MAC: Mines and Communities

Starm Raises The Alarm On Entry Of Foreign Partner Into Lepanto Mines

Published by MAC on 2005-03-02
Source: Save the Abra River Movement

STARM Raises The Alarm on Entry of Foreign Partner Into Lepanto Mines

People's Alert No. 3 - Published by the Save the Abra River Movement (STARM)

2 March 2005

Last January 2005, most of the major dailies reported in their Business Pages about two developments with regards to Lepanto Consolidated Mining Corporation’s (Lepanto) financial status:

(1) Pacific Mining sold all their Lepanto B[1] shares amounting to a 12.5% (some say 12.3% or 12.7%) share in Lepanto.[2] The shares were worth $21,400. [3] It was speculated that the shares had been bought by Ivanhoe Mines.

(2) At the same time, Ivanhoe Mines had extended a $3 million loan to Lepanto, to be paid within six months at 3 percent annual interest, in exchange for priority negotiation rights to the projects of Lepanto.

Meanwhile, Department of Trade and Industry Secretary Cesar V. Purisima has praised, Robert Friedland’s, Ivanhoe Mines founder and chairman, renewed interest in the country’s mining industry. “Friedland’s interest in the Philippines mining sector is a testament to the wisdom of the (Supreme Court’s) decision. It also heralds the renewed interest of foreign investors to grab a chunk of the country’s mining industry.”

Instead of welcoming Friedland’s interest in our mining industry, we should all be wary for this mining investor’s credentials are far from immaculate.

Friedland is not new to the Philippines. In 1981, Friedland entered into a joint venture with Lepanto through Far SouthEast Gold Resources.[5] It was during the 1980s that Lepanto went into its Far SouthEast Porphyry Project. This was also the period when there were strong protests from surrounding communities who complained of air pollution and negative health effects from Lepanto’s operation of a copper ore dryer. Friedland later sold his 30%[6] share of the project to CRA (Rio Tinto Zinc’s Australian associate) in 1990 as he started getting into trouble with his other ventures. It was the World Bank’s International Finance Corporation that packaged the deal.[7]

Friendland is known by many names:

Robert Friedland is “Toxic Bob”. This notorious nickname was earned during one of Friedland’s first ventures under Galactic Resources. Friedland managed to convince Swiss and British investors, along with the Bank of America, to finance the $222 million gold mine in Summitville, Colorado. (Incidentally Bechtel was in charge of design and engineering of the mine.)[8]

Friedland had cut corners and costs to bring the Summitville into operation in record time. They used a heap-leach system (the cheapest and fastest way to extract gold from ore) over 50 acres of land.[9] Within days, the cyanide solution began leaking out from the liner. Cyanide and acid mine drainage flowed into the Alamosa River, killing aquatic life for 17 miles.

Summitville has been coined “the Exxon Valdez of the American mining industry”[10] It has cost the US Environmental Protection Agency $50,000/ day to contain the toxic chemicals and another $60 million is needed to implement a reclamation plan.

In 1992, Galactic Resources filed for bankruptcy. Friedland resigned all his positions at the company “the very day the EPA came knocking on the door”,[11] thus escaping all liabilities. Friedland moved all his assets to Canada.

Friedland has the ability to acquire “big mineral finds” early on, and then sell them off at a profit later. Because of this, Friedland has also been called “The Man with the Golden Arm” or “The Midas Man”. In 1990, Friedland made money by brokering a deal wih the Guyana government, the World Bank, the Canadian Export Development Corporation and a Quebecois company Cambior over the biggest gold deposit of Venezuela (in Omai, Guyana). In 1994, he sold all his shares and by mid-1995, the tailings dam at the Omai mine collapsed completely, poisoning the Essequibo River (Venezuela’s main river and source of freshwater).

A year later, Friedland (through the Diamond Fields Resources) discovered a huge base metals deposit in Labrador, Canada. He gained $5 million from a subsequent takeover by a Canadian company (the world’s largest nickel miner) called Inco. Inco was later left to deal with protests from the indigenous Inuit and Innu over the encroachment on their ancestral lands.

Friedland has also been called the “Mercenary Miner”. In 1996, the notorious private army called Executive Outcomes helped to recapture the Koidu diamond fields in Sierra Leone (South Africa) which had been overrun by anti-government forces in 1994. With the help of another company called Branch Energy, they relinquished control of the diamond fields back to DiamondWorks, another Friedland-created company.

Branch Energy is linked to another mercenary group called Sandline. Sandline, in turn, proposed to seize control of the Rio Tinto copper mine in Papua, New Guinea from Bougainville nationalists who asserted their right to their land through armed means.[12]

By 1994, Friedland started investing again in Asia-Pacific. Ivanhoe Mines’ corporate headquarters also moved from Canada to Singapore.

In Burma, Friedland was aided by the Burmese Vancouver-based businessman Reggie Tun Maung who became senior vice-president of Ivanhoe Myanmar Holdings. (Muang’s son had married the daughter of the Burmese military regime (SLORC) deputy prime minister.)

Ivanhoe Mines inked an agreement with the Burmese government to develop a copper mine and split the profits. Many groups, including the Canadian Labour Congress, BC Federation of Labour and Amnesty International, have been denouncing this partnership with Burma’s military government.

The SLORC has been cited internationally for gross human rights violations, its refusal to recognize the results of Burma’s 1990 democratic elections and the persecution of ethnic and pro-democracy groups. The protesters cited that “Seven villages were forcibly relocated and 1000 hectares of land was confiscated for (Ivanhoe’s) Letpataung expansion.” The Pakkoku-Monywa railway which services the mine was built with the forced labor of over 921,000 villagers. The Thazi dam which provides power to the mine was constructed with the forced labour of another 3-5,000 people. Worse, relocated communities draw their water supply from sources contaminated by chemicals and tailings from the mine site.[13]

Under Indochina Goldfields, Friedland has also penetrated the Emperor Gold Mines of Fiji. Emperor Gold Mines is said to have “the longest record of willful exploitation of indigenous labor of any mine in the South Pacific”.[4] Friedland also has close ties with one of Indonesia’s richest exploiters, Johannes Kotjo.

In 1996, Friedland bought a $7 million luxury villa in Sydney, Australia. This puts him in a strategic position to claim Australian citizenship should he need to abandon his Canadian citizenship.

Ivanhoe Mines at present sells stocks on the New York, Toronto (Canada) and Australian stock exchanges. The company’s sales revenues in 2003 was $89.7 million. Its principal projects and interests in Asia Pacific are:

(1) Oyu Tolgoi (Turquoise Hill) copper-gold mine and another area being explored by subsidiary Asia Gold, Mongolia;
(2) Inner Mongolia exploration projects, China;
(3) Monywa Copper Mine and Modi Taung (Block 10) gold discovery in Burma (Myanmar);
(4) Bakyrchik Gold Mine in Kazakhstan;
(5) Phuoc Son gold project (Olympus Pacific) in Vietnam;
(6) Savage River iron ore mine and Selwyn copper-gold project in Australia.

Friedland thrives in a system of economic liberalization and state deregulation. Robert Friedland was able to start his empire at a time when multilateral government investments in mining were declining. The world’s biggest oil companies were withdrawing from most mining ventures, and the International Monetary Fund/ World Bank’s Structural Adjustment Programmes were systematically weakening state regulation over industry. He continues to thrive in an era of further deregulation and liberalization, coupled with the weakening of environmental and resource management standards all over the world.

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