MAC: Mines and Communities

HudBay gets out of Guatemala - but won't escape

Published by MAC on 2011-08-23
Source: Statement, Canadian Press, FM2M

Human rights abuse charges dog Canadian company

Canada's HudBay Minerals is about to sell all its interests in Guatemala's Fenix project.

Almost certainly one of the prompts for its withdrawal is the murder of a man, and the alleged gang-rapes of eleven women at the project in 2007.

See:  Victims of gang-rape in Guatemala sue Canadian mining company and HudBay loses out to Mayan community in Guatemala

However, according to the victims' lawyer:"HudBay and HMI Nickel cannot avoid liability for their past actions by selling the project"  and their court action against the company is to continue.

Editorial note: Expected to acquire the Fenix operations is a little-known, but powerful, band of mainly Russian investors, known as the Solway Investment Group, registered in Cyprus.

Solway is no stranger to Latin America. In 2007 it opened an office in Lima, Peru, to advance its mineral exploration in the country and throughout the sub-continent.

In May this year, Solway invested around US$ 500,000 in Coro Mining Corp, whose key asset is the unpopular San Jorge Copper project in Mendoza, Argentina. See: Canadians aim to float mining anew in Mendoza, Argentina and Massive anti-mining march takes over Mendoza legislature, Argentina

Solway also has major mining and mineral processing operations in Indonesia, West Papua, Laos, Ukraine, Macedonia and South Africa, as well as in Russia itself. See:


Lawsuits in Ontario against HudBay and HMI Nickel regarding murder and gang-rapes will continue

Klippensteins Press Release

9 August 2011

Toronto, Canada: Late on Friday August 5, 2011, HudBay Minerals announced that it had agreed to sell 100% of its interest in its troubled Fenix Mining Project located in Guatemala to the Solway Group, a private Russian company incorporated in Cyprus.

The sale of HudBay's interest in the Fenix Project for a reported $170 million is considerably less than the $460 million that HudBay paid for the project a mere three years ago.

"We believe this sale was prompted in part by the severe human rights issues at HudBay's Fenix Project that dogged the company at every turn. The murder of Adolfo Ich, and the gang-rapes of Rosa Elbira and the 10 other women at Lote Ocho committed by mine security personnel are albatrosses that weigh heavily on the neck of HudBay," said Murray Klippenstein, lawyer for the widow of Adolfo Ich and the 11 survivors of rape from Lote Ocho.

"It appears that HudBay Minerals took a huge financial hit as a result of speculating on a project in Guatemala that was beset by severe human rights abuse and risks of further abuse. We hope this serves as a lesson to Canadian companies that ignoring concerns over risks of severe human rights abuse can be incredibly expensive."

Despite the sale, the lawsuits against HudBay Minerals and its subsidiary HMI Nickel for the murder of Adolfo Ich and the gang-rapes at Lote Ocho will continue.

"HudBay and HMI Nickel cannot avoid liability for their past actions by selling the project," said Mr. Klippenstein.

"Our clients will continue to vigorously pursue their claims against HudBay and HMI in Ontario courts to ensure these Canadian companies are held accountable for their past wrongful acts."

For more information on the lawsuits, see

To see Rosa Elbira's testimony as survivor of the rapes at Lote Ocho:

Barristers & Solicitors
160 John Street, Suite 300
Toronto, Ontario M5V 2E5

Murray Klippenstein
Cory Wanless
Tel: 1-416-598-0288
Fax: 1-416-598-9520

HudBay sells Guatemala mine to stick to mining techniques it knows well

By Mary Gazze

The Canadian Press 

8 August 2011

TORONTO - HudBay Minerals Inc. (TSX:HBM) sold a promising nickel mine in Guatemala to focus on Canadian and Peruvian projects the company can develop using mining techniques it has been using for more than eight decades.

Analysts said Monday the sale was a long time coming because the Guatemala project had a different geology than HudBay's other mines and prospects.'

"We have been expecting a sale of the project for some time - admittedly," said TD Newcrest analyst Greg Barnes .

"We are somewhat pleasantly surprised that management was able to secure a price for the project that is very close to the value for the asset."

Late Friday, Toronto-based HudBay announced the sale of its 98 per cent stake in the Fenix project to global miner Solway Group for US$170 million.

HudBay plans to take a $212.7-million non-cash charge on the Fenix sale when it reports its second quarter earnings Tuesday, which could lead to a big loss for the miner.

The Lalor and Constancia projects in Manitoba and Peru are nickel sulphides - which are generally mined underground - while Guatemala has so-called lateritic ores, which require open pit mines and chemical treatment of the ores.

HudBay spokesman John Vincic said HudBay is focused on sulphide deposits, and has been mining them in Manitoba for 85 years. The company has never mined a project like the one in Guatemala before.

"We decided to look for partners or sell the project and through the process it became clear that the value of Fenix was much lower than the current carrying value on our books and that's why we have to take the charge," Vincic said in an interview Monday.

"We had a buyer with an attractive offer on the table which we thought was very fair for our shareholders, and it's going to give us additional capital that we need right now to redeploy on these two large construction projects."

