Rosa Tanguila, a Quechua indigenous woman, cleaning up the pollution caused by Texaco in a stream in her community, Rumipamba, in Ecuador’s Amazon jungle region. Credit: Gonzalo Ortiz/IPS

By Stephen Leahy
UXBRIDGE, Canada , May 18 2014 (IPS)

Conflicts with local communities over mining, oil and gas development are costing companies billions of dollars a year. One corporation alone reported a six billion dollar cost over a two-year period according to the first-ever peer-reviewed study on the cost of conflicts in the extractive sector.

The Pascua Lama gold mining project in Chile has cost Canada’s Barrick Gold 5.4 billion dollars following 10 years of protests and irregularities. No gold has ever been mined and the project has been suspended on court order.

And in Peru, the two billion dollar Conga copper mining project was suspended in 2011 after protests broke out over the projected destruction of four high mountain lakes. The U.S.-based Newmont Mining Co, which also operates the nearby Yanacocha mine, has now built four reservoirs which, according to its plan, are to be used instead of the lakes.

“Communities are not powerless. Our study shows they can organise and mobilise, which results in substantial costs to companies,” said co-author Daniel Franks of Australia’s University of Queensland, who is also deputy director of the Centre for Social Responsibility in Mining.

“Unfortunately conflicts can also result in bloodshed and loss of life,” Franks told Tierramérica.

The study is based on 45 in-depth, confidential interviews with high-level officials in the extractive (energy and mining) industries with operations around the world.

“Conflict translates environmental and social risk into business costs” was published May 12 in the Proceedings of the National Academy of Sciences (PNAS). A special report “Costs of Company-Community Conflict in the Extractive Sector” based on the study is also available.

“We wanted to document the costs of bad relationships with communities. Companies aren’t fully aware and only some investors know the extent of the risk,” Franks said.

“If companies are interested in securing their profits then they need to have high environmental and social standards and collaborate with communities,” Franks said in an interview.

Investing in building relationships with communities is far less costly than conflict. Local people are not generally opposed to development. What they oppose is having little say or control over how development proceeds, he added.

“We want development that benefits indigenous people and doesn’t just benefit someone’s brother-in-law,” said Alberto Pizango, president of the  Interethnic Association for the Development of the Peruvian Rainforest (AIDESEP), an indigenous rights organisation in Peru representing 1,350 Amazon jungle communities.

Peruvian indigenous leader Alberto Pizango, who is on trial in connection with the 2009 massacre in Bagua, has at the same time been asked by the Environment Ministry to help plan the next climate summit. Credit: Coimbra Sirica/BurnessGlobal

“Indigenous people have something to say about harmonious development with nature. We don’t want development that destroys our beloved Amazon,” Pizango told Tierrámerica from Lima.

Pizango has been actively resisting the government of Peru’s selling of petroleum concessions to foreign companies on lands legally titled to indigenous people.

The struggle turned violent outside the northern jungle town of Bagua on Jun. 5, 2009, when armed riot police moved to evict peaceful protesters blocking a road. In the clash 24 police officers and 10 civilians were killed.

Pizango and 52 other indigenous leaders were charged with inciting violence and 18 other crimes. They went on trial May 14 in Bagua.

The indigenous people were protesting 10 legislative decrees they considered unconstitutional, which were put in place by the government to foment private investment in native territories.

“We had no choice and thought our protests were fair and that we were right. But it was too high a price. We don’t want to see that again. We want to move from the ‘big protest’ to the ‘big proposal,” said Pizango, who faces a life sentence if he is found guilty.

The study published in PNAS shows that the violence in Bagua could have been avoided if companies and the government acknowledged indigenous rights and worked with local communities.

“It is with great sadness I say this has yet to happen in Peru,” said Pizango, who was not even in Bagua when the violent clash occurred.

Meanwhile, Peru’s Environment Ministry has asked Pizango and AIDESEP to assist in the planning of the big U.N. climate conference to be held in Lima at the end of the year. The indigenous leader hopes the event will show the world that native people can protect the forest and the climate.

Repairing relationships between communities and companies and governments is difficult, said Rachel Davis, a Fellow at the Corporate Social Responsibility Initiative at Harvard University.

“It is much harder for a company to repair its relationship with a local community after it has broken down; relationships cannot be ‘retro-fitted’,” said Davis, a co-author of the study.

Franks compares this to a divorce, pointing out that only rarely do partners remarry.

Leading mining corporations have apparently begun to understand this, and are implementing the U.N. Guiding Principles on Business and Human Rights and adopting the International Council on Mining and Metals Sustainable Development Framework, Davis said in a statement.

But this is not the case in the oil and gas sector. “Their culture is very different. They’re not used to dealing with communities,” said Franks.

The study shows that environmental and water issues are the biggest triggers of conflicts. Activities like hydraulic fracking for unconventional gas and oil are on the rise and are affecting water. Big conflicts are coming, he predicts.

