CANADIAN MINING COMPANIES VIOLATING INDIGENOUS RIGHTS IN GUATEMALA: THE CASE OF INCO IN EL ESTOR

-- October 2003, by Andy Astritis, for Rights Action. [1]

Exmibal [Subsidiary of INCO] spoke of the marvels of the work it was going to undertake and offered jobs, homes, electricity, health services and others.  What do we have now of what they promised?  Nothing.  We were cheated.  They took the riches from the land and now we are poorer than before because our crops are affected by the contaminated soil.  The area where we were relocated is full of rocks and you cannot plant anything there.                                

                                                                                 - Abelardo Chun

SUMMARY

            Canadian mining companies have long benefited from the corruption, repression and extensive periods of military rule in the Republic of Guatemala.  From their earliest involvement in the mid-1950s, the International Nickel Company (INCO) [2] and its subsidiary EXMIBAL have become notorious in Guatemala for manipulating the country’s political instability to their benefit, and effectively condoning the government violence and killings that were subsequently unleashed to silence their opponents.

            EXMIBAL’s mining operations in the El Estor area, from 1977 to 1983, left a legacy of violence, land encroachment, and environmental damage that continues to be felt today.

            Now, after a 20-year absence, Canadian mining companies are attempting a return to El Estor.  INCO has forged a joint partnership with Geostar Metals Inc. (Geostar) [3] , another Canadian mining company, and together they seek to reactivate the EXMIBAL facilities.  They are joined by Chesbar Resources Inc. (Chesbar) [4] , a Canadian mining company recently granted an adjacent land concession near El Estor. 

            The planned return of mining operations to the El Estor area raises serious concerns for the Mayan-Q’eqchi’ indigenous communities that live within the mining concession.  Having been abused in the past, these communities today demand a full accounting for the abuses of the past as well as proper consultations and negotiations before the reactivation of the mining project, as per Guatemala’s obligations under international law, notably International Labour Organization Convention 169 (ILO 169). [5]

            To date, however, the government of Guatemala, the government of Canada, and the mining companies with interests in El Estor continue to ignore their moral, legal and financial obligations towards these indigenous communities.  Moreover, community groups opposed to the renewal of mining in the El Estor area are once again finding themselves the targets of threats, violence, and even killings.

            As in the past, INCO and Chesbar and the governments of Guatemala and Canada continue to turn a blind eye to the human rights violations taking place, knowing that these abuses suppress opposition to mining in El Estor, and thus ultimately benefit their interests.

RECOMMENDATIONS

Rights Action recommends:

Ø       The Canadian government and politicians act immediately to ensure that Canadian mining corporations do not benefit from the violations of internationally recognized human rights in their operations abroad. 

Ø       Canadian citizens become aware of the actions of Canadian Mining Companies abroad, and demand that they conform with their obligations under Canadian and international law.

Ø       Canadian media investigate and report on the role of Canadian Mining Corporations in both past and present human rights violations in Guatemala.

With respect to the role of Canadian mining companies in El Estor, Rights Action recommends:

Ø       That INCO, Geostar, and Chesbar publicly denounce the use of violence as a political tool by their former employees and supporters, and investigate allegations of past and present violations of human rights in El Estor.

Ø       That INCO, Geostar and Chesbar:

§         suspend plans to renew or pursue mining activity;

§         take an active role in ensuring the Guatemalan government comply with its obligations under ILO 169 and consult with the affected indigenous communities.

Ø       That INCO, with international, national and local participation, commission a full environmental and human rights impact statement to present to the government of Guatemala and the indigenous groups in the area prior to seeking their approval for the reactivation of the El Estor mine.

Ø       That INCO renounce the agreements made with past military dictators, and begin new negotiations under the requirements of ILO 169.

Rights Action recommends:

Ø       That the Guatemalan government fulfill its obligations under ILO 169 to properly consult with the local indigenous groups on issues that affect their interests.

Ø       That the Guatemalan government annul the land concessions granted to EXMIBAL and Chesbar until after it has properly consulted with local indigenous groups, as per its obligations under ILO 169.

Ø       That the Guatemalan government investigate the threats, violence and killings that are being used to silence opposition to the renewal of mining activities in El Estor.

FOR MORE INFORMATION:  Rights Action: info@rightsction.org, 416-654-2074, www.rightsaction.org.
INTRODUCTION – GLOBAL NICKEL COMPANY MEETS MAYAN-Q’EQCHI’ PEOPLE

The town of El Estor, located in the department of Izabal in north-eastern Guatemala, has for almost 50 years sat at the centre of an intensifying dispute involving mineral extraction, environmental concerns, and the land rights of the local Q’eqchi’ indigenous populations.  The Q’eqchi’ people, who live throughout the municipal jurisdiction of El Estor’s 3000 square kilometers, make up approximately 90% of the 40,000 inhabitants of El Estor, and survive mainly as subsistence farmers and fisherman.