Desjardins Securities analyst John Hughes said the sale "is in line with their strategy to develop assets that are of a specific geological type, which Fenix was not."

The writedown was required on the miner's books because the Fenix project had a book value of about $346 million, Hughes said.

Privately held Solway is based in Cyprus and has major operations in Russia, the Balkans, Asia and South America.

HudBay says it will put the money towards its Lalor nickel-zinc-copper-gold project in Manitoba and its Constancia nickel and copper project in Peru.

HudBay has been refocusing its business on its more promising projects under a new management team that replaced former CEOs Allen Palmiere and Peter Jones. Jones was succeeded by Palmiere, who engineered the purchase of Fenix in a corporate takeover in June 2008.

Jones later returned to the company in 2009, after a failed takeover of Lundin Mining was rejected by many of HudBay's shareholders.

TD Newcrest's Barnes wrote in a research note that the Fenix project was a "thorn in HudBay's side" because it was bought by a former management team and didn't fit the company's current plan.

"Current CEO, David Garofalo made it clear early in his tenure that the project would not be pursued to development by HudBay and that the project was non-core," Barnes wrote.

Shares in HudBay Minerals (TSX:HBM) closed down four per cent, or 48 cents to $11.35 on the Toronto Stock Exchange in Monday trading.

Earlier this year, a group of 11 women from Guatemala filed a suit in Canada against HudBay, alleging gang rapes in 2007 at the Fenix project.

HudBay, which didn't own the mining operations when the alleged offences occurred, has said it would investigate allegations that security personnel, along with members of the police and military, attacked the women.

Vincic said the lawsuits will stay with HudBay but he would not comment further because the matter is before the courts.

However, the company has said the accusations in the lawsuit contradict available information and that it would defend itself "vigorously against them.''

HudBay will report its second quarter results after markets close on Tuesday.

Law firm hopes to keep suits against Hudbay alive

By Jennifer Brown


16 August 2011

TORONTO - A Toronto law firm is pushing for lawsuits against Canadian mining company HudBay Minerals regarding alleged human rights abuses to continue, despite the fact the company no longer owns the project where the alleged killing of one man and gang rape of 11 women occurred.

The claims stem from the death of Adolfo Ich in September 2009 and the alleged rapes of 11 women in January 2007 by mine security workers.

Ich, an indigenous community leader and an outspoken critic of Canadian mining activities in his community, was allegedly hacked and shot to death by security personnel employed at HudBay Minerals' Fenix mining project near the town of El Estor, Guatemala.

Ich's family brought a lawsuit in Canadian courts against HudBay Minerals Inc and HMI Nickel Inc, as well as their Guatemalan subsidiary, Compania Guatemalteca de Niquel.

It claimed that on Jan. 17, 2007, Rosa Elbria Ich Choc, Margarita Caal, and nine other women from the community of Lote Ocho were raped by mining company security personnel, police, and military during the forced removal of families from the community. The forced eviction was sought by Canadian mining company HMI Nickel Inc. (previously known as Skye Resources) in relation to the Fenix mining project.

The 11 women have also brought a lawsuit against HMI and HudBay.

However, on Aug. 5, HudBay announced it had sold the Fenix ferro-nickel mining project in Guatemala to the Solway Group, a private Russian company incorporated in Cyprus. The sale of the Fenix project for $170 million is considerably less than the $460 million that HudBay paid for the project three years ago.

Despite the sale, the lawsuits against HudBay and HMI will continue, say lawyers working on behalf of the claimants. "HudBay and HMI Nickel cannot avoid liability for their past actions by selling the project," said Murray Klippenstein in a statement.

"We believe this sale was prompted in part by the severe human rights issues at HudBay's Fenix project that dogged the company at every turn. The killing of Adolfo Ich and the gang rapes of Rosa Elbira and 10 others at Lote Ocho are albatrosses that weigh heavily on the neck of HudBay," said Klippenstein, who is acting for the widow of Adolfo Ich and the 11 rape victims in Lote Ocho.

HudBay denies it sold the Fenix project because of the human rights issues, insisting instead that it was no longer a fit for the company.

"We sold Fenix because it did not fit our strategy of focusing on VMS and porphyry," says John Vincic, vice president, investor relations and corporate communications with HudBay Minerals Inc.

Cory Wanless, a lawyer with Klippensteins in Toronto, told InHouse that despite HudBay's sale of the project, the firm is pushing forward with the lawsuits saying HudBay was ultimately responsible for the decisions made on the site.

"The allegations are that they directly participated in decisions about security at the mine. Our position is the lawsuits will continue on; this is based on past actions," he said.

There is also a dispute with HudBay about where the case should be heard - here in Canada or in Guatemala.

"We're headed to a jurisdiction motion as HudBay says it should be heard in Guatemala, not Canada," said Wanless. "We say because the decisions were made in Canada it firmly belongs in Canadian courts. And because of the severe and continuing problems with Guatemala's justice system there is no hope of a fair and impartial hearing there.

HudBay said it intends to "vigorously defend the lawsuits until they are disposed of by a court of law." (Writing by Jennifer Brown for Canadian Lawyer InHouse, a unit of Thomson Reuters)

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