MAC: Mines and Communities

El Salvador: Pac Rim threatens suit while revealing it s own appalling ignorance - Pacific Rim buscará arbitraje del CAFTA contra El Salvador

Published by MAC on 2008-12-22

The parliament of El Salvador is currently debating terms of a new draft mining law. The rightwing administration wants to open up the country to new mining, while the leftwing oppositon, along with many civil society and religious groups are strongly opposed.

Meanwhile, angered and frustrated by the delay, Canada's Pac Rim Mining Corporation is threatening to take the government to international arbitration, under the terms of the Central Americam Free Trade agreement (CAFTA).

This may well be bluff on the part of the company - such disputes rarely reach this costly stage of litigation.

Below, we reprint Pac Rim's notice of its intent to go to arbitration, along with the transcript of a conference call, organised by the company on December 9th, to "discuss" the action.

Rarely have the prejudices of corporate "actors" been so openly revealed; and, in this case, such appalling ignorance about the actual roles played by NGOs, communities and the church in campaigning to pre-empt an unacceptable mining project.

Pacific Rim Files Notice of Intent to Seek CAFTA Arbitration


9th December 2008

Pac Rim Cayman LLC, a Nevada corporation and a wholly-owned subsidiary of Pacific Rim Mining Corp. (TSX: PMU)(NYSE-A: PMU) (collectively with Pac Rim Cayman LLC, "Pacific Rim" or the "Company"), has filed a Notice of Intent ("NOI") to commence international arbitration proceedings against the Government of El Salvador under the Central America-Dominican Republic-United States of America Free Trade Agreement ("CAFTA-DR" or "CAFTA"). Pacific Rim will be claiming significant monetary damages (several hundred million dollars) in the arbitration if a satisfactory resolution is not found within 90 days following the filing of the NOI. The Company has retained the Washington, DC-based international law firm of Crowell & Moring, LLP to represent it in the arbitration.

Conference Call

Pacific Rim will host a conference call this morning to discuss the details of this CAFTA action. The conference call will commence at 11:00 am Eastern time (8:00 am Pacific time) and is open to all interested parties by dialing 1-800-762-8973 toll free from Canada or the US, or 1-480-629-9572 from international locations, approximately 10 minutes prior to the scheduled start time.

Presenting on behalf of Pacific Rim will be Tom Shrake, President and CEO. The Company's legal counsel in this matter, Timothy McCrum of Crowell & Moring, LLP, will additionally be on line to answer questions. A replay of the call will be available from 3 hours following its completion until December 16, 2008. The replay dial-in number is 1-800-406-7325 in Canada or the US and 1-303-590-3030 from international locations. The access code to listen to the replay is 3952530.

Basis of Claim

By exploring, discovering and delineating gold deposits in El Salvador while at all times operating in full compliance with El Salvadoran law, Pacific Rim has developed precious metal assets higher in value than the investment of over US$ 75 million undertaken in El Salvador by the Company and its predecessors. The Company's claims under CAFTA are based on the Government of El Salvador's breaches of international and El Salvadoran law arising out of the Government's failure, within its own mandated time frames and pursuant to the clear terms of applicable laws, to issue exploration and exploitation permits to which the Company is entitled. This inaction by the Government of El Salvador has resulted in significant loss to the Company, its employees, and the local communities.

The Company's mandate to its shareholders is to build a gold mining company that explores and develops gold deposits in an environmentally responsible manner. In meeting its responsibilities, a mine design for the Company's El Dorado gold project was submitted to the Government of El Salvador in its final form in October 2006, over two years ago. Development of the El Dorado project has received support from an increasing majority of El Salvadoran citizens, including national and local organizations and their leaders. Despite the inclusion of carefully engineered environmental protections in the El Dorado development and operating plans and strong public support, the Government of El Salvador has not met its responsibility to issue the Company additional permits. Therefore it is with great regret that the Company has concluded it must seek a legal remedy to secure its right to develop the El Dorado project.

"It is with deep regret that we must now pursue our legal rights through the initiation of a CAFTA action and we intend to pursue these rights vigorously," states Tom Shrake, President and CEO of Pacific Rim. "Sadly, it is not just Pacific Rim whose rights are being compromised, but the rights of all Salvadorans and foreign investors. Local communities and social and environmental agencies are being denied the benefits of our community programs. The country is being denied a project that sets new environmental precedents for the Americas and that is destined to become a significant contributor to the economy in the midst of a worldwide economic crisis. With the mine operating, Pacific Rim would be the single greatest contributor to the tax revenues of the country, and rather than providing thousands of new lucrative jobs for El Salvadorans, we have had to dismiss over 200 local workers in the past few months. Nonetheless, we remain committed to resolving our permitting impasse and throughout the mandated 90-day period prior to arbitration, will continue to seek a solution to this dispute with the government of El Salvador so that we can put our employees back to work building and operating a safe and environmentally sound mine that provides the engine for a sustainable economy in the northern region of El Salvador as well as benefiting the nation as a whole."

Arbitration Process

Under CAFTA rules and procedures, involved parties have 90 days following the filing of the NOI to resolve their dispute amicably. If a resolution is not forthcoming in this timeframe, the Company has the right to commence arbitration proceedings against El Salvador on March 9, 2009. The arbitration will be administered under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States and under the Rules of Procedure for Arbitration Proceedings of the International Centre for Settlement of Investment Disputes ("ICSID"). ICSID is an affiliate of the World Bank and is headquartered in Washington, D.C.

In the arbitration, the Company intends to request, among other things, that the arbitral tribunal award: 1) compensation for the money Pacific Rim has spent in pursuit of its investments in El Salvador; 2) damages for the loss of value that has been created by the Company through its efforts and investments resulting from the Government's wrongful conduct; 3) costs associated with preparation for and conduct of the arbitration proceedings; and 4) pre- and post- award interest on all claims. Once an arbitral tribunal is constituted, the length of the ensuing proceedings may range from approximately one to three years.