Land in Guatemala, as in Central American generally, plays a crucial role in local power dynamics, and is often forcibly transferred from weaker parties to more powerful ones.  Nickel mining in El Estor demonstrates the centrality of land to broader political issues, and the interconnectedness of domestic and international power structures to the economic decisions made by governments.  These power relations play an increasingly critical role in contemporary Guatemalan society, itself the product of 500 years of racism, exploitation and repression against Mayan indigenous groups, who make up the majority of the country’s population.

THE ENTRY OF CANADIAN MINING COMPANIES INTO GUATEMALA

In August of 1965, INCO became the first Canadian mining company formally involved in El Estor when it was granted a 40-year land concession by the government of Guatemala.  INCO and its associates, however, had been involved in Guatemala from as early as 1955 when it was first determined that the hills near El Estor contained extensive nickel reserves.  From that point on, INCO set about to manipulate the political situation in Guatemala to its advantage, resulting in it securing the 1965 mining concession and the 1971 extraction agreement – both of which are extremely favorable to INCO’s interests. 

The 1954 Military Coup and the Investor-Friendly Aftermath

The historical context in Guatemala at the time these agreements were established helps to explain the extremely favorable terms secured by INCO.  In 1954, the democratically elected government of Jacobo Arbenz was overthrown by a military coup that was organized, trained, and funded by the United States through its Central Intelligence Agency (CIA). [6]   The coup, driven by the intense lobbying efforts of major land owners such as the United Fruit Company, was in response to progressive reforms being implemented by the Arbenz government  The Arbenz reforms included an end to forced labor, the establishment of minimum wage laws and the right to collectively bargain through union relations.

Most controversial amongst the Arbenz policies, however, was a land reform initiative that sought to redistribute uncultivated land from major land owners to local campesinos (small farmers).  Under this program, large land owners would be compensated for the value of their land based on its declared tax value, which, because of fraudulent reporting on the part of major land owners, was much lower than its real value. 

The overthrow of the Arbenz government brought an end to these reforms and ushered in an era of corrupt and repressive governments that remained heavily influenced and controlled by the United States, other western nations and major global economic actors. 

The Canadian government, as well as other western states, remained silent regarding the overthrow of the democratic government of Guatemala and the installation of a military dictatorship.  Furthermore, the Canadian government encouraged its multinational corporations to continue to do business with the new regime, and itself maintained friendly relations with Guatemala’s new military rulers.

Throughout the 36 year armed conflict that followed, the Guatemalan government employed brutal tactics to suppress any domestic opposition to government policies, labeling all dissidents as guerilla supporters or insurgents.  According to the United Nations Committee for Historical Clarification (CEH), these policies resulted in the killing and disappearance of over 200,000 people during the armed conflict.  In apportioning blame, the CEH found that government forces were responsible for 93% of the individuals killed during the armed conflict, and that of those killed, 80% were unarmed indigenous peoples. [7]

In some parts of the country, the UN specifically labeled these actions genocide because of their impact in targeting and eliminating entire portions of the Mayan populations.

It was in this context of extreme violence, repression and killing that INCO established and carried out its operations in Guatemala.

INCO’s History in Guatemala

INCO emerged from the Second World War as the dominant international nickel producer.  In the years that followed, however, INCO saw its share of the global market quickly drop from 88% in 1950, to 65% in 1957, and down to 50% in 1970, largely as a result of heavy subsidies paid by the United States to its domestic producers. [8]   In response to these developments, INCO embarked on an aggressive international campaign from 1967 to 1973 in which it invested over $1 billion dollars in an effort to expand its production outside of Canada, and reestablish its monopolistic control over the nickel market. [9]    

Guatemala was identified early on as one of the most promising international centers for nickel exploration.  In 1955, only one year after the U.S.-backed military coup, officials from Hanna Mining Company (Hanna), a U.S.-based corporation, applied for a mineral exploration license in El Estor.  Hanna thus became one of the first beneficiaries of Decree #272 which had been established that same year by the new dictatorship to facilitate large-scale mineral exploration. [10]

By 1960, Hanna had invited INCO to form a joint venture which resulted in the establishment of the Guatemalan company Exploraciones and Explotaciones Mineras Izabal, S.A. (EXMIBAL), of which INCO held 80% of the common shares, while Hanna held 20%.

The political resistance to the military dictatorships, which at times involved armed resistance, was seen to pose a considerable threat to foreign investment during the early 1960s.  While a state of siege had been imposed from the 1954 coup onwards, this situation worsened in the Zacapa and Izabal areas with the increase in guerilla activity in the early 1960s.  These activities were primarily aimed at holding the United Fruit Company to account for its involvement in the 1954 coup.  The government of Guatemala, through the hand of then General Carlos Arana, eliminated this movement, killing thousands of Guatemalans citizens in the process. [11]   For his role in these activities, General Arana earned the title of ‘Butcher of Zacapa’.  In 1970, General Arana led a military coup to become president of Guatemala, later instigating the violent repression of EXMIBAL’s opponents that allowed his government and EXMIBAL to finalize the terms of EXMIBAL’s mining in Guatemala.

