacity.” The Ombudsman cited lack of payment of fines on the part of companies and failure to live up to their environmental impact assessments. [2] State protections for indigenous rights in Panama are also notoriously weak. [3]

But neoliberal frameworks and limitations of CSR are also reflected in the way in which our own diplomatic corps operates to promote Canada's economic interests abroad – just one of the many government props that we provide for our mining industry.

Perhaps some of you heard about the recent Wikileaks cables revealed from the US Embassy in Lima at the end of January?

To summarize, the leaked information refers to an August 2005 meeting hosted by the Canadian and US Ambassadors with representatives of major mining companies operating in Peru. The intent was, I quote, “to review their operating difficulties... and to coordinate efforts to improve the investment climate.”

Representatives from major companies such as Newmont, BHP Billiton and Toronto-based Barrick Gold were present, and Swiss, Australian and British diplomats also attended. The South African Embassy was invited to participate, but reportedly couldn't make it. The US cable calls this set of embassies, a “diplomatic mining group.”

The immediate backdrop to these diplomatic cables was violent police repression against peasant farmers protesting a copper-molybdenum mine in northwestern Peru, close to the border with Ecuador. Three protesters were shot and one died. This same incident also gave rise to allegations of “torture, inhumane and degrading treatment, and false imprisonment” that have since been filed in proceedings going forward in a British high court. Back in 2005, this project was fully-owned by a British junior mineral exploration company, Monterrico Metals. Zijin, a Chinese consortium, has now bought out most of the company. Monterrico is unable to divest of its final 10% share due to a court injunction. The company denies any involvement in the alleged abuses. [4]

This was the most violent of several persistent conflicts in the country. But to read these diplomatic cables you would think the victims were the corporate elite.

According to the leaked cables, the company representatives described their projects as under attack, blaming leftist political parties, local campesino organizations, as well as drug traffickers and NGOs. In no way do the records of this meeting indicate any recognition of local community concerns for the future of their water supplies, lands, or livelihoods.

Most disconcertingly, the company reps asked the group of diplomats to urge the Peruvian government to encourage a rotation of teachers in conflictive mining communities, and for the Catholic Church to rotate bishops in these regions as well. They further complained that political parties had not spoken out about what they described as “anti-mining violence.”

Without any hint of concern for the violence that local communities were facing, the “diplomatic mining group” signalled that they could help out. The US Ambassador said embassies could do more to promote the benefits that mining brings to the country and that, “pending key information from the mining companies,” that they were “ready to meet as a group with the [government of Peru], Catholic Church and political party leaders.” [5]

Dr. José De Echave, a highly respected advocate for more just mining practices in Peru, points out that evidence indicates they might have followed through. He notes that since this time, laws have been tightened to raise penalties against those who protest, hundreds have had to face serious charges for questioning actual and proposed mining projects, while teachers have reportedly been harassed and moved, NGOs have had their telephone conversations and emails monitored, and the highly regarded priest and environmental defender, Father Marco Arana, has been pursued. [6]

We also know that shortly after this meeting that the Canadian Embassy approached at least one Canadian NGO working in Peru. According to one account, the Embassy notified Canadian Lutheran World Relief that “it had to end its funding of Peruvian NGOs that questioned forms being taken by mining development, and that did legal defence work for affected populations. This work, it was told, was a foreign relations problem for Canada. If CLWR did not end support to these NGOs, it would lose its co-financing support from the Canadian government. Peruvian NGOs receiving this support were informed of this termination in October 2005.” [7]

Such silence from diplomatic representatives when serious allegations of egregious harms have arisen and an uncritical backing for corporate interests, contributes to polarization in countries like Peru. And the situation in Peru is polarized.

On June 5th 2009, following 58 days of protest along a stretch of highway called the Devil's Curve, which connects the northern Peruvian highlands with the Amazon, a police operation was ordered resulting in the deaths of twenty three police officers, at least five indigenous people and five residents from the nearby town of Bagua. Another 200 people were wounded. The protest arose in opposition to a series of decrees that President Alan García had passed presumably - although apparently going much further than necessary - to implement the US free trade agreement with Peru. [8]

That same month, the National Ombudsman's office registered 128 socio-environmental disputes across the country, nearly double from the same time a year earlier.

