Mining

Update on Pacific Rim Mining Company

It has been over three years since Pacific Rim closed down its operations in El Salvador and filed a notice of intent to seek arbitration against the Salvadoran Government for denial of mining permits.

Pacific Rim, a Canadian company that bills itself as “an environmentally and socially responsible exploration company,” reports that in the first half of fiscal 2012, their “cash and cash equivalents increased $1.4 million from $0.3 million at April 30, 2011 to $1.7 million at October 31, 2011. The company’s short-term investments increased from $0.8 million to $1.1 million over the same period, resulting in a $1.8 million total increase in assets.

The increase in assets does not indicate that they are all of a sudden profitable. According to a Pacific Rim’s press release announcing their quarterly report, the increase “reflects the cash proceeds of a private placement equity financing undertaken by the Company.” This means that Pacific Rim found new private investors to finance their operations. In fact, the press release states clearly that they have “no source of revenue, and will require additional cash to continue fund legal, exploration and administrative expenses.”

While Pacific Rim’s El Dorado project in San Isidro, Cabañas is their most advanced, the company recently acquired an option to earn 65% interest in the Hog Ranch gold property in Nevada and has begun field exploration. Pacific Rim also has the opportunity to acquire a 100% interest in the Remance property in Panama – an interest they secured in 2010. While they have begun “phase 1 drilling” at Hog Ranch, Pacific Rim reports that the Remance project is “in doubt” and they have no plans for exploring the property.

The biggest question mark for Pacific Rim remains their ICSID claim against El Salvador, which is potentially worth $100 million dollars and the rights to mine gold in Cabañas. In their press release, Pacific Rim says,

“Expenditures related to Pacific Rim’s CAFTA/ILES arbitration claim are expected to continue at present or modestly higher levels during the coming months, and are directly related to the level of arbitration activity. The Company has currently accumulated a liability of approximately $1.4 million related to the CAFTA/ILES arbitration action and is currently discussing vendor-specific alternative financing opportunities that will reduce this accounts payable position.”

The ICSID Tribunal will likely hand down a ruling any day on the last round of preliminary objections filed by El Salvador. If the Tribunal finds in favor of El Salvador, part or all of Pacific Rim’s claim could be dismissed. If the Tribunal finds for Pacific Rim, the case moves a little closer to a full hearing.

In anticipation of the decision, a group of labor, union, environmental and other civil society leaders will hold a rally outside the World Bank tomorrow (Thursday, December 15) protesting Pacific Rim’s claim. Those attending the rally will present a letter to World Bank and ICSID officials calling on them to respect El Salvador’s decision to prohibit mining in order to protect their local communities and water resources from environmental damage.

Though Pacific Rim continues to engage in minor exploration activities, their primary activity and asset is this lawsuit. A favorable outcome of the ICSID arbitration would be a windfall for Pacific Rim’s investors, possibly allowing them to recoup their $77 million investment and perhaps damages and lost profits.

Cabanas, International Relations, Mining

Interview with Antonio Pacheco, Director of ADES

On June 8th, the CEO of Pacific Rim mining company, Thomas Shrake, spoke before a Canadian congressional committee about his experience with the El Dorado mining project in Cabañas, El Salvador.  The congressional committee was debating the Bill C-300 that proposes oversight of the government’s investments into international mining projects.  The committee invited Mr. Shrake to testify as an example of why the bill is needed to protect Canada’s reputation abroad.  Mr Shrake’s testimony argued against the Bill and demonized the sectors of Salvadoran society that have opposed the company’s projects in their communities.  Here we provide a response from the community association, ADES, targeted in Shrake’s testimony.

Interview with Antonio Pacheco, Director of ADES:

ROSIE: We’re here with Antonio Pacheco, the Director of ADES, and we have reviewed the comments made by Thomas Shrake to the Canadian Congressional committee on June 8, 2010. I’d like to ask, after reviewing these accusations against ADES, how do you perceive what he has said?