EXMIBAL tacitly supported the repression, extra-judicial killing and other terrorist tactics because it promoted a more stable climate for foreign investment.  As one INCO executive put it: “The military will continue to rule Guatemala for the foreseeable future…It is the only base of stability, really.  It will rule even with a civilian government in power…the political prospects are good…one of the best prospects in terms of realism and pragmatism regarding foreign investment”. [12]

In order to begin its mining operations, EXMIBAL first needed to be granted a mining concession from the government of Guatemala, and, second, to secure an exploitation agreement with the government.  As a result of the economic uncertainty related to the military coup and subsequent resistance, international investors were using the EXMIBAL experience as an indicator of the “stability” of the Guatemalan investment climate, and thus EXMIBAL found itself in a strong position to negotiate forcefully with the military dictators.

By 1962, when EXMIBAL first applied for a mining concession, it was already heavily lobbying the government of Guatemala to revise the terms of its mining code.  When negotiations failed to bring the intended results, it appears that bribes and pay-offs proved effective in accomplishing the task.  These negotiations between the companies and the military dictators, as well as the continued support of the international investment community, served to greatly legitimize the military dictators to the outside world.

As a result of this pressure from EXMIBAL, in April of 1965 – even while Guatemala was without a Constitution – the Guatemalan government passed new mining legislation that was extremely favorable to EXMIBAL’s interests.  In fact, some reports allege that the government had allowed a representative of INCO to draft the country’s new mining code. [13]

When the Constitution finally came into effect the following year, several key provisions were taken directly from the EXMIBAL-inspired Mining Code.  In August of 1965, only four months after the introduction of this new legislation, EXMIBAL was granted a 365 square kilometer mining concession in the El Estor area.

            Having succeeded in establishing a favourable regulatory framework – in essence, one that gave away resources for very little in return – EXMIBAL turned its attention to minimizing its transfer of profits to the Guatemalan state.  EXMIBAL succeeded in circumventing the mining tax in the new code by being classified as a ‘transformational industry’, despite the fact that the Code stated that this classification would only apply to non-metallic industries.  EXMIBAL’s secured tax exemption was particularly notable in light of the fact that it projected sales totaling hundreds of millions of dollars in the first five years alone.  As such, EXMIBAL was left to pay a royalty fee and surface tax that worked out to a mere $23,000 per year. [14]

The Rise of Popular Protest

With a strike in Sudbury crippling INCO’s Canadian nickel production from July to September of 1969, INCO increased pressure on the Guatemalan government to conclude negotiations on a final exploitation agreement.  As the details of these negotiations began to emerge, groups within Guatemalan civil society responded with frustration and disdain to what they saw as the surrender of a tremendous national resource with little benefit to the people of Guatemala.

The resistance to EXMIBAL was spearheaded by university professors, working alongside labour and political leaders.  Popular protest against the 1965 concession became so intense that EXMIBAL, in an effort to quell the public outcry, launched an extensive, and expensive, public relations campaign from 1968 to 1971.

In May of 1969, the National University’s Faculty of Economics sponsored a three-day round-table on the EXMIBAL concessions that produced a set of recommendations that reflected the public discontent with the negotiation process.  The report came to four principle conclusions:  First, the state should itself exploit the nickel deposits or the concessions should be renegotiated calling for bids from other companies.  Specifically, the report stated that returns to the state should be in the form of a fixed price per ton of nickel, rather than royalty or taxes; if such an arrangement could not be negotiated, the project should be postponed.

Second, a new Mining Code should be drawn up in the country’s interests to replace the one drafted under EXMIBAL influence.  Third, the government should rescind resolution 5727 that provides an exception from foreign exchange laws for large foreign investors.  Fourth, that EXMIBAL’s classification as ‘transformative industry’ be rescinded.

At the end of this conference, the participants established an ad hoc Commission to oppose the efforts of EXMIBAL, and instead pursue for greater accountability and participation in any negotiations over natural resources.  This Commission would become the focal point for the broader social mobilization against the EXMIBAL concession. [15]

The Signing of the Exploitation Agreement in the Shadow of Violence and Repression

The government responded to the domestic opposition with a campaign of threats and assassinations, specifically targeting prominent and outspoken leaders of the resistance to EXMIBAL. In November of 1970, the Arana government imposed a state of siege that restricted all civil, political and constitutional rights, and served as a cover for its violent repression of EXMIBAL opponents. [16]   That same month, Julio Carney Herrerra, a lawyer and member of the ad hoc Commission, was assassinated.  Also that month, Alfonso Bauer Paiz, another Commission member and law professor, was shot by government assassins, but survived the attack.  Two months later, in January of 1971, Adolfo Mijangos, a third Commission member and prominent lawyer, was also assassinated. [17]   These attacks on prominent opponents to the EXMIBAL concession served to punctuate the broader repression and killings faced by students, professors and other opponents to the project.

In February of 1971, just one month after this string of assassinations, the government and EXMIBAL finalized a 21-point exploitation agreement; not surprisingly, the terms of this agreement failed to incorporate any of the recommendations put forward by the university round-table.  Thus, within a mere four months, the government of Guatemala had succeeded in decapitating the opposition to the EXMIBAL concession, and EXMIBAL had secured a favourable exploitation agreement. 