About the Company

Pacific Rim is an environmentally and socially responsible exploration company focused exclusively on high grade, environmentally clean gold deposits in Central America. Pacific Rim's primary asset and focus of its growth strategy is the high grade, vein-hosted El Dorado gold project in El Salvador. The Company is also generating and exploring a pipeline of grassroots gold projects. Pacific Rim's goal is to become a low cost, intermediate level gold producer. Pacific Rim Mining Corp.'s shares trade under the symbol PMU on both the Toronto Stock Exchange ("TSX") and the NYSE Alternext US ("NYX").

On behalf of the board of directors,

Thomas C. Shrake, President and CEO

Pacific Rim Conference Call on CAFTA arbitration, 2008.12.9

Introduction of conference call: Listen-only mode. Following the presentation the conference will be open for questions, Tuesday Dec. 9th, 2008

I will now turn this conference call over to Barbara Henderson, VP of Investor Relations. Please go ahead.

Barbara Henderson

Good morning everybody. I'd like to thank you for joining us this morning to discuss our filing today of a notice of intent to seek arbitration against the government of El Salvador under the Central American Dominican Republic United States Free Trade Agreement, otherwise known as CAFTA. Today we have Tom Shrake, President and CEO of Pacific Rim, on line, who will give a brief presentation on this filing. And our legal representative Timothy McCrum of Crowell & Moring. After Tom's presentation we will open the floor to questions. And without further delay I'll turn floor over to Tom. Go ahead Tom.

Tom Shrake

Thank you. Let me start by thanking everyone for their attendance on this conference call. I'll make a brief statement and then, as Barbara said, we'll open the floor for questions. As you know today we filed a notice of intent to file a claim for arbitration under the Central American Dominican Republic United States Free Trade Agreement, known commonly as CAFTA, against the government of El Salvador. We are seeking repayment of the $77 million we have invested as well as hundreds of millions of dollars in damages. The precise number of hundreds of millions of dollars in damages will be defined as the case progresses. I'm both surprised and disappointed it's come to a CAFTA action but I'm still optimistic that a resolution can be negotiated.

Mining Industry has favor in El Salvador. A poll taken in August, 2008 shows that only 25% of the population opposes the mining industry. We believe that this limited opposition is based upon misinformation. Last year there was an article, or last week there was an article on the front three pages of one of the more prominent newspapers in El Salvador, Diario de Hoy, describing a debate among congressional candidates. Candidates from all political parties. No candidate thought that mining was bad for El Salvador as long as the environment was protected. Even the candidates from the more left-leaning FMLN party were in favor of responsible mining. A similar debate among mayoral candidates generated the same opinions.

In my mind the permit is a "when" question not an "if" question. Benefits to El Salvador are tremendous and the environmental impact is minimal.

The government of El Salvador has effectively shut down the mining industry. The Ministries of the Economy and the Environment were told to do nothing with respect to mining until they heard otherwise. They haven't. There have been no environmental permits including exploration permits granted to ANY mining company during the past two years. In fact we had one exploration permit almost ready to go, 2 years ago for which we had taken the final step of posting bond. It still has not been granted.

Similarly there have been no new mining concessions granted and there have been many applied for. In our grass-roots reconnaissance programs we have discovered two new epithermal systems in El Salvador, for which we have applied for concessions. We're still waiting almost two years.

Let me be crystal clear. These silent "inactions" by the El Salvador government are illegal with respect to El Salvador law as well as international treaty. We did not enter into this CAFTA decision lightly. It is an action with consequences to the good hard-working people of El Salvador, and we tried extremely hard to avoid it. We have been in nearly constant negotiations with the government throughout the year. In fact, as a direct result of what we perceived as good will in these negotiations, the company has been under self-imposed insider trading blackouts throughout much of the year, including a nearly continuous trading ban since May. During this time we have been told on many occasions by the government that a permit was imminent. Obviously it was not and it's equally obvious the current government of El Salvador has no intention of granting our permit. They've simply been delaying, delaying us for over a year by making us believe a permit is imminent. After a year of stalling and with our backs against the wall, we are forced to seek justice through international arbitration.

Pacific Rim is a company that was designed to set the bar higher for environmental protection. With that goal in mind our explorations focus solely on an environmentally-clean type of deposit technically known as a low sulphidation epithermal deposit. Environmental protection was built into our start-up strategy. These types of gold deposits have no potential for acid mine drainage and have lower levels of accessory metals common to most other types of metal deposits of gold, copper or zinc, for example. In fact at El Dorado the metal content of the gold-bearing vein is lower than the metal content of the rocks that surrounds that vein. These same rocks that surround the vein are the most common rocks in El Salvador. The reality is that gold mining in cabanas will be significantly less polluting than doing the laundry for example. If you can't mine this type of deposit then you can't mine any deposit anywhere in the world. The idea that this type of mining is catastrophic to the environment is pure fiction invented by politically-minded international NGO's who hide behind environmental protection in their anti-development activities. These organizations want to deny the extremely poor people of cabanas the economic prosperity these same NGO's enjoy themselves. They want to scare the good people of El Salvador into believing that gold mining will destroy the environment for ages. That's simply preposterous.

If these organizations are so environmentally sensitive, why when they invade our property with masked armed gunmen do they chop down trees planted in our reforestation program. That does not sound like an environmentalist to me.

Over 77 million dollars has been invested at the El Dorado mine. Until last summer we had 262 direct employees in El Salvador. We now have 36. Counting contractors there are now more than 400 people out of work because of the government's illegal actions.

