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NEWS
El Salvador makes history
El Salvador
On March 29, El Salvador made a little
bit of history.
The tiny Central American country
passed a law banning all exploration,
mining and processing of metals; without
exception. It is the first nation to do so. promise for industrial stalwarts such as
The legislation prohibits the use of
toxic chemicals like cyanide and mercury
and makes permanent an executive or-
der passed by former President Antonio
Saca in 2009 and renewed by subse-
quent administrations.
Several regions of the country have
attracted interest from international gold
and silver mining companies.
In October, El Salvador won an arbi-
tration at the World Bank’s International
Centre for Settlement of Investment
Disputes (ICSID) against Australian-Ca-
nadian miner OceanaGold Corp, which
was seeking $US250 million over the
2009 denial of an extraction permit.
In its decision, the ICSID ordered the
company to pay El Salvador $US8 million
for legal costs.
The decision, which enjoys broad pop-
ular support, is all the more remarkable
given the parlous state of the country’s
economy.
But in a public debate that pitted water OceanaGold, which operates mines in
supplies against economics, water won.
The decision will not affect any met-
als supply chain. There are no major
mines in the country, although one was
planned.
El Salvador has specific issues with
water. Its Ministry of the Environment
and Natural Resources estimates that
90% of surface water is contaminated.
However, it is symptomatic of the en-
vironmental pressures that are building
PAGE 12 MAY 2017 AUSTRALIA’S PAYDIRT
across the developing world and increas-
ingly impacting industrial metals.
This is the flip side of the green revo-
lution, which holds so much demand
copper and has propelled new materials
such as lithium and cobalt into the public
spotlight.
The vote in El Salvador follows a pro-
tracted battle with a Canadian junior,
Pacific Rim Mining, over its proposed El
Dorado gold and silver mine. The project
was bitterly resisted by locals and envi-
ronmental activists because of its impact
on water supplies.
Pacific Rim had sued the Government
for failing to issue a mining licence after
the company had submitted its environ-
mental impact study, a decision the IC-
SID ratified last October.
That paved the way for the new anti-
mining law, which was passed with cross-
party support and codifies a previous de
facto moratorium on mining permits.
El Salvador may be an extreme case
but it is not unique in looking again at the
trade-off between the economic benefit
and environmental impact of mining.
Pacific Rim was bought in 2013 by
New Zealand, the United States and the
Philippines.
The company’s Didipio gold and cop-
per mine in the Philippines was served on
February 14 with a suspension order by
the country’s Department of Energy and
Natural Resources due to allegations in-
cluding “the potential adverse impact to
the agricultural areas of the province”.
OceanaGold, which is appealing
against that order, had ironically just won
for the second year running the country’s
Presidential Mineral Industry Environ-
mental Award.
But that has been swept aside by the
Government’s anti-mining campaign,
which at the last count had led to the clo-
sure of 23 mines out of a national total
of 41 and the suspension of 75 develop-
ment licences.
Eco-warrior turned government minis-
ter Regina Lopez appears to have taken
a leaf out of El Salvador’s book, linking
her environmental audit of the mining
sector to water supplies.
And she has the support of Philippine
President Rodrigo Duterte, who has
upped the rhetoric in an already heated
national debate by suggesting he might
favour a total ban on mining similar to
that in El Salvador.
The threat may turn out to be overstat-
ed but Lopez’ actions have already roiled
the nickel market because of the impact
on the flow of ore to China’s nickel pig
iron sector.
Similar arguments have been playing
out in Malaysia over that country’s baux-
ite mining, which also stands accused of
environmental depredation.
Malaysia placed a moratorium on
bauxite mining at the start of 2016. It has
been extended several times, most re-
cently until June this year.
The issue in the Philippines and Malay-
sia has been one of unregulated opera-
tors maximising profit over environmen-
tal impact.
But as OceanaGold will attest, the
danger is that all operators pay the price
for the bad behaviour of the few.
Such pressures on mining impact only