While EXMIBAL continues to deny the role government violence and suppression played in the securing of its agreements, [18] the United Nations Commission for Historical Clarification in Guatemala (CEH) as well as the “Nunca Mas” report by the Human Rights Office of the Archbishop of Guatemala, specifically catalogue these violations and explicitly link the violence to efforts to eliminate the popular opposition to EXMIBAL. [19]   The rampant corruption present in the Guatemalan government at the time virtually ensured that the military leaders who facilitated these agreements were greatly rewarded for their efforts and support.

The 1971 Exploitation Agreement

The 1971 exploitation agreement granted EXMIBAL ultimate freedom to profit from its activities, paying little back to the state.  While EXMIBAL agreed to pay portions of its required tax, EXMIBAL, in reality, surrendered little to the government.  These so-called tax payments, for instance, were to be rendered to the government in the form of EXMIBAL’s stock, up to a total of 30% – an arrangement similar to previous arrangements between Guatemala and the United Fruit Company.  Under this profit-sharing agreement, the Guatemalan government would, in theory, receive compensation for the concession via EXMIBAL’s profits. [20]  

In practice, however, EXMIBAL’s books rarely showed a profit. EXMIBAL at all times retained full decision-making control, and was free to manipulate its domestic profits so as to avoid paying revenues to the Guatemalan government.  Put simply, EXMIBAL exported unrefined nickel ore to another INCO subsidiary in Clydach Wales, thereby avoiding paying taxes on its profits.   In Clydach, the nickel ore was properly refined, and sold on the international markets for a significant profit.  Likewise, EXMIBAL diverted as much of its income as possible to freight, insurance, and warehousing, all of which were supplied by INCO affiliates. [21]  

Thus, while EXMIBAL showed little or no profits, and therefore paid no compensation to the Guatemalan government for its 385 square kilometer land concession, its parent company, INCO, would continue to profit from the overall corporate structure.

Reports allege that when EXMIBAL withdrew from Guatemala in 1982 following a drop in international nickel prices it had not paid anything to the government in taxes. [22]   The costs of its activities, however, continue to be borne by the people of El Estor.

The Aftermath of Nickel Mining in El Estor  

            Although the EXMIBAL mine operated for only a short time, its impact in El Estor continues to be felt today.  Of greatest concern are issues of land encroachment and environmental contamination.  Local reports indicate that over a hundred farmers were relocated during the first phase of mining in El Estor. [23]   Moreover, indigenous communities report that the armed military personnel and INCO security staff that guard the mine have, over the past 20 years, engaged in repeated encroachments of Q’eqchi’ land.  Since the INCO concession has not been properly marked off, and thus remains poorly defined, indigenous communities remain vulnerable to the arbitrary land claims of the security forces and soldiers.  As a result from this poor demarcation, INCO has reportedly allowed logging companies to illegally log old-growth forest in the area, on land that in many cases may belong to the government or local indigenous communities. [24]  

In addition, INCO has failed to adequately address the environmental concerns that have persisted since the mining operations were closed.  Although EXMIBAL General Manager Roberto Polanco adamantly claims that there have been no serious environmental consequences from the operation of the mine [25] , the track record of similar open pit mines run by INCO and other companies around the world contradict this assertion. [26]  

Open pit mining, which requires the deforestation and unearthing of massive amounts of land, typically employs a cyanide bleaching process that purifies the nickel ore that is extracted, simultaneously producing a toxic tailing.  The sulfur-dioxide emissions released during this process are a major cause of acid rain that leads to the contamination of rivers, lakes and land that could be used for farming.  To provide some perspective, INCO’s sulfur-dioxide emissions from its Canadian nickel mines have positioned it as the country’s largest single producer of the major acid gas. [27]   In 2002, concerns over such environmental impacts caused the government of Costa Rica to ban open-pit mining because significant risk it posed to farming and eco-tourism industries. [28]  

Despite the uncertainty regarding the environmental impact of its first phase of operations, INCO officials have consistently failed to address the issue of these toxic tailings and how they were disposed of, or the broader environmental questions that remain unanswered.   Due to the repression of political dissidents in Guatemala, proper environmental studies have yet to be completed by local groups, but the environmental issues remain a serious concern.  While mining officials claim that new technologies will lessen the environmental impact of open pit mining, one can only view these claims with skepticism given INCO’s unsavory environmental record, both in El Estor and elsewhere. 

The Return of Canadian Mining to El Estor

            After a 20-year absence that left a number of issues from the past unsettled, Canadian mining companies are planning a return to El Estor.  With its original 40-year concession terminating in 2005, INCO had planned to renew mining operations in the El Estor area under a new joint partnership with Canadian mining company Geostar. [29]   Such a renewal of activity would be necessary in order for INCO to apply to have its concession rights renewed in 2005.