We should be talking hand in hand with the government of El Salvador about the thousands of direct and indirect new jobs the mine will create. We should be talking about tax revenues. Pacific rim will be the single greatest taxpayer in El Salvador. Instead we're talking about CAFTA and the denial of those benefits to all the people of El Salvador. El Salvador has environmental laws. El Salvador has a mining law written in 1996 just 12 years ago. El Salvador has attractive foreign investment laws. El Salvador has laws that cover our industry and our investment. The laws are there and we've followed them, every one of them. The government of El Salvador has not. Fortunately the disregard for the law is not endemic to the country or the society. When we first started working in El Salvador the government spoke about building confidence for foreign investors. They spoke of transparency, the rule of law, a country aggressively pursuing foreign investment. They have now lost ground in most of these areas. If you doubt this, look into the Millennium Challenge. El Salvador won the competition called the Millennium Challenge two years ago. The Millennium Challenge is a US-backed competition for third world countries competing to receive US aid. Competition is based on 17 parameters measured by the US, including business climate, environmental protections, transparency, rule of law, etc. Over the past two years El Salvador has fallen on many of the parameters measured by the Millennium Challenge Corporation including rule of law and security. However, I'm confident as a country they'll rebound, and believe that the last few years have been an aberration and not the norm. While we understand the unfortunate consequences to El Salvador and her people, we have been painted into a corner. We are left with no option but to preserve our rights under CAFTA. We hope we can resume negotiations with the government of El Salvador in a timely manner, and we hope these negotiations are in good faith to seek a mutually beneficial resolution for Pacific Rim, our current and former employees and all the people of El Salvador.

CAFTA process is prescribed. We now have until the 9th of March to continue to negotiate. On that date under CAFTA rules we are able to file our claim for arbitration. Until then, we will maintain a dialogue with the government in hopes of settling this dispute for the sake of all of those involved.

Operator I'd like to now open the floor to questioners and remind listeners that I'm joined by Tim McCrum of Crowell & Moring, our legal representative, who is also available to answer your questions.

Barbara Henderson

Thank you sir. Ladies and gentlemen as a reminder, if you do have a question Š(directions for questions)Š

A first question question comes on the line from Nicholas Campbell with Canaccord Adams (

Please go ahead.

Nicholas Campbell

Hi Tom, how are you doing?

Tom Shrake

I'm doing well thank you.

Nicholas Campbell

Can you just walk through the process on how you guys are going to, uh, how you guys are going to go at this legally to try and, uh, come to a resolution with the government?

Tom Shrake

Well, uh, the CAFTA process requires a 90 day, basically "cooling off" period from the time you file the notice of intent, which was this morning, until we actually file for arbitration. That is a prescribed negotiating time frame. And so we will continue to pursue a negotiated solution during that time.

Nicholas Campbell

OK. And if it does go to arbitration, do you have any idea, in terms of cost to you, how much will be born by you, during the CAFTA arbitration?

Tom Shrake

Yeah we've, we have uh, uh, we have a fairly hefty budget for legal costs for uh, for uh, for the arbitation, arbitration process. It's a long process and we budgeted several hundred, several hundred? , several million dollars for that process.

Nicholas Campbell

OK and do you think this is something, this is something that is just specific to this government, do you think with a new government you might be able to negotiate some sort of a resolution if new parties come into place?

Tom Shrake

Yeah, I'm very, I'm very confident that that that there's going to be a resolution achieved here. I think the political will is there. Clearly the populous support is there. And, you know frankly in this time of economic crisis this is, this is probably the best hope that the country has, uh, to advance their economy in this crisis. I think, I just can't imagine the logic of the government to get us where we are today. Um, I don't see..El Salvador, El Salvador is a very special place. I've, as many of you know I've worked throughout Latin America, I've done systematic work in 7 Latin American countries: Chile, Peru, Argentina, Costa Rica, El Salvador, Mexico. And I've been in practically all of the countries along the Pacific margin. Now there are very few places, very few societies, very few cultures that have as hard working people, that have a general acceptance of the rule of law. Corruption is is not, uh, is not tolerated in in El Salvador in general. Just to give you a sort of simple uh, analogy, there are only two Latin American countries where I've worked, or where I've done even limited work, where um, where you're not, uh, fleeced by the police, when you get pulled over, and those two countries are Chile and El Salvador.

I think the society has, has, is special. I mean it's a special place. I really think very highly of the country and I think very highly of the people in particular and I don't think that the current government is representative, representative of those standards. The um, the candidates that are running for president, have, have all made statements about mining and basically have made statements to the effect of that they favor responsible mining. I think that, as I pointed out in my remarks the, uh, political will is certainly there. Uh, you know, whenever, you know, candidatesŠ There's an election in March for congressmen, mayors and president and the debates on mining have all been very favorable to us.

Tim McCrum

This is Tim McCrum of Crowell & Moring, just one follow-up just to clarify, Uh, the company remains optimistic that the current government will be open to negotiations in its remaining months in office, despite, despite the past. So we're hopeful that they will take a fresh look at this matter in light of this CAFTA notice.

Nicholas Campbell

And if the uh, if you do eventually go to CAFTA arbitration can uh, can the government uh, can it be stopped or does it have to go all the way through to completion?

Tim McCrum

Even after the claim would be filed, the government would be free to settle claim at any time and not be pursued, not be forced to pursue it to a resolution through that process.

Nicholas Campbell

OK. Thanks guys. Good luck.

Barbara Henderson

Thank you. The next question comes on the line from Ralph Weil of R. Weil Investment Management (of Boca Raton), please go ahead.

Ralph Weil

Good morning. Good morning to you. Who are the, uh, major organizations, or you said NFO's

Tom Shrake


Ralph Weil


Tom Shrake

Yeah, non-governmental organizations

Ralph Weil

Yeah, who are they, and have they done this in any other places?