At the demonstration near Bagua, however, the large number of Awajún and Wampi indigenous people present bore direct relation to a conflict associated with a Canadian-owned mine project on the Amazonian side of the border with Ecuador. [9] Owned by Dorato Resources, a junior mining company, local communities allege that the Peruvian government has given the company favourable treatment by reducing in half the size of a national park that they had been negotiating in order to protect indigenous territories and important headwaters from mining activities. [10]

Less than two weeks following the Bagua massacre, the Canadian government ratified the Canada-Peru Free Trade Agreement, remaining silent and then denying any connection with the violence. [11]

Rather than blame teachers, priests, peasant farmer organizations or leftist political parties, however, the National Ombudsman's office and other international human rights organizations attribute such conflicts to a lack of any real regard for the participation of affected communities in decisions being made over development projects taking place on their lands and in their watersheds.

But attempts to address this in Peruvian law have been stymied, leading some to fear that another Bagua could be just around the corner. [12]

In the meantime, corporate rights are firmly in place. In addition to free trade agreements with the US and Canada, Peru has signed similar agreements with Chile, Mercosur, Singapore and China. [13] And at least one US-based mining company, the Renco Group, which owns the U.S. mining and metallurgical company Doe Run, has threatened to start an international arbitration process invoking protections available to it under the US-Peru FTA. The company's smelter in the town of La Oroya, known as one of the most polluted places on earth, has been at the centre of disputes over whether the company or the state must pay to clean up contamination and compensate families of more than one hundred children with lead poisoning. [14]

International agreements have been similarly evoked in El Salvador. Vancouver-based Pacific Rim Mining opened a shell company in Nevada in order to take advantage of the US Central America Free Trade Agreement and has sued the Salvadoran government for $77 million for having not granted it a licence to extract in the headwaters of the country's most important river system.

These corporations would never settle for voluntary arrangements to secure their rights. Why should affected communities?

This is not to say that the alternative to CSR is easy. We know, in the wake of an attempt to get Bill C-300 passed - which would have only moderately increased government oversight of the mining industry and conditioned a small part of the economic and political supports available to them – that in Canada we're up against the same well-heeled mining industry.

But, if when we refer to social responsibility we actually mean that we want to work with affected communities to support them in the defence of their collective and individual rights, then we need to seriously examine how our own government is putting corporate rights first and aim for a mandatory framework that would hold our companies to account.

Thank you.

[1] Mines & Communities, Inmet's Panama Copper project raises concern among activists, 21 December 2010

[2] Terra, Ombudsman panameño pide al gobierno una moratoria para actividad minera, 18 January 2011

[3] For instance, Panama is one of the few Latin American countries that has not ratified the International Labour Organization Convention 169 for the rights of indigenous and tribal peoples. See: http://www.ilo.org/ilolex/cgi-lex/ratifce.pl?C169

[4] Guardian, “UK firms' partner 'wanted Peru to curb priests in mine conflict areas',” January 31st 2011

[5] Guardian, “US Embassy Cables: Mining companies worry about security” January 31st 2011

[6] Cooperacción, José De Echave C., “Peru:Wikileaks, Empresas Mineras y Embajadas,” February 2nd 2011

[7] Peru Support Group, “Mining and Development in Peru with Special Reference to the Rio Blanco Project, Piura,” March 2007

[8] Upside Down World, “Peru and Ecuador: A Common Enemy,” Jennifer Moore, July 30th 2009,

[9] Interview with lawyer Marco Huaco, Macas, July 2009

[10] Servindi, “Reports document alienation of land in Cordillera del Condor, Peru for mining,” March 8th 2010

[11] Georgia Straight, Dawn Paley, “Canada ratifies Peru free trade agreement, stays silent on Amazon massacre,” June 18th 2009; also Embassy Magazine, Michelle Collins, "Peruvian Violence Prompts Concerns over Canada's Push for Free Trade Deals," June 24th 2009

[12] Servindi, “Is another Bagua massacre just around the corner?,” January 7th 2011

[13] IPS, Milagros Salazar, “Free trade undermining rights in Peru,” March 25th 2011

[14] IPS, Milagros Salazar, “Doe Run's Latest Move,” January 5th 2011