            Under the propsed arrangement, Geostar would purchase the INCO concession, and INCO and Geostar would undergo a complicated stock swap giving each significant holdings in the other company.  The plan calls for a renewal and expansion of the original mining concession, and the opening of 8 to 10 new strip mines in the area. [30]    

            Likewise, Chesbar, another Canadian mining company, which also operates under the names Jaguar Nickel Inc and Minera Mayamerica, has also recently secured a significant mining concession in the El Estor area, adjacent to the INCO/Geostar concession.  Chesbar is currently in the exploration phase of its operation but plans to put forward a specific proposal by 2005. [31]

LAND EXPROPRIATION AND INDIGENOUS RIGHTS UNDER ILO CONVENTION 169

The return of Canadian mining companies to the El Estor area raises not only the pending questions from the past, as summarized above, but also serious concerns about the impact they will have on the local Q’eqchi’ indigenous communities.  The initial phase of mining development saw hundreds of families lose their farms, some of which were resettled in Chichipate, while others were moved further into the mountains. [32]   The renewed development of the mining concession will likely result in the further forced expropriation of large amounts of indigenous land, much of which indigenous groups in the area have just recently finished purchasing from the government at great cost. 

Local groups estimate that there are roughly 35 Q’eqchi’ communities presently located in the El Estor land concessions, with a population of between 10,000-20,000 people.  While the commencement of mining operations would not require the expropriation of all these lands, officials at EXMIBAL and Chesbar are unable to state how many communities they believe will require relocation. [33]

Historically, relocation within Guatemala has lead to social upheaval within communities, as well as between the relocated communities and other communities who live near the new land that is being provided.  Aside from concerns over land expropriation and relocation, a renewed mining presence would also significantly affect indigenous groups within the mining concession through detrimental impacts on water quality, crop growth, and other aspects of traditional community life.

The Principles Established in ILO 169

            Under international law, Guatemala has an obligation to directly consult with indigenous peoples regarding any development that may affect the use of their territories or impact their traditional way of life.  Specifically, International Labour Organization Convention 169 on Indigenous and Tribal Peoples (ILO 169) – an international treaty Guatemala ratified in 1996 – establishes the responsibilities states have towards indigenous communities when considering development projects that may impact indigenous land.

            ILO 169 identifies land rights as the core issue in the survival of indigenous communities around the world. [34]   To defend these rights, ILO 169 recognizes indigenous communities as autonomous actors in consultations and negotiations with government, whose consent must be sought prior to commencing any development process.

The Obligation to Consult Prior to Exploration or Exploitation

            Article 15(2) of ILO 169 states that even in cases where the state retains ownership of sub-soil resources, as is the case in Guatemala, that the state “shall…consult these peoples, with a view to ascertaining whether and to what degree their interests would be prejudiced, before undertaking or permitting any programs for the exploration or exploitation of such resources pertaining to their lands”. [35]

            As such, it is unacceptable for government of Guatemala to allow exploration and exploitation to occur prior to properly consulting the affected indigenous groups.

            In cases where ILO 169 came into effect after a concession was granted, the government nonetheless has the responsibility to begin consultations in an adequate and timely fashion. [36]   Thus, the government of Guatemala cannot allow the reactivation of EXMIBAL facilities until it has properly consulted with local indigenous groups.  Further, in the case of the Chesbar concession, which was signed after the ratification of ILO 169, the Government of Guatemala must annul this land concession and re-initiate the granting process, beginning with the consultation of local indigenous groups. [37]

The Obligation to Consult with the Representative Institutions of an Indigenous Group

Article 6 of ILO 169 states that the government must “consult indigenous and tribal peoples, through adequate procedures and their representative institutions, whenever consideration is given to legislative or administrative measures which may affect them directly”.  In meeting this high threshold, it is not enough for mining companies to consult with individuals on a case-by-case basis, as the need to relocate them arises.  Rather, ILO 169 envisions the government consulting the representatives of indigenous communities in advance of the development project, and negotiating the necessary agreements for the development to proceed.  It is important to note that these protective measures apply not only to land actually occupied by indigenous groups, but also include lands to which indigenous groups have ”traditionally had access to for their sustenance and traditional activities”. [38]  

To date, EXMIBAL, Chesbar, and the Guatemalan government have all failed to properly consult with the representative leadership of the indigenous groups that will be affected by the renewal of mining in El Estor. [39]   While the mining companies state that they do not see the need to consult because they do not believe there will be an impact on indigenous land, they fail to appreciate that the purpose of the consultations is specifically to ask the indigenous groups how they believe they will be affected.

The Obligation to Share the Benefits of Extractive Activities

            Article 15 further states that “The peoples concerned shall wherever possible participate in the benefits of such activities, and shall receive fair compensation for any damages which they may sustain as a result of such activities”. [40]

            In essence, Article 15 not only requires that indigenous groups be properly compensated for their land, but, rather, that all efforts are made to ensure that these groups actually gain something from activities that will inevitably disrupt their communities.  Such an approach clearly envisions indigenous groups as active partners in the development project, and not mere passive bystanders.  As such, local indigenous groups must be placed in a position to properly bargain with the government and the mining company, to ensure that they receive adequate revenues from the mining of nickel on their lands.  This approach varies considerably from the typical approach of the extract paradigm that, at best, simply looks to compensate individuals whose land is required with a token payment.

