MAC: Mines and Communities

Chile's mining battle fronts

Published by MAC on 2012-04-02
Source: The Santiago Times, Reuters

Canadian mining industry brings social discord to Chile's Patagonia region

Members of Chile's Copper Workers Confederation (CTC) and the Calama Civic Assembly claim that profits are leaving their region without providing any economic benefits to those who live and work there.

Previous on MAC: Chile's 'Mining Capital' Calls For Government Support

A new report has exposed the Canadian mining industry's responsibility for social discord and environmentally-destructive policies in Chile's Patagonia region.

See full report at: Chilean Patagonia in the Balance: Dams, Mines and the Canadian Connection

Meanwhile, operations at Mandalay Resources' Cerro Bayo mine have resumed after protestors removed blockades, allowing supplies in and out of the mine.

Background note:

The Cerro Bayo silver-gold mine is located near the Chilean border with Argentina, approximately 130 km south of Coyhaique and 12 km west of the town of Chile Chico.

The mine was put on care and maintenance from October 2008 to September 2010 by its former owner, U.S.-based Coeur d'Alene Mines Corporation.

Australian company, Mandalay Resources Corp., purchased 100% of Compañia Minera Cerro Bayo in August 2010.

Mandalay restarted mining in September 2010, recommenced processing in January 2011 and seems to be planning an expansion of the mine.

The mine and processing plant are located near the Lake General Carrera-Buenos Aires. The lake has a surface of 1,850 km² of which 970 km² are in the Chilean Aisén Region, and 880 km² in the Argentine Santa Cruz Province, making it the biggest lake in Chile and the fourth largest in Argentina.

Coeur also owns the Martha mine in Santa Cruz province. The company used to truck hi grade ore from Martha some 430km, across the international border, to process it at Cerro Bayo plant.


Northern Chilean mining city joins the social movement protests

By Olivia Crellin

The Santiago Times

20 March 2012

Citizens in the northern Chilean mining city of Calama protested on Tuesday against what they called a misappropriation of funds.

Members of the Copper Workers Confederation (CTC) and the Calama Civic Assembly say their mining region profits are leaving the region without providing any economic benefits to those who live and work there.

"We are regions that have historically delivered wealth to the country, and yet today we feel abandoned," José Mardones, a social leader in Calama, said.

The assembly aims to get implemented the Northern Development Fund (Fondenor), an initiative that would reserve 5 percent of the profits from copper-producing areas to be used in the administration of the regional government in those areas.

Currently, citizens in the copper mining regions see little of the profits from the mining sector, the industry responsible for much of Chile's buoyant economic situation.

This situation has gone on for years. In 1976, a law was repealed that had previously ensured profits made from mining remained in the area that generated them.

Calama Mayor Esteban Velasquez told Radio Cooperativa that this march is only the beginning of a long struggle for improvements to the mining city.

"We will leave [this march] with more enthusiasm and courage and it is for this reason that the first step is important," Velasquez said. "But we will be putting all of our patience and technical capacity into monitoring how the situation will progress into the month of April."

The assembly, which is also backed by a group of 15 mayors from the Association of Mining Communities, also delivered a list of demands to La Moneda.

Other requests included aims to modify the water code, to preserve water resources in the north of the country, to renationalize mining, and to initiate a process of decentralization in Chile, working with authorities and local leaders.

"We want a serious and forceful policy," Mardones said. "The mining industry pollutes our community and contaminates the water. We need clear and specific policies to combat these issues."

The march also received more attention due to high profile appearance of student leader Camila Vallejo.

The miners' movement in Calama, the latest social movement to spring up in Chile after the issues that began almost two months ago in Aysén, wants to merge their interests with those of the students. That is why CTC leader Cristián Cuevas asked Vallejo to attend the march.

"We invited Camila because Chilean students need to know the reality that exists in the areas that are up in protest at the moment," Cuevas told The Clinic.

"The idea is to cross social movements with the students' complaints," he said. "This is part of the social convergence, which must exist, because if we do not form a relationship with students, workers, and other social movements, truthfully we cannot move toward social change."

