the world bank and extractive industries – the divisive ‘demonstration impact’ of the marlin...

8/12/2019 The World Bank and Extractive Industries the Divisive Demonstration Impact of the Marlin Mine

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Case study on Glamis Gold s Marlin Mine June 2005 1

The World Bank and Extractive Industries The Divisive Demonstration Impact of the Marlin Mine

prepared by the Halifax Initiative Coalition

Glamis Golds Marlin mine in Guatemala

represents the Companys most important gold

asset1, and the World Banks hopes for a

poster-child that would set a new standard for

sustainable mining. Yet before operations have

even begun, the controversial project has become

a focal point for protest, and has consolidated

opposition to mining in the country.

Introduction

On January 11, 2005, hundreds of local residentswere engaged in a stand-off with 700 military and300 police at Los Encuentros, Guatemala. Forforty days, they had been blockading the path of aball mill being sent to process ore at Canadianmining company Glamis Gold's Marlin mine in theWestern Highlands. Initial opposition resulted fromthe company sproposal to dismantle a locally-built pedestrian bridge in order to allow themachinery to pass. As more people joined theprotest, concern turned to the negative impactsof the proposed mine on local communities. Theensuing clash left local resident, Raul CastroBocel, dead and ten others injured.

Guatemala sPresident, Oscar Berger, justifiedthe military intervention on the grounds of protecting shareholder interests2. The companyblamed the incident on anti-developmentactivists. The International Finance Corporation(IFC), the private sector arm of the World Bank(WB), which had agreed to fund the project sixmonths prior, continued to assert that thecompany acted as a goodcorporate citizen andthat the project can be operated in a

responsible way to help reduce poverty andimprove people s lives3. This study tells adifferent story.

Company Description Glamis Gold

Glamis Gold Ltd. is an intermediate-sized goldand silver mining company and Canada sfourthlargest gold producer4. It was incorporated in1972, and is traded on both the Toronto and NewYork Stock Exchanges. Although registered inVancouver, British Colombia, its offices are inReno, Nevada, where it operates as Glamis GoldInc. The company has thirty years of experiencein developing and operating mines throughout the

Americas, with previous developments inCalifornia (Picacho and Rand mines) andHonduras, following the acquisitionof Mar-WestResources Ltd. (San Martin mine). Mergers withRayrock Resources Inc. in 1999 and withFrancisco Gold Corp. in July 2002 gave itpossessionof the Marigold mine in Nevada, theEl Sauzal mine in Mexico and the Marlin mine(and Cerro Blanco project) in Guatemala.5 Themerger with Francisco is part of Glamis strategyto develop a strong presence in Central Americaand create development and operationalsynergies among its different mines.6

The Guatemalan Context - Open forbusiness, like it or not

Companies such as Glamis are attracted toGuatemala by the country s low royaltyrates, taxshelters, weak mining regulations and significantunexploited mineral resources.

Guatemala sMining Law was revised in 1997,specifically to open the country sdoors to theglobal mining industry7. Article 125 of Guatemala sconstitutionacknowledges mineral exploration asa useful and public need for the state8. To providean incentive for companies to invest in mining,

Sipacapa, San Marcos (Photo: GrahamSaul, FoE Canada


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Halifax Initiative Coalition2

the Mining Law fixed royalties at 1% of miningrevenues9. This represents the lower limit ofroyalty rates internationally. Tax incentives formining companies are also significant. Forexample, Glamis will not be required to pay the31% corporate tax expected until 200810.

These reforms had their desired effect and therehas been an explosion in the number of miningconcessions granted in Guatemala. Between2000 and 2004, over 350 new licences wereapproved.11 These permits cover roughly tenpercent of the country s landmass and arespread across 16 departments and 106municipalities12.

Canadian companies dominate the Guatemalanmining sector and their operations have long beencontroversial.About 75 percent of the post-reformmining concessions have gone to thesubsidiariesof four Canadianmining companies: (i) Inco Ltd, (ii)

Jaguar Nickel, (iii) Radius Exploration Ltd, and (iv)Glamis Gold Ltd13. Concessionsfor Glamis Marlinmine in Guatemala covers a subsurface area of2,000 square kilometres, on which the companyis allowed to conduct further exploration drillingand testing14once it has secured tenure from thepeople that live on the land.