Tom Shrake

Um, the two international, the, the, I really hate to name names. The bottom line is that probably the most active NGO in the country is OXFAM America. They are supporting and they're a major supporter of the local organizations who oppose the project and who are responsible for al lot of the anti-mining activities in the country so OXFAM is certainly one of them.

Ralph Weil

And what is their major objective to keep the people poor so they canŠ

Tom Shrake

You've got me. I mean that question, that fundamental question is one that has gnawed at me for the entire time I've spent my career in the mining business. What is it that they hope to achieve? I mean do we go back to hunters and gatherers. I mean do we want no metal? Do we want no oil? I just, I don't understand it. And the thing that reallyŠ as someone who's worked in extremely poor countries for over two decades now, and has, you know, lived with the people in poverty know I have just tremendous compassion for these people and I, I don't don't get the logic. The logic just isn't there, I mean, the, if you go out and visit with the people in the region where we're trying to build this mine, II mean there's no, their number one objective in life is to be able to, to have the dignity and the ability to feed their families. And they're the hardest working group of people I've ever been around I mean, they deserve this as much as anybody, but uh. I can't answer that question cuz, I just don't, I fail to see the logic of what these organizations are trying to achieve and what alternative they propose.

Tim McCrum

This is Tim McCrum of Crowell & Moring. The question was not exactly a legal one but in terms of who the, what the motivation is of these opposition groups. There was a documentary DVD made a year or two ago entitled "Mine your Own Business", describing three different mine projects one in Europe, one in Africa, one in South America. And these projects were carried out by companies ranging from Rio Tinto to Barrick Gold and the common theme in each case was that you had international NGO's seeking to deprive local people of economic development provided by mining. Local populations supporting the mining, but the international NGOs, typically removed from the situation, uh, putting forth scare claims that influenced the uh, influenced the local country to either delay or deny the projects. And that's the same type of phenomena as what we've seen here in El Salvador where we believe the local population supports the project that's been corroborated by the Wall Street Journal this past year in their story on this by Mary O'Grady. Uh, and yet we see the NGO's uh, making these claims that are influencing the government into paralysis.

Tom Shrake

Basically the product of the NGO's is fear. They just try to scare the heck out of everybody involved.

Ralph Weil

Where does the church stand in this?

Tom Shrake

Complicated. Actually Tim has been working on that issue for us and I'll just defer to himŠ

Tim McCrum

The um, the Catholic Church has been a factor in El Salvador and its not been a productive, uh, factor. And we are, we are puzzled by that, uh and uh,we see that the, in some cases the Catholic Church in Central America has allowed itself to be influenced by the NGO positions.

Ralph Weil

Which is the stronger factor the NGO's or the Church? I assume the people will listen to the church more than the NGO's.

Tom Shrake

El Salvador's a little bit different I mean, I think there's an almost 35% Protestant population in El Salvador which is a little unique. Um, as far as, ŠI think it's hard to separate the two. The NGO's work with the Church. I think that they do, in many regards go hand in hand. Um, but I think it's it's very complicated the politics of the Catholic Church in Latin America. Uh, there are, there is a certain constituency of the Catholic Church basically that stretches from Central America, or central Mexico all the way down the Pacific margin to southern Peru, that is uh, politically very, uh, almost radically left-leaning. And they are a vocal, uh they are a vocal component of the Church in those regions and they have for a long long time now, uh, been opposed to many types of foreign investment. For example the Church was opposed to the Central, the Free Trade Agreement in general. They were, in El Salvador they were opposed to privatizations, they were opposed to the dollarization of the economy. Um, so it's, it's basic politics. There's a constituency in the Central American part of the Catholic Church that we need to make sure we qualify that, that is sort of left-leaning.

Ralph Weil

Uh huh

Tom Shrake

They don't necessarily dominate the politics of the church but they're a factor.

Tim McCrum

Uh, um, the only thing I would add is that uh, the people that are, the representatives of the Church that are espousing the opposition to this mining, we don't believe are actually acting consistent with Catholic doctrine as espoused, as espoused by Pope Benedict as recently as January 1 of 2008 of this past year.

Ralph Weil


(Well maybe they're getting paid by Oxfam America)

Tim McCrum

We'd rather not speculate there.


Barbara Henderson

Thank you the next question comes on the line from (Brian Mann with Brit Capital), please go ahead.

Brian Mann

Yeah, I was just wondering as far as um, filing the legal case if there is any president that the legal team was relying on and actually more specifically if there's ever been an instance where a mining company has actually claim, has actually won a case in international arbitration with respect to a situation like this where a sovereign country, you know, decided to deny permits for whatever reason and I guess, if there's ever been, you know, a president from an arbitration case that's won outside of mining but obviously more specifically mining if there was one available in that instance. Thanks.

Tim McCrum

One of the more, uh one of the recent analogous arbitration claims, uh, that is informative here is not involving mining but involving a hazardous waste facility proposed in Mexico and that is the Metalclad, uh, controversy where a US investor was pursuing a hazardous waste facility in Mexico and everything was going along smoothly for a number of years and then, and then the government uh turned, turned against the project and arbitrarily denied it and in that case the claim was brought by the US investor under NAFTA and that did result a decision that the NAFTA protections for investors had been violated and ultimately resulted in a reward to the investor of, in the range of 12 million dollars or so, which was the estimated amount at issue there.

Brian Mann

OK thank you.

Barbara Henderson

Thank you. The next question comes from the line of Steve Jones, private investor. Please go ahead.

Steve Jones

Hi. Thanks for holding this call. I've got two questions. One, what, uh. You know the Saca administration in El Salvador has been opposed to dollarization and claimed that dollarization has harmed the country's poor. To what degree do you think your situation, Tom, is influenced by that larger political debate?