ANTONIO:  Mr. Shrake’s objective was to create a strong impression in the Canadian Congress, to the end that they will not approve a law that controls the behavior of Canadian businesses. Mr. Shrake accuses us of promoting violence, but in reality, the authorities of this country know very well that ADES had nothing to do with these acts, and that ADES is very removed from this type of event.  ADES has done nothing to cause violence in the area of Cabanas.

ROSIE: So, why do you think it was in Mr. Shrake’s interest to make this type of accusation against your organization?

ANTONIO: He tries to paint ADES as the devil, and to make himself into the victim of our actions. He tries to make an impression on the Canadian public that they are the victims of an attack from a Salvadoran organization, and that the Salvadoran government has done nothing to prevent this type of action.

ROSIE: So, what is the real history of ADES? What’s the organization’s mission?

ANTONIO:  ADES is a community organization, comprised of campesinos and campesinas, dedicated to agriculture and community organization. Its focus is community development. This mission leads us to oppose a project like mining exploration, which is so environmentally devastating. Before we knew about the damage caused by mines, we thought it was a good project because of the employment opportunities and development that it could bring. However, our position changed when the people effected by Pacific Rim’s initial exploration came to our office to ask for help and accompaniment. The population, coming to their own conclusions, had already tried to denounce the project through the municipal government, the attorney general, and prosecutor’s office, but these organizations didn’t pay any attention to their complaints.

From this point, ADES began to get involved in this issue. The first thing we had to do was investigate the issue, and we realized that effectively in Central America and Latin America there had been a lot of damage caused by mining companies.  We are convinced that our vision, which is sustainable development, including the rational use of natural resources, is the best way to improve our standard of living.  So, due to this situation, specifically the persistent increase of mining exploration throughout the department, and the continuous complaints of the population, we decided to accompany them by raising awareness of the potential damages, scientific research with outside experts, and to begin to bring the issue onto the national stage. We decided to bring the issue to politicians, to the Salvadoran Congress, ministers, and the church, while respecting the mining industry’s presence in Cabañas.

ROSIE: Mr. Shrake has said that on 2 occasions armed groups attacked his employees and damaged his property, along with other incidences of violence, and he says that ADES is responsible for all of these violent events.

ANTONIO: Frankly, we don’t know where this accusation; that we have acted in a planned manner with armed groups, is coming from.  We are a social organization, legally constituted, and we focus on peaceful advocacy. We understand the detrimental impact that this type of activity could cause on our area, where we work and live with our families. We make it very clear that it is not our political practice to use violent means, as Mr. Shrake suggests.

ROSIE: So, ADES is going to prepare a more detailed response to these accusations, and we will await this document.

ANTONIO: Of course ADES will respond to the accusations of the president of Pacific Rim, so that the citizenry, not only in El Salvador but also in USA and Canada can hear our point of view.

Elections 2009, Mining

Mining and the Presidential Elections: Rep. Rohrabacher, Paul Behrends, and Pacific Rim

Days before El Salvador’s recent presidential elections, a small chorus of Representatives from the U.S. Congress spoke out against the FMLN political party and their presidential candidate Mauricio Funes. Of those that spoke out, Rep. Dana Rohrabacher (R-CA) was one of the most vociferous.

In a speech on the floor of the House of Representatives, Rep. Rohrabacher labeled the FMLN a pro-terrorist political party that has links to Iran, al-Qaeda, the FARC, Cuba, and Hugo Chavez. He added that while Salvadorans are free to vote for whomever they like, if they elect the FMLN, the U.S. should end the temporary protective status (TPS) for Salvadorans in the U.S., and cut off the flow of remittances to El Salvador. Rep. Rohrabacher and officials from the State Department made similar threats during the 2004 presidential elections in El Salvador, contributing to the ARENA’s victory over the FMLN.