The Canadian government is currentlynegotiating a free trade agreement withGuatemala and three other Central Americancountries: Nicaragua, Honduras and El Salvador(the Canada-Central America Free Trade

Agreement, or CA4FTA). The CA4FTA will likely

include an investor-state clause based onChapter 11 of the North American Free Trade

Agreement, which allows corporations tochallenge legislation that limits their ability togenerate profit15. Such provisions create a chillingeffect that discourages elected officialsfrom adopting legislation that protects the publicinterest, for fear of being sued by foreigncompanies.16

Glamis has made use of the NAFTA Chapter 11provision in connection with its open-pit goldmining project in the Imperial Valley ofCalifornia. It filed a US$50 million claim for

compensation against the United States whenthe State of California adopted environmentallegislation requiring mining companies to backfillholes in sacred indigenous areas.17

Not surprisingly, Guatemalan citizen groups havebeen vocal in their opposition to the free tradeagreements and their investment provisions. Inearly March, Guatemala City witnessed a seriesof street protests as citizen groups voiced their

opposition to the government sratificationof theUS-Central America Free Trade Agreement(CAFTA). The government responded withforce, resulting in a number of deaths.

Project Description - The Marlin Mine

Glamis Gold s wholly-owned subsidiary, Montana

Explorada de Guatemala, is developing theMarlin mine. The greenfield gold project islocated in the Western Highlands of Guatemalanear the towns of San Miguel Ixtahuacn (1)(actual site of the mine) and Sipacapa (2)(industrial and processing facilities), and thecommunity of Huehuetenango. The mine islocated in a remote, mountainous regioncomposed of volcanic rocks, approximately2000m above sea level, with very distinct wet anddry seasons18. The area is populated almostentirely by two indigenous Mayan peoples: theMam and Sipakapense Maya.

The company began development of thecombined open pit and underground mine inNovember 2003 once it secured the exploitationlicence from the Portillo government. Glamis haspurchased the vast majority of the 322 parcelsofland located in the 6km2zone in which the minewill operate, from local landowners.19 The mineis expected to cost approximately US$254million20, and produce 2.1 million ounces of goldand 29.2 million ounces of silver21. Marlin willyield approximately 217,000 ounces of gold peryear, extracted through cyanide-vat leaching. Itis expected to operate for ten years, beginningin the fourth quarter of 2005, although further

exploration in the region may reveal additionalreserves, such as in La Hamaca (see below).22.Glamis also holds mining rights to the CerroBlanco gold mine in south eastern Guatemala,and is currently completing a final feasibilitystudy for the project. Extraction at Cerro Blancois likely to be undertaken through undergroundmining.

Image published in El Peridico, Guatemala 18 March 2004,Busi nesssection, page 11.


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Social and environmental impacts and benefits

In April 2003, Montana Explorada submitted itsEnvironmental Impact Assessment (EIA) to theMinistry of Environment and Natural Resources.In September of that year, the Ministry grantedMontana s environmental permit.

As with other open-pit mining projects, theMarlin mine will result in a number of significantenvironmental impacts. These include: thegeneration of approximately 38 million tons ofwaste rock (including 23 to 27 million tons oftailings)23; potential acid rock drainage24;deforestation (289 hectares); diminished airquality; noise pollution; and potentialcontaminationfrom the treatment of tailings withsodium cyanide25, and the potential failure of thetailings dam.26

The company claims that the mine will offer

significant local benefits. Glamis has reportedlyinvested US$1.3 million in social andenvironmental programs. This includes thecreation of a foundation (Fundacin SierraMadre) to which the company will contributeUS$400,000 over the next five years. Thefoundation will promote a series of community-based programs in the area (for example,sapling nurseries to replenish the surroundingregion and help to prevent erosion), andcommunity facilities and services (for example,construction of water chlorinators in themunicipal water system, a medical clinic, a bankto finance local enterprises, churches, roads,

bridges and rehabilitationclinics). Through thesesocial programs, the company has retrained orhired approximately 430 individuals27. The minecreated 1283 local construction jobs in the firstyear28and Glamis will fill 80% of the longer term

jobs created at the mine with local residents.

Benefits or costs?

Despite the number of jobs the company saysthe project will create, the vast majority (1000)will only last for the first year of construction. Ofthe 200 longer-term mining jobs, 160 will go tolocal residents. It is uncertainwhether these willbe full or part -time. Furthermore, some local

groups have argued that the number of jobscreated by the mine will not compensate for lostagricultural jobs.