Meanwhile, Public Works Minister Laurence Golborne called for patience from Calama regarding the Fondenor project, which aims to deliver funds to mining districts.

"It's been very clear that we have been working towards this for several months," Golborne said. "What is important is that we understand that we need time to solve these problems, nothing is solved in a minute."

The assembly announced it will not stop protesting until the promise of the Fondenor is confirmed, but they pledged to continue marching peacefully.

Unveiling Canada's Role in Chile's Environmental and Political Conflicts

By Cyril Mychalejko

21 March 2012

A new report reveals the Canadian mining industrial complex's responsibility for social discord and environmentally-destructive policies in Chile's Patagonia region.

"Far away, on the southern cone of South America in Chilean Patagonia, exists one of the most beautiful, still-virgin territories on Earth. There, an intense struggle is taking place that most Canadians have never heard of, but that intimately involves the Canadian mining industry, the Canadian government, and millions of Canadian pensioners and investors," notes Council of Canadians chairperson Maude Barlow in the report's introduction.

The report, Chilean Patagonia in the Balance: Dams, Mines and the Canadian Connection, asserts that Canada's mining industry, which leads the world in mining investment with more than half of its assets in Latin America, accounts for 33 percent of electricity demand in Chile while advantageously exercising enormous influence in setting government policy there.

The report focuses on the Aysén region, which has seen protests and social discord since the announcement that the hyrdroelectric "development" plan would move forward last May. The project will potentially affect 12 of Aysén's major rivers and involve five dams on the Baker and Pascua Rivers.

The project, which also includes the construction of power lines from the Aysén region to Santiago, will cause the "deforestation of 23,000 hectares, and six national parks" and damage to "11 national reserves," reported The Guardian. The environmental nonprofit International Rivers has also indicated that the project would forcibly displace many families, would flood many of the area's best agricultural and ranching lands, and would endanger rare animal species.

The report states: "Transelec, the only transmission company currently operating in Chile that is even remotely capable of building HidroAysén's link to energy markets, is owned by a Canadian consortium led by Brookfield Asset Management, with partnership from the Canada Pension Plan Investment Board and another public sector investor, the British Columbia Investment Management Corporation. Canadian capital is instrumental in making HidroAysén and projects like it both attractive and possible."

As many as 50,000 protesters marched in opposition to the project in May 2011, while the national daily La Tercera reported that 74 percent of Chileans oppose the project.

The HidroAysén dam project's Environmental Impact Assessment (EIA), which was approved in May 9, 2011, has come under fire. According to Chile's Christian Democrat party Deputy Sergio Ojeda, chair of a congressional committee charged with investigating the EIA, it was riddled with flaws.

"It appears that the HidroAysén project should not have been approved," Ojeda told El Mercurio. "It is evident that the Environmental Impact Assessment suffers from a number of flaws that allow megaprojects like HidroAysén to not be evaluated with much rigor."

Social movements in the region and nationally across Chile have remobilized with demonstrations and roadblocks last month to not only protest the project, but to demand reforms to address other social and infrastructure problems.

"We have initiated a process of permanent and long-term demonstrations to trigger a change in the regional development that until now has focused essentially on the benefit of interests that do not belong to those who live in Aysén," wrote leaders of various constituencies that make up the Social Movement for the Aysén Region in a letter to the government, as the Santiago Times reported.

Protests were met with violence and repression, prompting Amnesty International to call for an investigation into reports of "an excessive use of [police] force, the unwarranted use of tear gas, the use of metal pellets and possible arbitrary arrests," according to the BBC. Meanwhile, Chilean President Sebastián Piñera recently threatened to apply the country's draconian anti-terrorism law toward protesters.

"By probing the links between Patagonian hydropower, electricity transmission, and the expanding mining sector, we hope to make Canadians stop and think about the implications of our shared investments abroad, and consider what obligations we might have to ensure that those investments are socially and ecologically sustainable," states the Council of Canadians' report.

Socially and ecologically sustainable business practices is something Canada's mining industry has had trouble upholding.