Despite the last minute threats, on March 15, 2009 Salvadorans elected Mauricio Funes as their next president. While Rep. Rohrabacher’s comments on the House Floor caused a stir the week before the elections, the media has largely ignored them in their coverage of the Funes victory. Rep. Rohrabacher on the other hand posted a C-SPAN video of his speech from the House floor on the front page of his official website.

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Contrary to Rep. Rohrabacher’s threats, El Salvador’s relationship with the U.S. remains strong. President Obama and Secretary of State Clinton both called to congratulate Funes on his victory, and to schedule meetings with him at an upcoming summit. Funes –a moderate and a party outsider– has reiterated that he will respect trade agreements and international law, seek to stem the flow immigration, and maintain strong ties with the U.S.

Within hours of Rep. Rohrabacher and others making statements regarding the FMLN, thousands of U.S. citizens were calling the State Department to demand a statement of neutrality from the Obama Administration. State Department officials readily obliged by restating their neutrality and willingness to work with the next Salvadoran president. The statements made by Rep. Rohrabacher and others beg the question – do these Congressmen have intelligence or information on the FMLN that the State Department and President do not have, or were other interests in the balance? We propose that the answer may lie in Rep. Rohrabacher’s connections with the Pacific Rim Mining Corporation’s struggle to secure mining permits in El Salvador.   Click here to keep reading

Environment, Mining

Mining in El Salvador – So what’s next?

On March 13, 2009, Pacific Rim posted their Fiscal 2009 Third Quarter Result, in which they state, “[i]n deference to [the] democratic process, Pacific Rim may elect to wait until after the election is decided and then evaluate the post-election climate for mining in El Salvador before initiating CAFTA arbitration proceedings.” 

Recall that on December 8, 2008, Pacific Rim filed a notice of intent to commence international arbitration proceedings against the Government of El Salvador under CAFTA-DR.  Their claim is that El Salvador violated international and Salvadoran law by failing to issue exploitation permits, resulting in significant loss.  Under CAFTA-DR rules, Pacific Rim could proceed with formal arbitration on or after March 9, 2009, which is when the three-month negotiation/cooling-off period ended.

 

So what is Pacific Rim’s next move? (Click here to read on)

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Advocacy, Environment

Pacific Rim Freezes Activities; New Archbishop Opposes Mining

The El Dorado gold mine project proposed by the Pacific Rim has been at the center of the debate regarding natural resource extraction in El Salvador.

According to Pacific Rim, a Canadian company, the mine project has widespread local support because of the employment it would provide, and poses no threat to the environment. The project would use the newest and best techniques, and include a water treatment plant.  The practices would be so safe in fact that, according to CEO Tom Shrake, the tailings pond could eventually be used as a reservoir. (See article on Mineweb.)

However, local anti-mining activists, Oxfam America, and the Roman Catholic bishops tell a different story. They say the mine would contaminate drinking water with cyanide, irreparably damage the environment, and produce little economic benefit for local communities. (See article on Upside Down World.)

Because of the politically delicate nature of the issue, the Saca administration –going against its neo-liberal reputation– has refused to grant Pacific Rim the permits necessary to move ahead with the project. In July of last year, Pacific Rim announced a slow down, and that it was laying-off 42 of their 267 employees based in El Salvador until the government granted them the permits. After little response from the government, in December 2008 Pacific Rim filed a notice of intent to seek arbitration under CAFTA regulations for $77 million in indirect appropriation, giving the government until March 9 2009 to respond.

Yesterday (February 16 2009) at the regional forum on metals mining, the new Archbishop of San Salvador, Monseñor José Luis Escobar, declared his opposition to mining because of the danger it poses to the environment and human health. He urged the nation to wait to extract the minerals until the industry develops better technologies and techniques that will not pose these threats.  The archbishop went on to say that he is also concerned with the degree of power that the government grants transnational corporations.

These comments came only 4 days after Pacific Rim announced that it will freeze its feasibility study, citing the current volatility in the costs of inputs such as steel and fuel. They stated that activity will be halted until the market stabilizes, however it is unclear when that will be.