RIGHTS: Gold Industry Consolidation Seen as Threat to Locals

By Marty Logan Reprint | | Print |

Marty Logan

MONTREAL, Canada, Jan 15 2002 (IPS) - Consolidation among the world’s largest gold companies will further diminish the influence of local communities, say mining industry watchdogs.

“I can give you a very concrete example of how (consolidation) essentially stalled progress or perhaps made things worse,” says Stephen D’Esposito, president of the Mineral Policy Centre, a Washington-based non-governmental organisation (NGO).

D’Esposito says Canadian gold company Placer Dome approached NGOs to help it develop sustainable mining policies. After working together in a process dubbed ‘Denver Group’ for three years, the NGOs were optimistic the company would adopt some of their recommendations. They had urged that the company not dump waste into rivers, refrain from mining in protected areas, and engage with international and local NGOs when problems arose at a site.

However, Placer Dome then hired a new chief executive and D’Esposito says he is still waiting for a response to questions he raised at the last meeting, in March 2000. “We were making progress, a number of things were on the verge of becoming company commitments, and then nothing happens in this new kind of financial merger climate,” he says, referring to rumours that the Canadian company is a takeover target.

The company sees it differently. “We’re simply just re-evaluating all of the engagements. There are a number of initiatives that are going on in the industry right now,” says Keith Ferguson, Placer Dome’s vice-president of sustainability. “Some of the issues that were discussed within the Denver Group are progressing. It’s just not necessarily (happening) within that group.”

“I think it’s got more to do with how the overall industry is looking at sustainability and all the different issues and ways of spending our time than (with) a question of consolidation,” Ferguson adds.

Industry initiatives include the Global Mining Initiative, formed by Placer Dome and eight other firms in 1998 to address the issue of sustainable development and to prepare the industry for the World Summit on Sustainable Development in South Africa in September.

Ferguson says such group projects don’t prevent individual companies from dealing with community issues. “If they’re of a more generic nature, then it might be better for several companies or an association to look at it with the NGOs. If it’s a specific community, it’s probably better off to have a particular company dealing with an NGO.”

While Placer Dome – one of the world’s six largest gold mining companies – is only rumoured to be a takeover target, two industry giants are grappling for a firm hold on other assets. U.S.-based Newmont will take the top slot if it outbids South Africa’s AngloGold for Australia’s largest gold producer, Normandy Mining.

For NGOs, the prospects are worrying.

“Indigenous communities around the world already affected by cyanide use, mercury spills, toxic mine waste, and sacred site desecration associated with Newmont’s and Normandy’s operations will face increased threats as they combine to form the world’s biggest and largest gold mining company,” says a statement issued by U.S.-based Project Underground, the Mineral Policy Institute in Australia, and Indonesia’s Mining Advocacy Network.

Among Newmont’s holdings is the majority share in Latin America’s largest gold mine, Yanacocha in Peru. The local community there has accused mine operators of contaminating the environment and its owners of enriching themselves on the backs of local labour. In June 2000, a truck spilled about 150 kilograms of mercury while en route to the site but the company didn’t report the accident until the next day; 300 people were treated for health problems.

Normandy, which runs 19 gold mines on five continents, has been fighting for 10 years to resume work at a site in Turkey. Local opponents say the mine is too risky because it uses a process called cyanide leaching to extract the gold. Last year, the Supreme Court backed the locals but mine operator Eurogold, a Normandy subsidiary, continues to press the Turkish government for the go-ahead.

Other companies involved in the recent consolidation wave include Canada’s Barrick, which is working with AngloGold. Barrick recently spent 2.3 billion dollars to buy U.S.-based Homestake.

A union researcher says the companies’ risk-spreading strategies mimic the insurance industry and would enable them to abandon an operation if it becomes a liability. “In effect, the local managers are as powerless as the community in determining the fate of the operation,” says Hugh Mckenzie, head of research for the Canadian office of the United Steelworkers of America.

D’Esposito says the relationship between the companies and NGOs also changes. “The bigger the companies become, the more they’re managing a whole series of assets and that does make it harder to penetrate and influence them.

“The question for the advocacy community then becomes how do we respond, how do we change our strategies. Because to influence a company in Papua New Guinea may now require advocacy organisations based in Washington, London and Sydney.”