Although the company has stated that it hasaddressed many of the environmentaland socialimpacts in its environmental management plan,an independent environmental assessmentexpert, Dr. Robert Moran, points out that thecompany has overlooked or underestimated a

number of issues in its EIA. These include thefollowing: long term acid rock drainage;cumulative impacts on the availability of localwater; seismic activity in the area; the impacts ofleachates and cyanide on aquatic organisms;the lack of an underseal or liner in the tailingsdam; and the long term maintenance of mine

closure facilities.

As part of its environmental due diligence,Glamis Gold is developing twelve environmentalmanagement plans addressing many of theconcerns identified above. These include acidrock drainage, waste, cyanide, forestry, water,wildlife, closure and emergency preparednessmanagement plans. While the environmentalaudit conducted for the project in January 2005acknowledged that these plans are livingdocuments that change throughout the life of theproject, it also noted that little progress appearsto have been made in advancingthe plans since

[early 2004] .29 This is a serious shortcomingwhich Glamis has said it will address in 2005.

More recently, attention has been drawn to theareas surrounding the Marlin mine, whichGlamis is also looking to develop. Located threekilometres from the Marlin mine, the La Hamacadeposits, which Glamis discovered in March2004, are extensive.Although the new discoveryfell outside the scope of the EIA andenvironmental management plans when theywere approved, Glamis has decided to expandthe processing facilities in Sipacapa toaccommodate the new ore. Consequently, it will

increase the milling capacity from that cited inthe EIA by 900 tonnes a day. 30Glamis is alsolooking to truck the ore from its Cerro Blancoproject to the Sipacapa processing centre. Thisincreased processing activity will doubtless havean impact on the environment and localcommunities that was not anticipated in thecompany s original studies and managementplans.

In addition, while it will be difficult to know theextent to which these impacts will be felt until theproject begins, Glamis track record in Hondurasbodes poorly for Guatemala. In the Siria Valley

of Honduras, Glamis Gold's subsidiary, EntreMares, operates the San Martin open pit goldmine. In 2003, a two-year study of the healthproblems in El Pedernal, the closest communityto the mine, revealed increased incidence ofskin, neurological, respiratory and eye diseases.

Authors o f the study suggested that these mightbe linked to contaminationfrom the mine31. Thecompany has done its own study refuting manyof these claims. However, this causality between


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the mine and the health problems seems tohave been further corroborated by a waterstudy, conducted with Entre Mares approval, inthe exploitation area of the mine which foundunacceptably high levels of arsenic and mercuryin the water32. Communities have also noted asevere decrease in the availabilityof water, and

the Special Prosecutor s Office on theEnvironment has filed criminal charges againstthe company for altering the course of streamsand for unauthorized deforestation33.

In Guatemala, the company will provide only0.5% of royalties from the project to thegovernment and 0.5% to the municipality of SanMiguel (this is a reduction from 7% under theprevious code)34 for a total of US$10 million35.San Miguel will receive approximatelyUS$350,000 annually in royalties during the ten-year life-span of the mine36, and its residents willget the greatest number of jobs. Although there

is talk of Sipacapa also receivinga percentageof the royalties, currently it receivesfew benefits,and in contrast will receive fewer jobs. As well, itwill be the site for storing the mine waste andthe source of water needed for the processingfacilities.

While the inhabitants from San Miguel belong tothe Mam people, who are spread throughoutother areas, the Sipakapense Maya number only15,000. The mine could therefore have asignificant impact on their livelihood and culture.

As mentioned above, the Guatemalan

government will not tax the company until 2008.Economic benefits to the country are minimal,particularly since it seems that the company willnot provide compensation for any externalities,such as the destruction of forests, environmentalcontamination,or adverse health impacts incurredby local communities. According to someopponents, the mine will also not contribute to the

long term sustainable development of the region.Finally, mining is exacerbating existing tensionsbetween the government and the majorityMayan population, largely over what manygroups see as a parcelling off by thegovernment of their land to mining companieswithout adequate consultation and due regard

for their indigenous rights. The ExtractiveIndustries Review, a two-year independentreview commissioned by the WB to assess itsinvolvement in the mining, oil and gas sectors,found that a majority of projects provoked orprolonged social disruption, human rightsabuses and conflict among communities.37 Itnoted that indigenous groups are oftenparticularly vulnerable. This is especially true ina fragile democracy like Guatemala that has along history of conflict and repression of therights of indigenous Mayan communities, and inwhich fresh violence and intimidation areconstant reminders of the past.