Tom Shrake

Hi Steve. I don't uh. I've never been, I've never heard any discussions by the Arena party in terms of opposition to dollarization. If he's made a statement like that he probably made it uh, in a political sense. I don't think there is any, uh, I don't think that the Arena party would, would even attempt to try to flip the dollarization, the dollar, you know, the dollarized economy. In fact, even the FMLN party, Mauricio Funes, the candi, the presidential candidate for the FMLN has come out in favor of dollarization. So I'm not aware of any, uh, comments that uh, negative towards dollarization. But certainly, you know, where the US dollar is, anyone who is dollarized is suffering. (right) But uh, you know there are cycles, things go up and things go down. I don't, I don't, I don't I've never, I never have perceived any uh, any political will to change that. What was the second question Steve? I'm sorry.

Steve Jones

Well. The second question was, to what degree do you think this claim might influence your relation with other business leaders Nicholas Selume, the head of the National Hydroelectric Company and others who have, at least, not opposed Pacific Rim. Uh, do you think thisŠwhat influence this might have on the rest of the business community there and their support for you?

Tom Shrake

I think that, first of all it's important to know that we've really reached out to the business community and tried.

Steve Jones

I know you have and this might change that.

Tom Shrake

I don't think there's any question that we're running the risk of losing some support by filing for CAFTA. But I think the vast majority of the, uh, business leaders in El Salvador recognize that we just don't have any choice. Recognize how hard we have tried to avoid having to file this action. I mean we've been in, you know, almost constant negotiations for over a year. And in those negotiations we've brought in many, many of the sectors of civil and private society into, into the debate, and the business community strongly supports mining and strongly supports our project. They recognize that we've taken additional environmental steps. They recognize that what we're doing really offers very little in the way of, of, uh, of environmental, potential environmental damage and they understand that it potentially could be the driver to the economy much like copper is, copper mining is in Chile. So, while we may lose um, some portion of our support in the business community, I don't anticipate losing the majority of the support that we benefit from.

Steve Jones

OK thanks.

Tom Shrake

You're welcome.

Barbara Henderson

Thank you. Gentlemen, there are no further questions. I'll turn it back to you for closing comments.

Tom Shrake

Again I'd like to thank everybody for calling in and I'd just reiterate that if you have questions, just contact us we're always available. And uh, let's all hope that we can bring this to a quick resolution. So thank you very much.

Barbara Henderson

Thank you. Ladies and gentlemen, that will conclude today's teleconference. We do thank you again for your participation. And at this time you may disconnect. Have a nice day.


EL SALVADOR: Gold Mining 'Is a Huge Rip-Off'

By Raúl Gutiérrez


8th December 2008

SAN SALVADOR - A black coffin was consigned to the flames amid music and fireworks as dozens of people from Salvadoran communities that fear the impacts of gold and silver mining celebrated a "symbolic burial" of the Pacific Rim Mining Corporation, a Canadian-based company. "We want the El Dorado mine to close," said 21-year-old Juan Carlos Moreno, who took part in the Dec. 5 demonstration held in downtown El Salvador.

The protest was held by the " Reject Metal Mining" campaign launched by members of organisations opposed to the granting of mining concessions because of the threats to water resources and public health.

Pacific Rim hopes to start mining for gold and silver at the El Dorado mine in the village of San Isidro in the department (province) of Cabañas, about 65 kilometres from San Salvador, once it obtains the necessary permits from the government.

The company acquired the property, an area of 144 square kilometres, in 2002 when it merged with the Dayton Mining Corporation. Since then, it has been granted exploration licenses.

According to the company's estimates, it could extract 1.2 million ounces of gold and 7.4 million ounces of silver in a period of just over six years. However, environmentalists believe that these figures are lower than the true potential yields.

The price of gold currently stands at 850 dollars an ounce. In January, Luis Trejo, Pacific Rim's environmental adviser, told IPS the mine would create 2,000 direct and indirect jobs, and would pay the state up to three percent tax on gross sales.

Twenty-four mining projects with exploration licenses in El Salvador are waiting for a mining law, currently being discussed in parliament, to come into force. The law would give the go-ahead to exploit concessions which are currently suspended.

The draft law, introduced by the right-wing National Conciliation Party (PCN), is intended to provide mining with three pillars: "a clear regulatory framework, a monitoring body to enforce the law, and a classification of companies that comply with international standards," said PCN lawmaker Orlando Arévalo. But in the view of the left-wing opposition, the initiative would create an autonomous authority in charge of granting concessions, taking over that power from the ministries, and without requiring environmental impact studies.

Environmentalists warn that if the door is opened to the mining industry, El Salvador will suffer severe social and environmental impacts from acid drainage, water pollution, and evaporation of cyanide, used in the leaching process to separate gold and silver from rock.

Mining would also exacerbate water shortages in a number of areas, scientists say.

The most severe impact would be caused by cyanide evaporation, which occurs at 26 degrees Celsius; afterwards, rainfall would spread it far and wide, not only in the mining areas but in a sizeable part of the Central American region, depending on wind speeds, said Florian Erzinger, an environmental chemist who specialises in aquatic systems at the Federal Institute of Technology (ETH) in Zurich, Switzerland.

Pollution needs no passport to cross borders, said Erzinger, the author of a study on "Environmental impact of extractive mining on the Lempa river and its consequences for the metropolitan area of San Salvador," presented on Nov. 17 in the capital.

One-third of the water consumed by the over two million people in the metropolitan area of San Salvador comes from the Lempa river, which rises in southeastern Guatemala, flows through Honduras, enters El Salvador in the northwest and winds through most of the country until it reaches the Pacific ocean.

The 24 mining projects are concentrated in the north of the country, a farming region crossed by the Lempa river. The Lempa basin in El Salvador has an area of over 10,000 square kilometres and a number of tributaries, such as the San Francisco river, which would be polluted by acid drainage, according to the study.

