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.

Environmental groups and indigenous Diaguita communities of the Huasco Valley in northern Chile celebrated a court decision Wednesday that will bring to a complete halt work on the Pascua Lama gold, silver and copper mine belonging to Canada’s Barrick gold.

“The mine was approved on the condition that the glaciers would not be touched. But the General Water Department (DGA) has repeatedly confirmed that Pascua Lama is destroying glaciers,” said Lucio Cuenca, director of the Latin American Observatory of Environmental Conflicts (OLCA).

He told IPS that “illegal work on the mine has caused episodes of severe pollution in rivers in the area, and the environmental institutions have responded in a biased manner. So we believe it is a very good thing that the courts are putting things in order, even if this is a temporary measure.”

Located at 4,000 metres altitude in the Andes mountains on the border between Chile and Argentina, Pascua Lama, a binational open-pit mine, is the world’s highest-altitude open-pit gold, silver and copper mine.

On the Chilean side, it is at the headwaters of the El Estrecho river, in the province of Huasco, Atacama region, some 700 km north of Santiago.

Barrick had originally planned to actually move three glaciers to get at the minerals beneath.

The unanimous verdict handed down by the appeals court in the city of Copiapó, the capital of Atacama region, was in response to legal action brought by Lorenzo Soto, the lawyer representing the local Diaguita communities of Huasco who are opposed to the mine because they say it will threaten their water supply and pollute the glaciers.

In the lawsuit, Soto cited environmental infractions that triggered sanctions from government bodies like the National Geology and Mining Service (SERNAGEOMIN), the National Evaluation System and the Superintendency of the Environment.

Soto said the irregularities committed by the Canadian company included “the destruction of glaciers Toro 1, Toro 2 and Esperanza, located in the environs of the mine, and the pollution of water resources” with heavy concentrations of arsenic, aluminium, copper and sulphate that threaten the El Estrecho river.

The company had already brought construction of the mine to a halt in November 2012 on orders from SERNAGEOMIN, which fined it for failing to comply with safety standards.

But Wednesday’s ruling completely suspended work on the mine.

However, a spokesperson for the company clarified that on the Argentine side of the border, work would continue.

“What this court measure does is confirm that the oversight and fines by the country’s institutions have been absolutely insufficient and biased, and have failed to take into account the gravity of the denunciations made by the community with respect to the infractions committed by Barrick in the operation of Pascua Lama,” Cuenca said.

Oriel Campillay, president of the Chiguinto Diaguita Indigenous Community, told IPS that the communities opposed to the mine were pleased with the shutdown of the project.

“We live in a beautiful valley where we grow avocados, grapes, lemons, apricots, peaches and pears, and the El Estrecho river is essential for us,” he said.

Speaking “in a personal capacity,” Campillay said he would not be opposed to the mine “if things were done properly.”

“We are asking for our communities to take part in the oversight of the project, but the company refused,” he said.

Barrick has not yet stated whether it will appeal to the Supreme Court or address the environmental irregularities it is accused of.

Barrick Gold’s vice president of corporate affairs for South America, Rodrigo Jiménez, said the company had not yet been officially notified of the decision by the court, and was thus unable to comment on its content or implications.

The government of right-wing President Sebastián Piñera surprised activists by applauding the court ruling.

Interior Minister Andrés Chadwick said the verdict “comes as no surprise to us, and we believe it is a good thing that it was possible to bring work on the mine to a halt, through a judicial organism, while Pascua Lama effectively lives up to the measures that had already been ordered by the Superintendency of the Environment.”

Meanwhile, Environment Minister María Ignacia Benítez said “this ruling is in line with what the government has been doing…As an environmental institution, we are not willing to accept projects that do not live up to environmental resolutions and commitments.”

Cuenca said the government’s statements were “brazen” because “what the court is doing is precisely rebuking the government and the state services for not fulfilling their role.”

“I think it is amazingly cheeky for a minister to come out and say that she thinks it’s a good thing, after they have failed to do their work and to exercise proper oversight. What’s more, what should really happen is for Pascua Lama’s environmental permit to be revoked,” the activist said.

He also stressed the role of the local communities in the struggle against projects that threaten their sustainability.

“The role of citizens, organisations, and in the case of Pascua Lama, the community of Huasco Valley has to be strengthened,” Cuenca said.

“This conflict has dragged on for at least 10 years, and what is happening is the result of the protests and mobilisation by the community,” he added.

In addition, he said that there are now “more sensitive courts that are better-informed about the country’s environmental institutions and regulations and their consequences. Today there is a much more progressive interpretation of the legislation compared to what we had two years ago, and that has been demonstrated in a string of rulings.”

Cuenca said that was due to “a combination of new conditions in the country, but for us, the essential thing is the role that the community has played.”

Campillay, meanwhile, said the Diaguita communities were organising to demand the implementation of International Labour Organisation (ILO) Convention 169, which requires that indigenous and tribal peoples are consulted on issues that affect them.

A favourable verdict was already obtained in the El Morro gold and silver mine in the Atacama Desert in northern Chile. And now, he said, native communities would continue to challenge Pascua Lama and any projects that they feel threaten their integrity.

“We are surrounded by mining companies, and we want to be given the opportunity to decide what is done on our land, rather than having it be decided between four walls,” he said.