Consultation and Indigenous RightsAs part of the negotiations surrounding theadoption of the Peace Accords between thegovernment and the Guatemalan NationalRevolutionary Union guerillas, the Guatemalangovernment agreed to ratify International LabourOrganization (ILO) 169, the Conventionconcerning Indigenous and Tribal Peoples inIndependent Countries. This was an essentialelement of the Peace Accords, as it acted as aguarantee from the government that the rights ofindigenous Mayan communities would at last berespected.

The ILO Conventionplaces responsibility on thestate for development of an action plan toprotect the rights of indigenous and tribalpeoples. The plan should be developed inconsultation with these peoples and shouldaddress issues including culture, participation,consultation, development, land use, recruitmentand employment, social security and health.

Throughout 2003, 2004 and 2005, Mam andSipakapense Maya from San Marcos, theConsejo Nacional de Pueblos Indgenas, the

Achjmol Maya Comprehensive Development

Association, the Majawil Q IJ, and theindigenous authorities of the Western Highlands,among others, have argued that Glamis Marlinmine directly violates their rights protected underthe Convention (see table). In particular, theyemphasized Articles 6, 7 and 15, which dealrespectively with: consultation of indigenouspeoples; the role of indigenous peoples indevelopment-related decision-making; and theobligation of the state to consult with indigenous

Local sign against mining in Guatemala (Photo: FrentNacional de resistencia a la minera de metales)


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approval of the loan for the Marlin Mine, forthree months41. AEPDI based its request on thefollowing issues: Guatemala sgovernment hadfailed to comply with ILO 169 by not consultingindigenous groups prior to the granting of mininglicences; the EIA was flawed in a number ofways, in particular with regards to the scope of

the study and the inadequacy of theconsultations; the EIA had failed to identify aceremonial site adjacent to the mine, and sacredunderground caverns; and there was no reservefund for health issues, environmental damageand reclamation.42

Despite this request, Bank staff continued toargue that the project enjoyed significant supportfrom the local indigenous communities and thatconsultations had been carried out responsiblyand properly43. The Bank sBoard accepted thisviewpoint without challenge, although a numberof Executive Directors did express some

concern that the US$261million project wouldcreate only 160 long-term jobs, and suggestedthat the [International Finance Corporation]consider other opportunities with greaterdevelopment impact44. International FinanceCorporation (IFC) staff argued that Glamis wascommitted to socially-responsible mining, andthat Marlin would set the standard for futuremining projects in Guatemala and have a demonstration impact that would stimulateinvestment in the country.45 It argued that itcould play an important role to promote some ofthe positive benefits of the project communitypartnership, enhancing the company scapacity

to fulfill its environmental and socialmanagement plan, and developing linkages withsmall local businesses.46 On June 3, 2004,mindful of the demonstrationimpact ,the Boardapproved a loan of US$45 million for the project.

Demonstrating Bad Precedence

In December 2003, the WB released the finalreport from the Extractive Industries Review (EIR)

an independent review of the Bank sinvolvementin oil, gas and mining activities. TheReview assessed whether support for thesesectors contributed to the Bank s goals ofalleviatingpoverty and contributing to sustainable

development. With some exceptions, the Reviewconcluded that the WB has a role to play in thesesectors, but only if its interventions allowextractive industries to contribute to povertyalleviation through sustainable development47.For this to happen, certain conditions needed tobe in place: better public and private governancestructures to allow for proactive planning andmanagement to maximize poverty alleviation,more effective environmentaland social policies,

and respect for human rights.

Among other things, better governance includes thequality of the rule of law; the absence ofarmed conflict or the risk of such conflict; respect

for labor standards and human rights; recognitionof and willingness to protect the rights ofindigenous peoples; and government capacity topromote sustainable development througheconomic diversification48. The reportemphasized the need to restrict support toprojects that benefit all affected local groups, andthat enjoy the free, prior and informed consent ofaffected communities. In terms of human rights,the report acknowledged that the WB and itsclients have obligations under international law topromote, protect and respect human rights, andspecifically not aid in undermining the fulfillmentof member country obligations. More importantly,

the report explicitly stated that theWB [Group]should not support extractive industry projectsthat affect indigenous peoples without priorrecognition of and effective guarantees for theirrights to own, control, and manage their lands,territories, and resources49.

Although Bank Management accepted very fewof the EIR recommendations, largely ignoringthe most important ones, its responseunderscored the importance of a number ofissues the need for appropriate priorconditions, the importance of clear povertyalleviation components, the need for broad

community support, and the absence of conflict.