In July 2011 Greenpeace claimed that Barrick Gold's operations in northern Chile along the border with Argentina are responsible for the significant shrinking of three small glaciers, which farmers in the region rely on. Barrick initially wanted to remove the glaciers, but widespread opposition due to obvious environmental concerns stopped the plan. However, the Center for Human Rights and the Environment, an NGO from Argentina, reported that local water supplies have been contaminated as a result of Barrick's local projects.

"The media in Canada is fairly silent about protests happening in Chile, unless it ties into some other big news story. I've talked to some reporters that have admitted that they get so many stories about mining conflict that they barely even think that it qualifies as news anymore. ... It's a great example of how cynicism promotes systemic injustice," said Sakura Saunders, editor of, a website that provides research and organizing information around mining issues. The site focuses on Canadian mining giant Barrick Gold.

The Council of Canadians' report also notes that in 2010 "five assassinations resulted from conflicts around Canadian mining developments in El Salvador, Guatemala and Mexico." Part of the problem, the report states, is the Canadian government's "unwillingness to hold the Canadian extractive industry to basic environmental and human rights standards in its international operations."

A modest piece of legislation that would have empowered the federal government to investigate claims of human rights and environmental abuses and punish companies found guilty by withholding funding was rejected by Canadian legislators-even after receiving testimony that women were gang raped and tortured at a Canadian mine site in Papua New Guinea.

"We have to build a culture of resistance and awareness to these mining abuses. We have to reject these abuses in the strongest terms and demand action. We should investigate where our pensions and mutual funds are invested, and try to divest from mining companies such as Barrick and Goldcorp," added Saunders. "We have to share the many resources out there (like videos, articles, and books) with our neighbors and friends, and not be fooled by companies' promises for Corporate Social Responsibility."

Chile's environmental groups persist in protecting Patagonia

By Jade Hobman

The Santiago Times

14 March 2012

HidroAysén debate back in the spotlight after groups protest on World Day Against Dams.

Environmental group Patagonia Sin Represas (PSR) protested outside HidroAysén's corporate offices in Santiago on Wednesday declaring that "Aysén was not for sale."

They oppose the mega hydroelectric project in the Aysén region planned by HidroAysén.

Ecosistemas President Juan Pablo Orrego said Chile is confronting a huge social-environmental conflict.

"The government is authorizing construction of dams opposed by 74 percent of the population," Orrego said in a statement. "These projects have the potential to start the industrialisation and degradation of this invaluable region."

HidroAysén wants to construct five dams on the Baker and Pascua rivers, as well as a 1,200 miles electricity transmission line connecting to Santiago.

Investment in the project was originally estimated at US$3.2 billion, but is now projected at US$10 billion, including the power line installation. The project has a capacity to generate 18,430 gigawatt hours in six months. That power could be injected into the Interconnecting Central System (SIC) that extends from Region X (in the south) to Region III (in the north). where 90 percent of Chileans live.

But PSR said the dam construction would destroy Patagonia's biodiversity and further concentrate Chile's energy production in the hands of the two companies that own HydroAysén: Endesa (owned by Italy's Enel) and Colbún, a Chilean company.

"We believe that the earth can't continue being violated," PSR said on its website. "It must be defended. We oppose HidroAysén and believe there are alternative energies compatible with conservation of nature. We don't have an alternative planet."

HidroAysèn declined to comment on the protests.

In January President Sebastián Piñera promised these energy initiatives would not "deplete the riches of Patagonia." But many local communities are dissatisfied with the lack of transparency surrounding the energy deals and their potential damage to the area. They are concerned the power lines will destroy the region's beauty and jeopardize the tourism industry, which is a big part of the local economy.

"People are waking up and aren't embarrassed or afraid of what this multi-million dollar company can do to us," Claudio Escobar, a PSR volunteer, told the crowd.

Patricio Rodrigo, the secretary executive of Patagonia Sin Represas, said the go ahead for future HydroAysén projects was not yet resolved in the Supreme Court and questioned Chile's legislation practices.

"Legislation in Chile is not the greatest. We don't have much legislation on the handling of electricity so there needs to be a review to modernize it," Rodrigo told The Santiago Times.

