In El Salvador, OceanaGold Must ‘Pay Up and Pack Up’

February 23, 2017 | By admin | Filed in: OceanaGoldPacific RimEl SalvadorInternational Trade & Investment.

After seven years, four murders and US$24 million in total
legal costs, in October 2016, a little-known World Bank
trashed OceanaGold’s claim
that El Salvador either owed it
a mining permit for a proposed gold mine or US$250 million

The Washington D.C.-based International Centre for Settlement
of Investment Disputes (ICSID) panel decided that OceanaGold’s
predecessor Pacific Rim Mining never met the legal requirements
under El Salvador’s mining law to obtain a permit to exploit
gold and must pay the Central American country US$8 million
towards its legal costs.

Vancouver-based Pacific Rim Mining first announced its
intention to sue in April 2009, after outgoing Salvadoran
President Saca declared that he would not issue any new mine
permits until a strategic environmental assessment could be
undertaken to assess the viability of mining in the country,
the most densely populated in all of Latin America and largely
dependent on a single watershed. When Pacific Rim nearly went
bankrupt in late 2013, the Canadian-Australian firm OceanaGold
paid just C$10 million to pick up the company and its principal
asset: the suit against El Salvador, which it persisted in

The suit has exacted an enormous cost on human life and
sovereignty over environmental policy making in the country. So
rather than signify a win for the state, this case illustrates
why Investor State Dispute Settlement (“ISDS”) – enshrined in
over 3,000 investor protection agreements today – is such a
huge threat to peoples’ self-determination, health, and the
environment in El Salvador, Canada and around the world.

While the recent tribunal decision lifts a tremendous burden
off the Salvadoran people, the battle to get the company to pay
up and pack up is not over.

El Salvador’s Water Protectors 

Pacific Rim Mining first obtained concessions to explore for
gold and silver in the northern department of Cabañas, El
Salvador in 2002 and submitted applications for an
environmental and exploitation permits in 2004. By this time,
local communities were already put off. Early impacts on local
water supplies and the arrogance with which the company
addressed local landowners led residents to ask more questions
about the long-term implications of gold mining, and to refuse
to sell land to the company.

Local organizations and residents educated themselves about the
social and environmental impacts of gold mining through visits
to mining-affected communities in neighbouring Guatemala and
Honduras and by gathering expert opinion on the company’s
environmental assessment. Based on their experiences and the
information they found, local opposition emerged and quickly
gave rise to a national movement against metallic mining in El
Salvador. Even the head of the Catholic Church joined local
communities and organizations from Cabañas and the capital in
calling for a stop to the project. In 2008, the University of
Central America released its first public opinion poll on the
subject, showing that 62.4% of the population in the affected
areas opposed metal mining.

From 2008 to 2009, both outgoing and incoming Salvadoran
presidents publicly committed to not permit any mining projects
during their administrations. Meanwhile, national level
organizations pressured for a prohibition on any industrial
metal mining in the the country, given its already stressed
water supplies, vulnerability to climate change and population

Pacific Rim’s PR and Lobby Strategy

Faced with strong and growing opposition to its project,
Pacific Rim could not meet regulatory requirements to obtain
the permits it needed to put its proposed El Dorado project
into operation. Not only was its environmental permit never
approved, but it did not present the required feasibility
study, nor could it demonstrate that it either owned or had
land-owner consent to operate in the 12.75 km2 area for which
it was requesting an exploitation permit.

This latter failing – setting aside everything else that is
legally, morally and environmentally wrong with Pacific Rim’s
presence in Cabañas – is at the core of the recent ICSID panel

It is important to note that ICSID panels have no obligation to
take into consideration matters related to the water and land
that local communities rely on, threats and violence that arose
from the conflict and divisions that this project generated, or
the sovereign right of peoples to decide what is best for their
wellbeing and environment. In fact, the tribunal dismissed
without consideration the
“amicus curiae”
intervention that a number of Salvadoran
organizations presented with the help of the Center for
International Environmental Law (CIEL) that laid out their
experiences with the company in this regard.  