"Acid drainage" of mercury, cyanide, arsenic, zinc and aluminium, at levels "much higher than permitted levels," will pollute surface waters and cause many health problems, according to the study which was sponsored by the Catholic organisation Caritas-El Salvador and the non-governmental Salvadoran Ecological Unit (UNES).

Large amounts of water are needed in precious metal mines for leaching, so "the water table will fall to a depth of about 400 metres," the scientist said.

For example, Erzinger said the El Dorado mine would pump between 75 and 110 litres per second from groundwater sources and from the San Francisco river, which supplies the local population with water.

The average Salvadoran uses half that quantity of water per day, Erzinger said.

Mining operations would affect four million people, environmentalists say. According to official figures, the country's population is 5.7 million (other sources estimate it at seven million), and more than 1.5 million people do not have access to clean drinking water.

El Salvador has no mining tradition. The first mining projects were developed in the late 19th century, but they closed down a few years later. Mining was revived in 1940, but declined again in the 1950s.

There have been complaints that several rivers around the village of San Sebastián, in the eastern province of La Unión, were polluted with iron, copper and aluminium due to extraction operations from 1950 to 1981 at a nearby gold mine by the Commerce Group Corporation. The local community sued the company in 2007.

The Roman Catholic Bishop's Conference last year stated its position against mining, saying it "causes irreversible damage to the environment and to the surrounding communities." The costs will be paid by the Salvadoran people, while the mining companies will take almost all the profits, Ángel Ibarra, the head of UNES, told IPS.

The 24 mining projects would make "over nine billion dollars for the companies" in 10 or 15 years of extraction, the environmentalist said, quoting Erzinger's estimates based on the quantities of precious metals that would be recovered.

Out of these profits the companies would have to pay royalties and taxes of about 180 million dollars to the national government and to local municipalities in the mining regions. "It's a huge rip-off," Ibarra concluded.

Pacific Rim avisa de su intención de buscar arbitraje del CAFTA

VANCOUVER, COLUMBIA BRITANICA-(Marketwire - December 09, 2008) - Pac Rim Cayman LLC, una corporación de Nevada y subsidiaria de propiedad total de Pacific Rim Mining Corp., ha presentado una Nota de Intenciones ("NOI") para comenzar los procedimientos de arbitraje internacional contra el Gobierno de El Salvador en virtud del Acuerdo de Libre Comercio entre Centroamérica-República Dominicana-Estados Unidos de América (CAFTA-DR o CAFTA"). Pacific Rim reclama en el arbitraje daños y perjuicios monetarios importantes (varios cientos de millones de dólares) si no se encuentra una solución satisfactoria dentro de los 90 días siguientes a la presentación del NOI. La Compañía ha designado a la firma de abogados Crowell & Moring, LLP, de Washington, DC para que la represente en el arbitraje.

Pacific Rim sostendrá una conferencia telefónica esta mañana para discutir los detalles de esta acción CAFTA. La conferencia comenzará a las 11:00 a.m. hora del Este (8:00 a.m. hora del Pací?co) y está abierta a todas las partes interesadas, marcando a la línea gratuita 1-800-762-8973 desde Canadá o los Estados Unidos o 1-480-629-9572 desde ubicaciones internacionales, aproximadamente 10 minutos antes de la hora de inicio prevista.

En la presentación, en nombre de Pacific Rim, estará Shrake Tom, Presidente y Gerente General. El asesor legal de la compañía en estos asuntos, Timothy McCrum de Crowell & Moring, LLP, estará también en línea para responder a las preguntas.
Una repetición de la llamada estará disponible a partir de las 3 horas siguientes a su ?nalización hasta el 16 de diciembre de 2008. El número para la repetición es el 1-800-406-7325 en Canadá o los Estados Unidos y 1-303-590-3030 desde ubicaciones internacionales. El código de acceso para escuchar la repetición es 3952530.
Base de la reclamación

Al explorar, descubrir y delinear depósitos de oro en El Salvador, mientras opera en todo momento cumpliendo cabalmente con las leyes de El Salvador, Pacific Rim ha desarrollado activos de metales preciosos por un valor superior a la inversión de más de 75 millones de dólares estadounidenses realizada en El Salvador por la Compañía y por sus predecesores. Las reclamaciones de la Compañía en virtud del CAFTA se basan las violaciones del Gobierno de El Salvador a las leyes internacionales y a la ley salvadoreña, que se derivan de la incapacidad del Gobierno, dentro de sus propios plazos de tiempo y conforme a los claros términos de la legislación vigente, de expedir permisos de exploración y explotación a los que la Compañía tiene derecho. Esta inacción por parte del Gobierno de El Salvador se ha traducido en importantes pérdidas para la compañía, sus empleados, y las comunidades locales.

El mandato de la Compañía a sus accionistas es construir una compañía minera de oro que explore y desarrolle depósitos de oro de una manera medioambientalmente responsable. En el cumplimiento de sus responsabilidades se presentó al Gobierno de El Salvador en forma definitiva en octubre de 2006, hace ya más de dos años, el diseño de una mina de para el proyecto El Dorado. El desarrollo del proyecto El Dorado ha recibido el apoyo de un número cada vez mayor de ciudadanos de El Salvador, incluyendo a organizaciones nacionales y locales y a sus dirigentes. A pesar de la inclusión de protecciones ambientales cuidadosamente estructuradas para el desarrollo y los planes operativos de El Dorado y de un sólido apoyo de la opinión pública, el Gobierno de El Salvador no ha cumplido con su responsabilidad de expedir a la Compañía los permisos adicionales. Por lo tanto, es con gran pesar que la Compañía ha llegado a la conclusión de que debe buscar un recurso legal para garantizar su derecho a trabajadores locales en los últimos meses. No obstante, seguimos comprometidos con la solución de nuestro problema de permisos y durante todo el período contemplado de 90 días antes del arbitraje, seguiremos buscando una solución a esta controversia con el gobierno de El Salvador a ?n de que podamos reincorporar a nuestros empleados a su trabajo en procura de la construcción y operación de una mina segura y ecológicamente sólida que representa el motor para una economía sostenible en la región norte de El Salvador, y que beneficia igualmente a toda la nación".