PSR is part of the Aysén Social Movement (MSPRA), which has spoken out and brought national attention to 11 important issues facing the region, includng high fuel costs and health issues. They have demonstrated and put up road blocks in the region since mid-February.

"The Aysén people are the greatest example for the rest of the country to follow, and they know that Patagonia is not for sale," Escobar told the crowd.

Mandalay Resources resume Chile mine ops


9 March 2012

Operations at Mandalay Resources' Cerro Bayo project in Chile resumed after protestors removed blockades, allowing supplies in and out of the mine, and the Canadian miner said the disruption will not affect its annual production or outlook.

The protestors have begun negotiations with the local government, Mandalay said in a statement, adding that the fortnight-long disruption had minimal impact on production.

Last month, protestors in the Aysen Province of Chile closed the port and several roads reacting against the government's move to reduce fuel subsidies.

The company said it is going ahead with its ramp up plans for the project and working to return to normal production levels.

Shares of the company, which also has assets in Australia, closed at 85 Canadian cents on Thursday on the Toronto Stock Exchange.

Origin Energy buys Chile power stake

The Australian


4 April 2012

ORIGIN Energy has acquired a majority interest in Chilean hydroelectric power company Energia Austral from Xstrata Copper.

The energy producer and retailer yesterday said it had acquired a 51 per cent interest in Energia Austral, which was considering the development of a 1000-megawatt, grid-connected hydroelectric plant in the Aysen region of southern Chile.

Xstrata Copper has retained a 49 per cent stake in the company.

During the next three years and as consideration for the stake, Origin Energy will progressively spend $US75 million ($72.29m) on a feasibility study for the project.

If results are positive, Origin Energy will contribute an additional $US75m to the project to bring it to the stage where a final decision to proceed will be made, targeted for 2015-16.

"Xstrata Copper will be entitled to additional payments when the project is operational and only if certain revenue-threshold targets are met," Origin Energy said in a statement.

Origin Energy managing director Grant King said the acquisition complemented the company's 40 per cent interest in Chile's geothermal exploration company, Energia Andina. Chile was a market with attractive growth options, Mr King said.

Energía Austral first stage unlikely before 2020 - Xstrata - Chile

James Fowler

Business News Americas

3 April 2012 

Power holding company Energía Austral does not expect to begin generation operations from its controversial 640MW Cuervo dam project set for southern Chile's region XI until 2020 at the earliest, a spokesperson for parent firm Xstrata (LSE: XTA) told BNamericas. 

In a statement on Tuesday the Swiss mining giant announced that it did not expect to make an investment decision on the US$750mn project until 2015 at the earliest. 

Spokespeople for the Energía Austral project have previously told BNamericas that Cuervo could be online as early as 2018. 

Energía Austral is currently facing a legal challenge from opponents to Cuervo, who are protesting about the possible environmental and economic impacts of the project on local communities and businesses. The action, originally filed in January, raised particular concerns on whether due attention had been paid to the possible consequences of seismic activity or an eruption from nearby volcanoes. 

A vote by the environmental evaluation service (SEA) on Cuervo which had been scheduled for January was subsequently suspended after the initial action filed against the company.

Cuervo is part of the larger 1.1GW Energía Austral project which includes two more hydro plants, Río Blanco and Lago Condor, as well as an 800km transmission line connecting the project with the central SIC grid.

Figures of US$750mn and US$2.5bn have been previously given for Cuervo and the entire Energía Austral project respectively, however, the Xstrata spokesperson told BNamericas that these figures remain under evaluation.

On Tuesday Australian firm Origin Energy announced that it had acquired a 51% interest in the Energía Austral project, investing up to US$150mn in feasibility studies and preparations for the final investment decision.

Once approved, Origin will then also take responsibility for the majority of the development costs going forward, the Xstrata spokesperson told BNamericas.

"Once Origin Energy has invested US$150mn of development costs to take Energía Austral's projects to a final investment decision, all further costs would be funded on a 51% (Origin)/49% (Xstrata Copper) basis, including construction should a decision to proceed be approved," the spokesperson said.

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