Rather, the panel’s decision is very narrowly focused on the
technicalities of El Salvador’s mining law and the state’s
behaviour, to determine whether or not the state owed the
company a mining permit. In laying out the evidence, the most
interesting aspect of the three arbiters’ deliberations is the
detailed description of Pacific Rim’s singular strategy at the
state level to try to reform El Salvador’s mining law to loosen
regulatory requirements and enable its project to go forward.

In 2005, as the panel’s documentation makes clear, the company
knew very well that it did not – and could not – demonstrate
land ownership or landowner consent within 100% of the area for
the mining concession it was requesting.

The documentation also reveals that the company knew, well
before President Saca made his first public promise in 2008 not
to issue any mining permits, that the government was
considering a moratorium on mining in response to public
demands for a prohibition on all metal mining.

Nonetheless, once it became clear that its lobbying strategy
was a complete failure, the company announced the suit,
brazenly claiming that the company had “operated in full
compliance with Salvadoran law” and “that the Government has
failed to fulfill its obligations.”

The High Price of the Pacific Rim – and now
OceanaGold’s – Suit

However, the ICSID panel did not consider the fact that Pacific
Rim’s aggressive strategy to enact law reforms at the national
level was accompanied by public relations activities in Cabañas
that generated conflict, aggravated divisions and raised the
stakes around current and potential economic benefits from
mining. These could only have contributed to threats and
violence against community organizations and people in the
community who opposed the project.

The tension and discord that its local campaign created
culminated in violence just months after Pacific Rim announced
its intention to sue El Salvador before the Washington
tribunal. In June 2009, community leader and outspoken opponent
to the El Dorado mine, Marcelo Rivera, was tortured and killed.
Six months later, Ramiro Rivera Gómez from the Cabañas
Environmental Committee and community activist Dora Alicia
Recintos Sorto, eight months pregnant, were murdered. Then, in
June 2011, Juan Francisco Durán Ayala, also from the Cabañas
Environmental Committee, was killed. Meanwhile, various
organizations received numerous threats throughout the years.

While the murders have never been fully investigated, the
Salvadoran Human Rights Ombudsman’s office has attributed them
to the work these community activists were involved in to
protect the environment.  

The escalation of social division and violence, the time and
effort that the Salvadoran government has had to dedicate to
its legal defence, and the chill effect on efforts to get a ban
on metal mining in El Salvador during the last seven years are
the real price that Salvadorans have already paid for this

The Fight Continues to Get OceanaGold to Pay Up and
Pack Up

In OceanaGold’s response to the ICSID tribunal’s recent
decision, the company commented that it would evaluate its
options and described the suit as something that it had
“inherited”. But in the same way that Pacific Rim long knew
that it did not meet legal requirements to mine in El Salvador,
OceanaGold has known full well since it bought Pacific Rim that
the suit was the only thing the company had going. Pacific Rim
did not have any permits to mine or to explore anymore. It did,
however, have a foundation – the El Dorado Foundation –
registered in its name.

Contrary to balking over the suit, OceanaGold unapologetically
persisted with it, while trying unsuccessfully to get a
negotiated agreement with the government. Concurrently, since
2014, it
reactivated the El Dorado Foundation
and renamed the
company’s exploration company after El Salvador’s national
bird, the torogoz (turquoise-browed motmot). Its local public
relations strategy is perceived locally as just as
disrespectful and potentially dangerous as its predecessor’s

Now that the ICSID tribunal has made a clear decision in this
case, it is high time for OceanaGold to pay up and pack up.
Indications are, however, that this will require yet another

Already, the company is stepping up its public relations
campaign in El Salvador to try to convince the population of
“responsible mining”. But it fails to recognize that the only
responsible route is to leave the country and respect the clear
‘no’ to metal mining that Salvadorans have repeatedly
expressed, despite the serious risks they face in doing so.

Stop the Suits

In Canada, we will need to keep up the solidarity with the
brave Salvadoran fight to protect water and land from mining,
and take courage from their efforts to stand up against current
and new trade and investment agreements that enable this sort
of corporate bullying.

This article was published in the Winter
2017 edition
of Canadian Dimension. Find out how to buy an
issue or subscribe to the magazine here

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