The Role of ILO 169 in Canceling the Atlantico Oil Concession in El Estor

ILO 169 has already had a significant impact on the rights of indigenous groups in Guatemala.  In 2002, ILO 169 was successfully employed by a group of local El Estor environmental and indigenous activists to convince the Guatemalan government to rescind an oil concession it had granted to the Guatemalan company Compania Petrolera Del Atlantico (Atlantico) on the grounds that the government had failed to follow proper procedures under ILO 169.  In that case, Atlantico had been granted the concession two months before ILO 169 was ratified in 1996, but did not secure a contract until late 2001.

The environmental and indigenous activists used these facts to incorporate the obligations found in ILO 169, and after months of political pressure, convinced the Guatemalan government to annul the oil concession.  This decision by the Guatemalan government, which specifically cites ILO 169 in its reasoning, demonstrates that it clearly acknowledges the full-scope of its obligations under this convention. 

The Responsibilities of Canadian Corporations and Canadian Government

Although technically speaking it is the Guatemalan government, and not the Canadian mining companies, which has undertaken specific obligation under ILO 169, it is important to pay attention to the influential political and economic position from which Canadian mining companies can apply pressure on the Guatemalan government to either ignore or adhere to its international obligations.  Particularly in the Guatemalan context where state corruption and repression constantly undermine the Rule of Law, one cannot divorce the responsibilities of the Guatemalan government from the role played by INCO, Geostar and Chesbar in influencing those decisions. 

Similarly, the Canadian government shares responsibility for the actions of Canadian corporations abroad.  The Canadian government has played an important role in providing the legal framework and encouraging, sometimes subsidizing and facilitating the investments by Canadian corporations abroad, and continues to benefit financially from such relationships.

As a result of this intimate relationship, recent work by professors from the Law Commission of Canada has recommended that Canadian companies be held to the same standards overseas, as they would be in Canada.  Based partly on an analysis of Talisman Energy’s activities in the Sudan, many believe this approach would increase corporate accountability, and curb exploitation of poor, dominated countries with weak and/or repressive and illegitimate governments. 

A failure to act responsibly and ensure the immediate consultation with the representatives of indigenous groups, allows these mining companies and the Canadian government to continue to benefit from the unjust agreements they secured with the brutal and corrupt military dictatorships of the past.  Simply put, Canadian companies cannot ignore the political realities of Guatemalan society.  As Daniel Vogt, director of a local NGO in El Estor, states: “Mining has been a source of development in Canada in large part because of the rule of law.  In a country like Guatemala where corruption, discrimination and impunity are rampant, it is important that INCO play an active role in the respect and protection of the rights of the local indigenous populations”. [41]    

THE FAILURE OF THE ‘EXTRACT PARADIGM’ AS A DEVELOPMENT MODEL

            Above, we have set out some allegations of serious abuses of the past, that are on-going as Canadian mining companies get ready to resume their exploration and exploitation in the volatile and unjust conditions of Guatemala.  The critiques set out above do not, however, go to the under-lying economic development problems inherent to the ‘extract’ development model.

            The failure of mining companies to bring significant social benefits in other developing states, while exploiting their nonrenewable natural resources, provides good reason to support the rights of indigenous communities in El Estor to decide for themselves whether they wish to surrender the use of their lands for mining development and mineral extraction.

            While mining companies and their supporters often argue that the local costs of extract projects are offset by the national benefits, empirical evidence suggests that these claims lack credibility.  The typical situation involves international mining companies reaping the majority of the benefits, while local communities and the national economy absorb the majority of the costs.

The Relationship Between Extract Industries and Levels of Poverty

A recent Oxfam America study, authored by Professor Michael Ross of the University of California, specifically examines the relationship between extractive sectors, such as mining, and economic development.  The study points to the failures of the export-oriented “extract paradigm” of economic development as a tool to improve social conditions in developing states, and concludes that alternative development models must be pursued.

The Oxfam report made the following findings.  First, that the overall living standards in oil and mineral dependent states are exceptionally low – lower than they should be given their per capita incomes.  Secondly, Oxfam found that higher levels of mineral dependence are strongly correlated with higher rates of poverty.  Third, that oil and mineral dependent states tend to suffer from exceptionally high rates of child mortality.  Fourth, that mineral dependence is strongly correlated with income inequality.  Fifth, that oil and mineral dependence has harmful effects on governments themselves including higher levels of corruption, authoritarian institutions, government ineffectiveness, military spending and civil war. [42]

Simply put: “Oil and mineral exports do not simply fail to alleviate poverty; they appear to make it worse”. [43]

