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EL SALVADOR
ICSID ruling draws to a close
Latinamerica Press
9/15/2014
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Despite incompliance with environmental regulations, multinational mining firm has demanded the Salvadoran government to pay more than US$300 million for halting project.

The complaint filed by the Canadian firm Pacific Rim Mining in 2009, demanding US$301 million in compensation from the Republic of El Salvador, is entering its final stages at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

According to media reports, both sides were scheduled to argue their cases on September 15 before a three-person tribunal — V.V. Veeder of Great Britain, Brigitte Stern of France, and Guido Santiago Tawil of Argentina— and arbitration should conclude by September 20. The final ruling is expected in the first quarter of 2015.

Pacific Rim Mining, which was acquired last year by Australian company Oceana Gold, presented its case against El Salvador for alleged damages after the country blocked the firm from mining at El Dorado in the northern department of Cabañas.

Salvadoran authorities claim that the company failed to meet the environmental precautions required to operate in the country, and that the Ministry of Environment and Natural Resources never even accepted the environmental impact plan.

In a statement to newspaper El Diario de Hoy, attorney Luis Parada, who represents the state, said “there is an abundance of evidence that shows Pacific Rim did not comply with the legal requirements to have the right to the El Dorado concession, and in this hearing all these aspects will be discussed at length and with witnesses.”

The mining company took the case to mediator ICSID, arguing that El Salvador defied international law and put the firm’s investments in the country at risk, in violation of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).

However, in 2012, ICSID ruled that the complaint could not be adjudicated under the rules of CAFTA-DR, noting that the company had opened an office in the United States after the beginning of the dispute to benefit from the trade agreement. However, the arbitration process for the multimillion-dollar compensation continued.

Permission denied
The first exploration permits to Pacific Rim Mining were granted in 2002, during the government of former President Francisco Flores (1999-2004). In 2008, then-president Antonio Saca (2004-2009) refused to authorize the start of operations, but it was not until the following year, after Mauricio Funes (2009-2014) assumed the presidency, that he definitively denied licenses to company to start mining.

Funes based his decision on potential pollution from the cyanide used to extract gold, and the risk that water supplies would be affected. The mining company intended to use an average of 2 metric tons of cyanide and about 900,000 liters of water daily. There are an estimated 9.4 million ounces of silver and 1.3 million ounces of high-grade gold at the site.

Between June and December 2009, three anti-mining activists were killed in Cabañas. Although the involvement of Pacific Rim Mining in the crimes was not proven, environmentalists and residents of the area believe the deaths were linked to the victims’ opposition to mining activities.

The defense of water resources seriously threatened by the company was recognized in 2011 when farmer and environmental activist Francisco Pineda won the prestigious Goldman Environmental Prize. Pineda helped create the National Anti-Mining Board, and with this coalition he organized a series of local protests to call attention to the issue.

The current goal for the National Anti-Mining Board is the passage of a law that would ban such extractive activity in the country. In a news conference on July 22, the Global Day of Action Against Open Pit Mining, the group’s members demanded an end to the projects that “threaten life, dignity, sovereignty, and are against the will of the people of the country’s communities.”

“It is possible to stop mining,” said activist Pedro Cabezas. “We need the Legislative Assembly to approve as soon as possible a law against mining in El Salvador, where it clearly establishes that mining corporations are not allowed in our country. We need people to continue fighting to not allow mining
.” —Latinamerica Press.


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