Proceso de arbitraje

En virtud de las normas y procedimientos del CAFTA, las partes tienen 90 días después de la presentación del NOI para resolver su litigio de forma amistosa. Si una resolución no es inminente en este plazo, la Compañía tiene el derecho a iniciar un procedimiento de arbitraje contra El Salvador el 9 de marzo de 2009. El arbitraje será administrado en el marco del Convenio sobre Arreglo de Diferencias Relativas a Inversiones entre Estados y Nacionales de Otros Estados y en virtud de las Reglas de Procedimiento para Procedimientos de Arbitraje del Centro Internacional de Arreglo de Diferencias Relativas a Inversiones (CIADI). El CIADI es un organismo del Banco Mundial y tiene su sede en Washington, DC.

En el arbitraje, la empresa tiene la intención de solicitar, entre otras cosas, que el tribunal arbitral reconozca: 1) una indemnización por el dinero que Pacific Rim ha gastado en la búsqueda de sus inversiones en El Salvador, 2)los daños por la pérdida de valor que se ha creado por los esfuerzos e inversiones de la Compañía resultantes de la conducta injusta del Gobierno; 3) los costos asociados con la preparación y la celebración del procedimiento de arbitraje, y 4) los intereses previos y posteriores al reconocimiento sobre todas las reclamaciones. Una vez se haya constituido un tribunal arbitral, la duración de los procedimientos puede ser de aproximadamente uno a tres años.

Acerca de la Compañía

Pacific Rim es una compañía de exploración ambiental y socialmente responsable enfocada exclusivamente a los depósitos de oro de alta calidad y ambientalmente limpios en América Central. El principal activo y el eje central de su estrategia de crecimiento es el proyecto aurífero de alto grado en vetas, El Dorado, en El Salvador. La Compañía también está generando y explorando una serie de proyectos auríferos de base social. El objetivo de Pacific Rim es convertirse en productor aurífero de nivel intermedio, que opere con bajos costos. Las acciones de Paci?c Rim Mining Corp. se negocian bajo el símbolo PMU tanto en la bolsa de valores de Toronto ("TSX") como en el NYSE Alternext US de los Estados Unidos ("NYX").

En nombre de la junta directiva,
Thomas C. Shrake, Presidente y Gerente General

EL SALVADOR: Campaña contra la minería gana fuerza

Por Raúl Gutiérrez


6 Diciembre 2008

SAN SALVADOR, - Con música, petardos y la quema de un ataúd negro, decenas de pobladores de varias comunidades salvadoreñas que serían afectadas por la explotación minera de oro y plata celebraron el viernes el "entierro simbólico" de la empresa canadiense Pacific Rim. "Queremos que la mina El Dorado se cierre", reclamó Juan Carlos Moreno, de 21 años, uno de los manifestantes en el centro capitalino.

La protesta es parte de la campaña "Yo rechazo la minería", y reunió también a miembros de organizaciones que se oponen a la explotación minera porque "amenaza" los recursos hídricos y la salud pública, según alegan.

Pacific Rim espera iniciar la explotación de oro y plata en la mina El Dorado, en la comunidad San Isidro, departamento de Cabañas, a unos 65 kilómetros de San Salvador, una vez que obtenga el permiso gubernamental de explotación.

La empresa adquirió la propiedad de 144 kilómetros cuadrados en 2002, cuando se fusionó con la compañía Dayton Mining. A partir de entonces, obtuvo permisos para explorar.

Sus estimaciones indican que puede extraer 1,2 millones de onzas de oro y 7,4 millones de onzas de plata en un período de algo más de seis años. Pero ambientalistas consideran que esas cifras son más bajas que las reales.

En el mercado internacional la onza de oro se cotiza en unos 850 dólares. En enero de este año, Luis Trejo, asesor ambiental de la Pacific Rim, dijo a IPS que la mina crearía unos 2.000 empleos directos e indirectos, y pagaría al Estado hasta tres por ciento de impuestos sobre ventas brutas.

En El Salvador, 24 proyectos con permisos para exploración esperan que entre en vigor una ley de minería, en discusión en el parlamento, que daría luz verde a los permisos de explotación, que se encuentran suspendidos.

El proyecto de ley, presentado por el Partido de Conciliación Nacional (PCN) pretende dotar a la minería de tres pilares, "marco regulatorio claro, un ente que vigile y haga cumplir la ley y una clasificación de las empresas que cumplan con las normas internacionales", dijo el diputado de esa fuerza política, Orlando Arévalo.

Pero para la oposición de izquierda, la iniciativa crearía una autoridad autónoma encargada de otorgar las concesiones, despojando a los ministerios de esa atribución y sin contemplar un estudio estratégico ambiental.

Ecologistas advierten que de abrirse la explotación minera, El Salvador sufriría impactos sociales y ambientales severos, como el drenaje ácido, la contaminación de las aguas y la evaporización de cianuro, utilizado en el proceso de lixiviación para separar el oro y la plata de la roca.

La minería, además, profundizaría la escasez de agua en varias zonas, agregan observaciones científicas.

El impacto "más severo sería causado por la evaporización del cianuro a 26 grados Celsius, que luego, con las precipitaciones de lluvias" sería esparcido no sólo en las zonas de explotación, sino en buena parte de la región centroamericana, de "acuerdo a la velocidad que adquiera el viento", dijo Florian Erzinger, químico ambiental en sistemas acuáticos por el Politécnico de Zurich, Suiza.

