Towards a Fairer System of International Mining.

Corporate Knights Magazine: 2007

“Canada,” says Ulises Garcìa, is seen in his native Peru “as a country that respects human rights and promotes democracy.” He laments, however, that “the average Canadian doesn’t know about the negative impacts its mining companies are causing… These companies are destroying the reputation of Canadians.”

Garcìa’s father was a leader of community opposition to a proposed Canadian gold and copper mine in Tambogrande, Peru. The Peruvian government had granted a permit to Vancouver-based Manhattan 

Minerals and taken a 25 per cent interest in the venture. The mine would require relocating thousands of residents while threatening the area’s productive agricultural economy.

One month after a local protest against the project, the elder Garcìa was assassinated. In 2002, 95 per cent of voters in an internationally monitored local referendum rejected the mine, but the company simply ignored the result.

Now, as a result of ugly headlines from far away places like Tambogrande, the federal government and the Canadian mining industry appear eager to repair the damage. How serious they are about meaningful action remains a big question.

What is certain is that Canada is a global mining giant—more mining companies raise capital on our stock exchanges than anywhere else—and making our country’s 1,000 mining companies working abroad accountable for their conduct would make a positive difference in the lives of people in developing nations.

Risks that Canadian mines create in those nations are not just the result of corporate alliances with governments with weak commitments to human rights or democracy. Mines, especially open pit mines, even when operated under the watchful eye of a capable regulator, create significant risks to the environment and human health. Details that govern mining operations are therefore crucial.

Vulnerable populations live in those details. A poorly constructed tailings pond can break and poison a river that sustains local communities; massive water consumption can deprive farmers of water for crops and livestock; and the failure to prevent the release of heavy metals and acids from millions of tonnes of waste rock can contaminate ecosystems. These are only a few of the details that some Canadian mining companies have ignored.

Traditionally, the Canadian government has politely asked our mining companies to respect international human rights and environmental and social standards such as guidelines from the Organisation for 

Economic Co-operation and Development (OECD). Proof that this approach hasn’t worked can be measured in poisoned water and the blood of mining opponents.

In 2005, Parliament’s Foreign Affairs Committee made recommendations about actions needed to address the problem. Instead of acting, the federal government set up public roundtables and asked an Advisory Group to make its own recommendations. This group, which was comprised of experts from industry, civil society, academia, and other areas, released its final report this past March.

Pierre Gratton was a member of the Advisory Group in his personal capacity while in his day job he is responsible for the Mining Association of Canada’s (MAC) recently developed Towards Sustainable Mining standards. He says MAC’s members prefer to operate in places “where the laws are clear and clearly understood and there are effective means of enforcing them.” Gratton rejects the suggestion that companies go to countries where they can “get away with stuff” but acknowledges that even where mining laws exist, there is often a lack of capacity to enforce them.

“People are waking up,” says Peter Sinclair who directs the Corporate Social Responsibility program of Canada’s Barrick Gold, the world’s largest gold producer. Sinclair says companies, governments, communities, and civil society “realize that mining projects can’t do things like they have gotten away with in the past.”

The goal is how to ensure that history doesn’t repeat itself. The Advisory Group’s final recommendations call for greater disclosure and reporting requirements, the establishment of corporate social responsibility (CSR) standards (such as mine closure plans, provision of fair and appropriate compensation, and biodiversity conservation), withdrawal of government support from companies that breach those standards, and the creation of an independent mining ombudsman.

An ombudsman would be a welcome addition, according to Robert Walker, vice president of social responsibility research and policy for the Ethical Funds Company. The company manages about $2 billion in funds with a significant portion in Canadian mining enterprises, provided they meet certain social and environmental criteria.

Walker, who was also a member of the Advisory Group, says the problem is that companies may have strong management procedures on matters like engaging the local community, but “it’s almost impossible to determine what’s happening on the ground.”

A mining ombudsman would have provided the community of Tambogrande with a means of challenging Manhattan Minerals in a Canadian forum. Garcìa says his community “had no possibility whatsoever of taking action against the company.” He says that Manhattan, although a small company, had the full support of the Peruvian government and the state security apparatus, including the police and intelligence services. (A former Peruvian military commando was ultimately convicted of his father’s murder although the higher-ups were never identified.)
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Manhattan ultimately pulled out of Peru because negative Canadian media coverage hurt its ability to raise money and the Peruvian government eventually decided it could not ignore its own laws prohibiting a project in that area.

Whether a complaint procedure to an ombudsman is useful will partly depend on the strength and scope of the mining standards that are ultimately put in place by Canada.

The Advisory Group did not, for example, recommend that the corporate standards include an obligation to obtain the free, prior and informed consent of affected communities—a requirement that many civil society groups called for and that would have spared Tambogrande from much of the violence and turmoil that followed Manhattan Minerals’ entry into Peru. The Advisory Group mentioned a vague standard of broad support from affected communities. The right to say ‘no’ would help right the huge power imbalance between the corporate visitor and local communities.

Communities like Tambogrande that say ‘no’ to multimillion-dollar mining projects are sometimes dismissed as ‘anti-development.’ The reality does not so comfortably fit the label. While the lion’s share of profits from a country’s natural resources—its capital—often goes to the visitors in exchange for short-term jobs and other benefits, environmental and social risks (like repressive violence) stay local. Promised economic development often proves illusory.

And mining investment, which can often align powerful foreign interests with governments of dubious repute, may simply bolster corrupt elites while stifling democracy and sustainable development.

Walker says that actions like Venezuela’s recent nationalization can be partially explained by Chavez using the justification that “resource companies have had terrible track records of environmental abuse and of failing to deliver benefits to local communities, regional economies, or national economies.”

Other observers are more blunt. In his classic Open Veins of Latin America, Uruguayan writer Eduardo Galeano calls the history of natural resource exploitation by foreign companies in developing countries one of “organized looting.” 

Eventually, the value of Canadian mining standards to local communities will depend on the tools, including legal mechanisms, available to enforce those standards.

The recommended ombudsman’s office, for example, will be able to investigate complaints but only recommend appropriate consequences such as withdrawal of government support. The Advisory Group did not recommend that the mining standards be enforceable under Canadian law, thereby diminishing the power such standards might otherwise give communities in the face of well-financed corporate enterprises.

Grahame Russell, the co-director of Rights Action, an organization that works with communities in developing countries, argues that “we need strong civil and criminal law in countries like Canada and the 

US whereby affected parties—individuals, communities collectively, or their NGOs— can come to Canada to sue straight up in our courts for environmental harms associated with their projects and businesses, or human rights violations, labour standards and other abuses.”

It may be inevitable that the development of strong and enforceable rules for Canadian mining companies will be a slow process with details worked out over a number of years, starting with the Advisory Group recommendations. In the meantime, people in developing countries affected by Canadian mines will have to continue to manage the gaps or pick themselves up when they fall into them.

Jamie Kneen of the Canadian research and advocacy group Mining Watch says that “problems are being created every day and people are looking for something now not in five or 10 years’ time. They want to be able to stop some of these projects before more damage is done, before more people are hurt, or they want to be able to rectify an existing situation…and have [companies] make good on promises.”

Canada’s superpower status in global mining gives it the opportunity—perhaps the obligation—to lead the way internationally.

Garcìa, who now lives in Canada, concludes: “I am sure that if average Canadians were aware of the situation in Tambogrande they would be totally opposed.”

The Canadian government, on behalf of Canadians, now has the opportunity to start proving him right.