“It’s a good report but doesn’t address the broader economic and political pressure to push projects through quickly,” said Jamie Kneen of MiningWatch Canada.

Shareholders want big returns on their investments and governments want their royalties sooner rather than later. All of this makes corporations less willing to compromise or to take the time to find alternatives that might be acceptable to local people,” Kneen told Tierrámerica.

“Companies know there will be problems with local communities. Companies often gamble that any conflict will not get too high a profile and try to hide this risk from investors,” he added.

Not all conflicts are resolvable, Kneen said. “Some communities will never accept any risk of contamination to their water.”

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Bird covered with oil in the Gulf of Mexico. Credit: Susan Keith/IPS

By Emilio Godoy
MEXICO CITY, Dec 31 2013 (IPS)

The Terra 123 oil and gas well in the southeastern Mexican state of Tabasco was in flames since late October, just 1.5 km from a community of 1,500 Oxiacaque indigenous villagers, who were never evacuated.

The gas leak, which Pemex only managed to get under control on Dec. 21, caused irreversible damage, said Hugo Ireta, an activist with the Santo Tomás Ecological Association, dedicated to working with local populations in Tabasco that have suffered environmental, health and economic impacts of the state-run oil company’s operations.

The reform of articles 25, 27 and 28 of the constitution, approved by Congress in December, paved the way for private national and foreign investment in the oil industry.

The government will now be able to grant private companies permits for prospecting and drilling – a mechanism used in several countries of Latin America, such as Argentina, Ecuador and Peru, where conflicts with local communities are frequent.

“If it has been difficult with Pemex, with the private companies it’s going to be sheer anarchy; the companies are going to be in paradise. Nigeria has serious problems, and the same thing is going to happen to us,” Ireta told IPS, alluding to the armed groups that siphon oil from pipelines to sell on the black market in that West African country.

The Association and local populations affected in Tabasco will file legal charges against Pemex for damage to property in 2014.

An analysis of samples taken in May, August and September for the future lawsuit found lead, cadmium and aluminium in the water at the Chilapa drinking water plant, which operates in the Tabasco municipality of Centla and serves 21 communities.

Residents of the villages of Cunduacán and Huimanguillo brought a collective lawsuit against Pemex in June.

There is oil activity in 13 of the 17 Tabasco municipalities, where daily output amounts to 500,000 barrels per day.

The number of oil spills has been on the rise since 2008. Between 2000 and 2012 more than 26,000 barrels of oil were spilled in Veracruz, and more than 28,000 in Tabasco, according to the government’s National Hydrocarbons Commission.
Hidalgo in the east and Puebla in the southeast, as well as the roads leading to Mexico City, are also vulnerable to damage caused by the oil industry.

The industry releases into the environment heavy metals, ozone, sulfur dioxide, nitrogen oxide, volatile organic compounds, hydrogen, hydrogen sulfide, salts, ammonium, cadmium and acids.

“The communities have fought for reparations and Pemex says there has been no damage, even though the impact has been documented,” Ireta said. “The environmental problems generate social problems, and the authorities aren’t responding to society’s demand for a healthy environment.”

Now that Mexico has opened up its oil industry to private foreign capital, there is a risk that these kinds of problems will mushroom, while pressure on water, large amounts of which are needed to extract shale gas, will mount.

“The government does not have the technical or human capacity to stand up to transnational corporations,” said Waldo Carrillo, a veterinarian who raises livestock and hunts white-tail deer on his ranch in Piedras Negras, in the northern state of Coahuila. “The populace has no idea about what shale gas is or the impacts of extracting it.”

In that area lies the Cuenca de Burgos, a gas deposit that also extends to the states of Nuevo León and Tamaulipas, and which includes shale gas.

“What we want is to inform society from another perspective. We want to warn people of the risks,” said Carrillo, one of the founders of the environmental organisation Amigos del Río San Rodrigo, which is fighting to preserve the ecosystem of the San Rodrigo river.

“The government talks about jobs, investment and growth, but it isn’t seeing things from that other side. It basically has an optimistic discourse,” he said.

The state-run Mexican Petroleum Institute acknowledges that the public has a negative image of shale gas, which it attributes to “limited or poorly handled information.”

Since 2011, PEMEX has drilled at least six wells for shale gas in the northern states of Nuevo León and Coahuila. And it is preparing for further exploration in the southeastern state of Veracruz. It also plans to drill 20 wells by 2016, with an investment of over two billion dollars. Foreign oil companies have their eyes on the new wells.

Enormous quantities of water and a broad range of chemicals are required in the hydraulic fracturing or fracking process used to extract shale gas.

In Coahuila, water is not abundant. In 2010 the state suffered an intense drought. The groundwater recharge volume is 1.6 billion cubic metres per year, but groundwater consumption is 1.9 billion cubic metres per year, according to the state government.

