Economy & Trade, Environment, Headlines, Latin America & the Caribbean

ARGENTINA: Boom in Mining Seen as Mixed Blessing

Marcela Valente

BUENOS AIRES, Dec 30 2003 (IPS) - Argentina’s mining industry was a sleeping giant until the early 1990s, when a group of foreign corporations shook it awake. Today, local residents in areas near mineral deposits are torn between the potential for new jobs and concern over the environment.

In 1990, only seven mining companies were operating in this country of 37 million, which according to official statistics has 55 billion dollars worth of mining reserves.

By 1998, the number of mining companies had risen tenfold, after the government of Carlos Menem (1989-1999) pushed through legislation that favoured foreign investment.

The new legislation, the country’s huge potential in extractive industry resources, and cheap energy converged to form a magnet for investment, which grew in a decade from an annual average of four million to 500 million dollars.

But a new national umbrella group, the Network of Communities Affected by Mining, is demanding the repeal of the laws that promote foreign investment in the industry, and calling for the closure of several mines due to environmental damages.

One of the heads of the Argentine Chamber of Mining Businesses (CAEM) acknowledged in a conversation with IPS that some mining projects pollute the environment.

But he said that other industries do so as well, and that extractive industries – the oil, gas, and mining sectors – ”have standards for minimising the risks and mitigating any damages that might be produced.

”Mining has had a few accidents around the world, which is why we have rules governing the safe use of cyanide, which is used in the extraction of gold.

”But if you’re talking about banning an activity because of the risk of accidents, then we should prohibit the manufacturing of cars,” said the source, who asked not to be identified.

The steady stream of complaints and lawsuits against mining corporations due to negative social and environmental impacts led the World Bank to commission the Extractive Industries Review (EIR).

The process was aimed at providing ”a wide range of stakeholders – including government, business and industry, NGOs and civil society representatives – with the opportunity to discuss both the role of the World Bank in these industries, as well as key issues related to the oil, gas, and mining sectors.”

The final report that has emerged from the two-year process will be submitted to World Bank President James Wolfensohn in early January.

More than 70 representatives of civil society, industry, and financial institutions attended the Dec. 11-13 EIR final workshop in Lisbon, Portugal.

The independent study, coordinated by former Indonesian environment minister Emil Salim, says extractive industries have failed to alleviate poverty and unemployment and to respect the rights of indigenous communities.

The report recommends that the World Bank stop financing all coal and oil projects in developing countries, and calls for protection of human rights and the right to prior and informed consent for communities.

”Even the World Bank Extractive Industries Review acknowledges that the benefits of oil, mining and gas projects are often questionable,” said Nur Hidayati of Friends of the Earth Indonesia.

Friends of the Earth International (FOEI) released its own report at the final EIR meeting in Lisbon: ”Hands Off: Why International Financial Institutions Should Stop Drilling, Piping and Mining”.

The FOEI report ”reveals the devastating and irreversible social and environmental impacts of public financing for the fossil fuels and mining sectors…and describes global and local resistance to large-scale mining projects funded by international financial institutions through 11 case studies.”

In Argentina, transnational mining and oil companies have been welcomed with open arms – even those that have been brought to task for polluting in their countries of origin.

Taxes frozen for 30 years, tax exemptions for imports of capital goods and inputs, ridiculously small fines for companies found guilty of polluting, and a three percent cap on the share of revenues that go to local and national authorities created a recipe for a juicy deal for the companies that swarmed into Argentina in the 1990s.

There are currently 80 mining projects underway in Argentina. Most deposits are located in the Andes mountains, which border Chile, from Bolivia in the north to the extreme southern part of the country. At least half involve metals, mainly gold, silver and copper.

Over the past year, the price of gold has climbed, providing an additional incentive for mining companies. In the wake of the 1997 southeast Asian economic meltdown, the price of gold plunged below 280 dollars an ounce, but it has now rallied to 400 dollars an ounce.

The mining industry’s export revenues in Argentina soared from 15 million dollars to 1.7 billion dollars between 1993 and 2002.

Extractive industry projects have generated employment and bolstered economic activity in isolated regions of Argentina. But they have also drawn criticism for polluting air, water and soil.

The first National Conference of Communities Affected by Mining held this month in Buenos Aires drew delegations from six of Argentina’s 28 provinces.

”We want the public to remain alert, and we want to raise awareness on the fragility of some of our ecosystems,” Javier Fernández, an activist with the Anti-Nuclear Movement in the central province of Chubut who took part in the Buenos Aires meeting, told IPS.

Specific cases of pollution by extractive industries and incidents of harassment of activists were reported at the meeting, and the Network of Communities Affected by Mining was created, linking groups from 11 provinces.

But it was not easy to reach agreement on the demand to revoke the 1990s legislation governing extractive industries and investment, because in some regions, like Catamarca in the north, mining initiatives have generated a large number of desperately needed jobs.

Local communities in some areas prefer to demand a greater proportion of revenues from the companies, and to call for the corporations to provide clean-up funds. That is true in the case of many local residents who live and work near Bajo de la Alumbrera in Catamarca, Argentina’s biggest gold and copper mine.

”We are aware that mining involves finite resources, but it is precisely for that reason that an effort is being made to help workers so that when the work ends, they can launch other projects, taking advantage of the water pipes and power grids set in place by the mining industry,” said the CAEM source.

The Bajo de la Alumbrera mine, which is operated by Australia’s Mount Isa Mining corporation in association with Chilean, British, U.S., Canadian and Argentine companies, has some of the biggest gold reserves in Latin America, and produces 20,000 kgs of gold and 190,000 tons of copper annually.

There were more than 4,000 people directly employed in the construction phase of the mine, and 1,000 still work in the company. But experts at the University of Catamarca have warned that the area’s underground water reserves have been polluted by the chemicals used in the process of extracting gold and copper.

In the neighbouring province of San Juan, the main investor in Pascua Lama, a joint Argentine-Chilean mine, is Canada’s Barrick Gold Corporation, which also holds the concession to extract gold in Veladero, in the same province.

”Pascua Lama and Veladero together represent one of the world’s biggest undeveloped gold-mining districts,” enthuses Raymond Threlkeld, the vice-president of development in Veladero. However, Barrick was already fined for pollution even before the extraction of gold began.

Marcos Barragán, who was hired by Barrick to work on an environmental impact study, was laid off after he warned the company of water pollution and flaws in the waste treatment system.

Since Barragán’s dismissal, he has been working with the San Juan Life Commission Against Mining Pollution.

Based on information provided by the whistle-blower, who also revealed pollution by Barrick in Canada, Chile and Peru, the San Juan Mining Council confirmed the damages to local soil and water, and fined Barrick 80,000 dollars, besides ordering it to carry out an environmental clean-up operation.

The Andean resort town of Esquel, population 30,000, in Chubut launched a campaign to block a mining project by the U.S.-Canadian mining company Meridian Gold.

In March, local residents collected 7,000 signatures to hold a referendum on the Meridian Gold mine, which promised to create 300 jobs. Although provincial and municipal authorities and local businesses were in favour of the mine, 81 percent of the population voted No, and the project has been brought to a halt.

The CAEM businessman interviewed by IPS said local residents in Esquel were frightened by the risks of cyanide poisoning and sound pollution (a result of the explosions) just outside a mountain resort town that depends entirely on winter and summer tourism.