Many of the EIR recommendations and thecommitments set out in the Bank Managementresponse to the EIR have been ignored in thedevelopment of the Marlin mine. The Marlinmine is the World Bank's first mining investmentsince the completion of the EIR, and the Bank ison track to repeat the mistakes identified in theEIR.

A local resident from the town of Sipacapa (Photo:Graham Saul, FoE Canada)


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The Canadian government in Guatemala From human rights to investor rights

Historically, the Canadian government,specifically the Canadian embassy inGuatemala, has been a strong advocate ofhuman rights and the peace process, particularlyduring the civilwar and following the heady days

of the Peace Accords. Canada contributedtroops and funding to the United Nationspeacekeeping force in Guatemala, MINUGUA,and continues to be active in monitoring andpromoting the implementation of the Peace

Accords. Previous Canadian ambassadors tothe region, Daniel Livermore and Allen Culham,brought active experience in working on peaceand security issues, and development. Theperception of Guatemalan citizen groups is thatthe new ambassador, appointed in 2002, ismore actively promoting Canadian mininginterests in the region than human rights50.

On the same day that Prensa Libre, the nationalnewspaper, released a Voxx Latina survey ofpeople living near the Marlin mine that indicated95.5% of people surveyedwere opposed to themine,51 the Canadian ambassador published anarticle citing the economic and socialopportunities and benefits that mining brought tosome 200 indigenous communities in Canada52.

A month later, on December 1 and 2, 2004, theCanadian Embassy, along with the WB and theGuatemalan Ministry of Energy and Mines, alsosponsored a National Mining Forum toshowcase the mining industry. Only days prior tothe meeting, Mayan organizations held an

emergency congress to analyze mining activitiesin the country, as they had been all but excludedfrom the forum.53

Growing oppositionOn December 2, the same day as the Embassysponsored the Mining Forum, platform trailerscarrying a ball mill for the mine reached the

junction of Los Encuentros, just outside the cityof Solol, 130 km northwest of Guatemala cityand 100 km from the Marlin mine. The convoywas forced to stop at a low-lying pedestrianbridge that prevented trailers from moving anyfurther. Faced with the obstruction, workmen

from the transport company tried cutting awaypart of the bridge to allow the equipment topass. The locals, who had built the bridge,organized to protect it from being dismantled.When they learned that the equipment was to beused for mining, they became concerned aboutthe impacts of the open-pit mine on theircommunities, and in particular the use ofcyanide and large quantities of scarce water. Onthe first day of protest more than 2000

indigenous farmers and villagers gathered, andtried to dissuade the convoy from travelingfurther. When their demands were not met, onesmall vehiclecarrying tools and fuel for the minewas set afire.54Glamis instructed the contractorto move the equipment to the parking lot of alookout point two kilometres away from the

community, guarded by private police, and waitfor a resolution to the dispute.55

Following the initial blockade, the local mayorrepeatedly stated his determination to respecthis constituents demand that the equipment notcontinue to the Glamis mine in San Marcos.Local organizations, villagers and the CatholicChurch organized across four departments insupport of the protest and regional leadersrepeatedly demanded dialogue over the future ofthe mine involvingthe government, the companyand the communities of San Marcos that wouldbe affected by the project. However, the

Guatemalan Interior Ministry stated on January8 that it would call in troops to escort the convoypast the bridge despite the opposition.Responding to journalists in Guatemala City, thePresident insisted that the government had toreestablish the rule of law and protect theinvestors"56.

Confrontation ends in death

On January 11th, forty days after the blockadebegan, the Guatemalan government called in700 military and 300 police to end theconfrontation. Shots were fired and tear gas wasused to disperse protesters from the area.Workmen, accompanied by National Police, thendismantled the pedestrian bridge that hadinitially blocked the cylinder spath. When localvillagers gathered to oppose the action, thepolice fired more tear gas canisters. One man,Ral Castro, was shot and killed and up to tenothers, including a number of police, were

A reminder of the violence in Los Encuentros(Photo: Graham Saul, FoE Canada)


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injured57.