            The Oxfam study puts forward a number of reasons that help explain its empirical conclusions.  First, extract sectors tend to be very capital intensive, and use little unskilled or semi-skilled labour, thus providing few employment opportunities for the local population.  Moreover, extract industries tend to be geographically concentrated and create small pockets of wealth that typically fail to be distributed to the rest of society.  Further, the social and environmental problems they produce tend to fall heavily on the poor, and disrupt their way of life most.  Also, these industries tend to follow a boom-bust cycle that leads to insecurity for the poor, who generally have fewer savings and safety nets.  Finally, these industries are generally run by the state or large corporations in ways that lead to high rates of corruption, repression and conflict. [44]  

Understanding the Role of Mining in Developed States

            Mining executives often argue that:  “The experience of the U.S., Canada and Australia in becoming amongst the richest nations in the world while continuing to rely on mining clearly proves that mining is an economic foundation that can reliably help nations escape poverty.” [45]   In response to these claims, Oxfam commissioned a follow-up report, authored by Thomas Michael Power of the University of Montana.  The Power report found that mining in Canada, the US, and Australia was not a significant cause of economic development in those states, and that it was in all cases “linked to an overall transformation of business and financial organizations, education, research and knowledge development, human capital accumulation and infrastructure expansion.  It was strengthened by well-developed and stable political institutions…[and] public policies encouraged a broad distribution of land and resources which reduced income inequality.” [46]

            In the contemporary context of developing states, international corporations simply extract the minerals from the developing state with little long-term benefit to be accrued in the local economy, and ship the materials abroad where the profitable refining and sale of the minerals takes place.  

            Although the two Oxfam studies strongly critique the current pattern of mining development, it would be an oversimplification to say that Oxfam’s position can be characterized as anti-mining.  As Keith Slack, policy advisor for Oxfam America, states: “Oxfam America is not opposed to mining or other extractive activity in general.  We believe that discussions of the appropriateness of these activities in developing countries must be made in open and fair consultation, and with full respect for the rights of local communities who will be affected by the extractive operations.” [47]  

The Development Impact of Mining in El Estor

            The above arguments are particularly convincing in light of El Estor’s previous experience with EXMIBAL.  Looking specifically at the question of employment – which mining executives have held out as the sole benefit available for the people of El Estor – the initial mining project, much like the plans for the renewed project in El Estor employed fewer than 800 people.  While this employment benefited some individuals by providing them with a decent income while EXMIBAL’s mine was operational, they were immediately discarded when the market turned and nickel production became less profitable.  These short-lived benefits have provided little to the people of El Estor, while the costs of these activities have, still, yet to be calculated.

The continued support of the current extract paradigm, however, should come as no surprise; it is extremely profitable for mining companies, corrupt government employees, and the World Bank.  It is notable to point out that “loans to oil and mineral sectors continue to be the most profitable loans in the World Bank’s portfolio”. [48]

Without proper consultation, history is likely to repeat itself in El Estor; the local community will be left to deal with the impacts of these decisions long after the mineral resources are depleted and no longer of use to the mining companies.

THE RESISTANCE IN EL ESTOR AND THE RISKS FACED

Indigenous groups in the El Estor area, with the support of other local community groups and international non-governmental organizations, have mobilized resistance to the proposed resumption of mining activity.  One of the groups leading this effort is the Asociacion Estorena Para El Desarrollo Integral (AEPDI), which is headed by Daniel Vogt who was formerly the pastor of the Catholic Church in El Estor.

In 2002, AEPDI played an important role in the collective effort to convince the government of Guatemala to rescind the oil concession it had granted in 1996, and has been involved in community organizing on a range of issues in the El Estor area.   

AEPDI is not, strictly speaking, against mining.  Vogt explains:  “Our organization welcomes development.  This part of Guatemala has long been abandoned and the population is needy of work opportunities.  However, we believe that any development project must be agreed upon by the people who live here, those who would have direct work as well as those impacted by the project in other ways so as to avoid social conflict and also respect the intrinsic rights of the people who have lived here for generations and depend on the natural environment directly for their livelihood.  These same basic rights are also recognized by the Guatemalan constitution and the international agreements that Guatemala has signed.” [49]

To this end, AEPDI works closely with some 10 different indigenous communities who are situated in the EXMIBAL concession to ensure that their voices are heard.  According to Vogt, while there are those in the town who would like to see the return of INCO to El Estor, the indigenous groups that will be most seriously impacted by the mining operation have overwhelmingly opposed its reactivation under current conditions.

Violence and Threats in El Estor

Former INCO employees who support the return of the EXMIBAL to El Estor have made it increasingly dangerous for opponents of the mine to openly express any reservations about the project.  As Amnesty International reported in May of 2003, ‘Large land-owners, security forces, and local government officials involved and mining and logging interests have long threatened local Q’eqchi’ Indian populations and those that defend their interests’. [50]   In one example, Carlos Coc Rax of the village of Chichipate, who was leader of the Association for the Development of the Maya Q’eqchi’ people of El Estor, was ‘disappeared’ on April 21, 1999 on his way back to El Estor from land negotiations in Guatemala City.  Coc Rax had consistently spoken out against illegal logging that was taking place in the area. [51]

In another case in January of 2003, local environmental activist Sloida Mejia received a telephoned threat that stated she ‘would not be able to continue living in El Estor if she continued to oppose new mining developments, specifically that of Chesbar’. [52]   

Increasingly, these threats have begun to target the broader coalitions working in El Estor.  For example, INCO supporters had planned a pro-INCO rally to be held on July 5, 2003, at which time local INCO supporters threatened to burn down the local AEPDI offices.  These threats carried considerable weight as vigilante violence in El Estor has gone unchecked during the past year.