"La contaminación no necesita pasaporte" para atravesar fronteras, subrayó Erzinger, autor del estudio "Impacto ambiental de la explotación minera en el río Lempa y consecuencias en el área metropolitana de San Salvador", presentado el 17 de noviembre en San Salvador.

Un tercio del agua que consumen más de dos millones de habitantes del área metropolitana de San Salvador proviene del río Lempa, que nace en el sudeste guatemalteco, pasa por Honduras para luego serpentear, desde la zona norte, casi todo El Salvador en forma de línea limítrofe de varios departamentos, hasta desembocar en el océano Pacífico.

Los 24 proyectos mineros se concentran en la franja norte, dedicada a la agropecuaria y cruzada por el Lempa. La cuenca salvadoreña de este río tiene más de 10.000 kilómetros cuadrados e incluye la confluencia de varios cursos de agua, como el San Francisco, que sería contaminado por el drenaje ácido, según el estudio.

"Los drenajes ácidos" de mercurio y cianuro, arsénico, zinc y aluminio, que estarían "muy por encima de los límites permisibles", contaminarán las aguas superficiales, provocando muchas enfermedades, señala la investigación, auspiciada por la institución católica Cáritas - El Salvador y la no gubernamental Unidad Ecológica Salvadoreña (UNES).

Debido a la extracción de grandes cantidades de agua que requiere la explotación de los metales preciosos, "los mantos freáticos bajarán hasta 400 metros de profundidad", agregó el investigador.

Erzinger toma, entre otros ejemplos, El Dorado, que insumiría entre 75 y 110 litros de agua por segundo de los mantos acuíferos y del río San Francisco, fuente de agua de la población local.

Un salvadoreño común utiliza la mitad de esa cantidad por día, según Erzinger.

La explotación minera afectaría a cuatro millones de personas, aseveran los ecologistas. El país tiene más de 5,7 millones de habitantes, y más de 1,5 millones no tienen acceso a agua potable, según datos oficiales.

El Salvador no tiene tradición minera. A fines del siglo XIX se desarrollaron los primeros proyectos mineros, pero desaparecieron años después. En 1940 la explotación revivió, para decaer en los años 50. Hay denuncias de que varios ríos de la comunidad San Sebastián, en el oriental departamento de La Unión, están contaminados con hierro, cobre y aluminio, debido a operaciones de extracción en un yacimiento cercano entre 1950 y 1981, a cargo de la empresa Commerce Group, que en 2007 fue demandada en la justicia por los pobladores.

La Conferencia Episcopal se pronunció el año pasado contra la explotación minera, pues "causa daños irreversibles al medio ambiente y a las comunidades circundantes".

Los costos correrán por parte de los salvadoreños, mientras las mineras se llevarán casi todos los beneficios económicos, dijo a IPS el director de la UNES, Ángel Ibarra.

En 10 o 15 años de explotación de los 24 proyectos, se obtendrán "más de 9.000 millones de dólares para las empresas", precisó el ambientalista, en referencia a las estimaciones de la investigación de Erzinger, que se basó en la cantidad de metales preciosos que las mineras extraerían.

De esas ganancias, las empresas deberán pagar impuestos y regalías por unos 180 millones de dólares al gobierno nacional y las alcaldías de las zonas a explotar. "Es una gran estafa", concluyó Ibarra.(FIN/2008)

Población de Cabañas rechaza la explotación minera
Por Daniel Trujillo
Redacción Diario Co Latino, Sábado, 29 de Noviembre de 2008

Habitantes de diferentes comunidades del departamento de Cabañas están en contra de que en la zona se lleve a cabo la explotación minera, esa es la principal conclusión de una investigación realizada por el Centro de Investigaciones sobre Inversión y Comercio (CEICOM).

La investigación denominada "Perspectiva de la Industria de la Minería Metálica en El Salvador" asegura que el rechazo a la actividad minera es generalizada y ello se evidencia en que nueve de cada diez personas abordadas en el trabajo no quiere que la extracción de metales se lleve a cabo.

Edgardo Mira, miembro del consejo de directores de CEICOM, presentó los resultados y explicó que se consultó a población de las áreas rurales y urbanas de los diferentes sectores sociales del departamento de Morazán, por lo que el rechazo es categórico.

"Independientemente de su condición social y de su lugar de residencia tiene una postura frente a estos proyectos mineros, que es el rechazo", aseguró Mira.

El estudio se realizó durante 2007, en San Isidro, Cabañas, y se revisó en los primeros meses de este año. La metodología utilizada fue a través de entrevistas a grupos de personas, quienes exponían sus ideas y planteaban posibles propuestas de solución.

En San Isidro existe un proceso de exploración minera en el sitio El Dorado, propiedad de la empresa de capital canadiense Pacific Rim. Hay dos conclusiones importantes de la investigación. La primera es sobre los impactos socio-ambientales que traerá consigo la explotación y, el segundo, es el económico.

Respecto al primero, CEICOM sostiene que debido a la pequeño del territorio nacional sumado a la densidad poblacional, la explotación minera no es viable. "El agua que se utiliza en el proceso minero ya no se puede consumir y está contaminada", destacó Mira.

El impacto económico estriba en que la mayoría de las ganancias obtenidas de la explotación se las queda la empresa minera y un escaso 2% se queda en el país.

CEICOM no definió una fecha para presentar este estudio a la Asamblea Legislativa, pero Mira aseguró que este órgano del Estado tendrá conocimiento de la investigación.

"Vamos a presentar la investigación, pero la experiencia nos dice que cuando les presentamos los estudios a la Asamblea Legislativa, nunca nos llaman para que los discutamos y profundicemos en el tema", denunció Mira.

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