In nine of the 28 aquifers in Coahuila extraction exceeds recharge, the National Water Commission reported.

“People need more information,” said Carrillo, whose organisation is preparing an intense awareness-raising campaign on shale gas and fracking for 2014.

Fed up with oil spills from facilities belonging to Mexico’s state oil company Pemex, residents of two communities in the southeastern state of Tabasco are taking the country’s largest company to court in a bid for compensation for damage to the environment and agriculture.

The people of Cunduacán and Huimanguillo, which have a combined population of 300,000, will present a class action lawsuit against Pemex in June.

Oil rigs and pumps. Credit: Bigstock

“There have been several harmful effects; we have carried out tests on soils, sediments and water and we are about to receive the results,” Marisa Jacott, the head of Fronteras Comunes (Common Borders), an environmental NGO, told IPS.

Fronteras Comunes and the Asociación Ecológica Santo Tomás (Santo Tomás Ecological Association) are providing legal advice to the local population, mainly small farmers and fisherfolk, who have incurred great losses due to oil spills and gas explosions.

Mexico’s 2011 Class Action Law allows individuals and the federal consumer protection agency to sue state and private companies. However, the law does not provide for reparations.

The oil industry has been active in Tabasco since the early 1950s, and expanded there from the 1970s onwards with the construction of petrochemical plants, pipeline networks and storage facilities, sparking an economic boom.

But the boom did not result in benefits for the local communities. Instead, the oil industry displaced traditional activities like banana farming and cattle ranching.

The oil industry is active in 13 of Tabasco’s 17 municipalities, producing 500,000 barrels per day (bpd) – of a national total of 2.5 million bpd – according to the Mexican Petroleum Institute (IMP).

“There is environmental pollution and crop destruction, and there are soils that have lost their fertility. This means that harvests are not as abundant as they were before,” Lorena Sánchez, head of the Tabasco Human Rights Committee (CODEHUTAB), an NGO that has received complaints from local people about these problems, told IPS.

“It has affected people’s diets and caused respiratory health problems as well as blood and skin diseases,” she said.

Since 2011, CODEHUTAB has brought four lawsuits to the federal environmental protection agency, PROFEPA, that have resulted in fines for Pemex, but not in reparations for victims in local communities.

The most recent case, this year, was related to seven gas flares burning in the municipality of Paraíso, where CODEHUTAB took blood samples from 50 children between the ages of seven and 15. Ten percent of the samples had chromosome alterations, linked by the epidemiologists to oil industry activity.

PROFEPA estimates there are an average of 20 crude spills a year in Tabasco. Between 2008 and 2012, the environment ministry recorded 102 sites contaminated by environmental emergencies in the country caused by Pemex, including three in Tabasco.

In addition to Tabasco, the eastern and southeastern states of Veracruz, Tamaulipas, Hidalgo and Puebla and the highways connecting them to Mexico City are regarded as vulnerable to oil industry activity.

The oil industry in this region produces pollution with heavy metals, ozone, sulphur dioxide, nitric oxide, volatile aromatic compounds like benzene, hydrogen sulphide, salts, ammonia, cadmium and acids, all of which are harmful to the environment and human health, the NGOs complain.

Manuel Pinkus-Rendón and Alicia Contreras, academic researchers at the Autonomous University of Yucatán, concluded in a study published last year that “the social and environmental fabric of Tabasco reflects a regional development potential considerably below that which existed over 60 years ago, as a result of environmental degradation.”

For their study “Impacto socioambiental de la industria petrolera en Tabasco: el caso de Chontalpa” (Social and environmental impact of the oil industry in Tabasco: The case of Chontalpa), the authors interviewed 200 residents of four towns in the municipality of Cárdenas, 65 percent of whom expressed negative views about oil industry activity, especially because of the pollution and destruction it causes.

“It is a case that has not been addressed. We want the judges to have the fewest possible reasons to reject it,” said Jacott, of Fronteras Comunes.

In April, the local residents presented a complaint to the National Commission on Human Rights. In 2004 they had filed a legal complaint against Pemex in the attorney general’s office, but it went nowhere.

The environmental organisations and local residents have spent two years building their case. The next step will be legal action over damage suffered in the adjacent state of Veracruz, another major oil-producing region.

“We want them to take the required preventive measures. All Pemex does is supposedly carry out remediation of the damage, but it does not invest in maintaining the pipelines and guarding the area,” CODEHUTAB’s Sánchez complained.

The organisations are asking for an assessment of the state of ecosystems in Tabasco, and the dissemination of Pemex’s policies and guidelines for preventing leaks, addressing environmental contingencies and cleaning up polluted sites.

They are also calling for the gradual replacement of fossil fuels with alternative energy sources, as well as regular measurements of the main atmospheric pollutants in affected areas.