In November of 2002, vigilante groups in El Estor burned down the local police station, and went on to extra-judicially execute five young indigenous men who allegedly had ties to regional gangs.  The volatile political situation in El Estor was further demonstrated on July 30 and 31, 2003, when two other individuals were lynched by a mob of people and burned alive.

While these violent acts are not necessarily linked to the mining issue, they demonstrate the dangerous propensity of groups to employ extreme violence in pursuit of their objectives, with no sanction from the local authorities. 

Much like the situation in Guatemala during the 1960s and 70s, INCO stands to benefit directly from the violence that limits the political space for opposition to the mine. The influence INCO has over these groups was clearly demonstrated when the planned July 5 pro-INCO rally was abruptly cancelled after Vogt sent a personal letter to the Canadian Chairman and CEO of INCO Scott Hand on July 3.  Although INCO’s reasons for canceling the protest are difficult to ascertain, one imagines that INCO realized the negative publicity an action of that magnitude could have on their plans would not be off-set by the benefits.  Despite its capacity to influence those who would use threats and violence against opponents of the mine, EXMIBAL has nonetheless consistently refused to issue a public statement denouncing the use of violence in El Estor. [53]

The Collective Position of the Affected Indigenous Groups

            On August 22, 2003, representatives from 38 local indigenous communities and organizations met in El Estor to discuss the options available to them in opposing the reactivation of EXMIBAL operations.  This group, composed predominantly of mayors or presidents of local indigenous councils, generally expressed feelings of concern and opposition to the possible return of mining to El Estor, most of which was based on their memory of the initial EXMIBAL operations, 20 years ago.

            As Abelardo Chun, a local Q’eqchi’ indigenous leader stated: “Exmibal spoke of the marvels of the work it was going to undertake and offered jobs, homes, electricity, health services and others. What do we have now of what they promised?  Nothing.  We were cheated.  They took the riches from the land and now we are poorer than before because our crops are affected by the contaminated soil.  The area where we were relocated is full of rocks and you cannot plant anything there.”  Capturing the mood of the meeting, Chun completely rejects the return of mining companies to the communities.

Following this meeting, the indigenous leaders agreed to consult again with their communities and then reconvene to determine what concrete steps they would take to oppose the mine.  One of the main drives behind this mobilization effort by the local indigenous communities is reflected in their understanding that they will continue to be ignored by both the governments and the mining companies unless they organize themselves and demand that their concerns be dealt with through a formal consultative procedure with the government of Guatemala and the mining companies.

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HOW TO SUPPORT THE Q’EQCHI’ INDIGENOUS COMMUNITIES OF EL ESTOR

            Contact the following individuals and demand that Canadian Mining Companies in Guatemala halt further development until proper investigations are concluded into the human rights violations of the past and present, and that indigenous communities are fully consulted and negotiated with, as per ILO 169:

Ø       David Marshall, Trade Attaché at the Canadian Embassy in Guatemala at: gtmla-td@dfait-maeci.gc.ca

Ø       Scott Hand, Chairman and CEO Inco Ltd. 145 King Street West, suite 1500, Toronto, Ontario, M5H 4B7 Canada

Ø       Michael Reimann, President, Geostar Metals Inc. 1255 West Pender Street, Vancouver, British Columbia, V6E 2V1 Canada

Ø       John Yates, President, Jaguar Nickel Inc.  910-55 University Avenue, Toronto, Ontario, M5J 2H7 Canada

CONTACT RIGHTS ACTION:

-          to invite a speaker to give public presentations on this and other related issues;

-          to come to Guatemala on fact-finding delegations to learn more about these issues;

TO MAKE TAX-CHARITABLE DONATIONS: for the community development work of Asociacion Estorena Para El Desarrollo Integral (AEPDI), make check payable to “Rights Action” [writing El Estor – AEPDI on the memo line and in a note] and mail to:

-- UNITED STATES: Rights Action ,1830 Connecticut Av, NW, Washington DC, 20009.

-- CANADA: Rights Action, 509 St. Clair Av. W, box73527, Toronto ON, M6C-1C0.

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Updates from the “World Unites Against Inco” events and further background information are available at: www.IncoWatch.ca, www.jatam.org/english/case/inco.

GLOBAL WORK CONCERNING INCO:  Contact Jennifer Foulds, Communications Director, Environmental Defence Canada, 416-323-9521 ext. 232, jennifer@edcanada.org and Elizabeth Chiu, Communications Officer, Environmental Defence Canada, 416-323-9521 ext. 222, elizabeth@edcanada.org.