As news of the death and violence spreadthrough the area, large groups of villagersgathered along the Pan-American highwaywhere the convoy would pass, ready to try tohalt its advance. The convoy was escorted by

an ominous number of armed police andsoldiers until it reached San Miguel. No furtherviolence was reported

In response, a large number of internationalgroups wrote to the IFC, demanding that the WBsuspend any further processing of the existingloan and conduct an independent and thoroughreview of the project, including of the eventsrelated to the protest58. Groups also demandedthat the Bank support a process for immediatedialogue among the communities, thegovernment and the company, and insist thatthe government and the company suspend

further development of the project untilcommunity concerns could be addressed andfull respect for the rights of affected communitiesbe guaranteed.

Despite these calls to action and the protests,Glamis continued to assert that the projectenjoyed strong support from local residents aswell as municipal and federal governmentofficials, and blamed anti-development activistsfor spreading dissent and misinformation aboutthe project59. The WB, in turn, blamed anti-mining activists60. Despite the blockade andprotests, the company is proceeding on

schedule. Glamis drew the remainder of its IFCloan (US$15 million) a few weeks after theprotests in February, having drawn the firstUS$30 million from the loan facility inDecember61, just as the blockade wasunderway.

The unwillingness of the Bank to intervene ledMadre Selva, a Guatemalan NGO, working topromote the rights of indigenous communities, tofile a complaint against the IFC through its Officeof the Compliance Advisory Ombudsman. Thecomplaint argued, among other things, thatlocally affected communities were inadequately

informed about the negative impacts of the mineand inadequately consulted in a language andby a means appropriate to the communities, asper the provisions of ILO 169.

The conflict also exacerbated tensions betweenchurch and state. President Berger blamed theprotests and violenceon the Catholic Church fornot having upheld the rule of law and for notexplaining to protesters that the mine and its

operations are legal. Cardinal Rodolfo Quezadarefuted the government sallegations that theChurch and San Marco Bishop AlvaroRamazzini an activist for indigenous rights -had manipulated the peasants into opposing theproject, and said that the Guatemalangovernment was only interested in protecting the

interests of transnationalcompanies, rather thanthe life, health, and the environment of thecountry62. To ease tensions, the governmentagreed in January to organize a High LevelCommission with the church that would evaluateexisting mining contracts and mining legislation,reactivate the mining supervisory commissionand improve communications between thechurch and the state on the issue of mining63. Noindigenous groups are represented in theCommission.

One step forward, one step back

By early February, 19 municipal mayors from the

Province of Solol had asked the government to,among other things, cancel MontanaExploradora slicence and all existingexplorationand exploitation licences, modify the miningcode, investigate the January death of RalCastro and refrain from authorizing any furtherexploration licences without consulting theaffected population.64 The governmentresponded by saying that it would place amoratorium on mining concessions, althoughthis has yet to happen, and admitted that it couldnot cancel the licence granted to Glamisbecause of the high cost of breaking such acontract.65 Now as the High Level Commission

continues to discuss reforms to the country smining laws, and methods for consultingindigenous peoples about development projects,a referendum on mining in Sipacapa in June hassparked a whole new debate that may set animportant precedence with respect toconsultation, mining and ILO 169.

The Sipacapa referendumIn an effort to finally resolve the degree ofsupport for the mine, the community of Sipacapadecided to organize a referendum on the Marlinmine for June 18th, through assemblies in eachaffected village. When the intention to hold a

referendum became known, however, MontanaExplorada asked for an injunction against theprocess from the Seventh Circuit Civil Court,claiming that the referendum was illegalbecause the decisions regarding mineralexploitation fell to the national government whohad already granted Glamis a licence for themine. At the same time, the Ministry of Energyand Mines filed an injunction in Guatemala sConstitutional Court asking that the referendum


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be deemed unconstitutional. On June 15, theCivil Court decided in favor of Glamis,supporting the injunction and issued a mandatedemanding that the mayor of Sipacapa suspendthe referendum. The next day, however, theConstitutionalCourt reversed the decision, citingILO 169 and article 65 of the municipal code.66

Matters became further complicated when themayor of Sipacapa withdrew from the process.Flyers appeared in the region indicating that thereferendum was still suspended67, and Glamisworked to undermine the validity of the vote bysaying that it had encouraged its workers not tovote, and alleged that its supporters were beingintimidated.68 Despite the confusion, the votewent ahead on the original date with 70 nationaland international observers. 11 of the 13community assemblies rejected mining, whileone supported it and another abstained.69.

Following the referendum, leaders and

representatives of the municipal governmenthave sought to have the results recognized atthe national level by the National Congress andthe Office of the Solicitor for Human Rights(PDH). Sergio Morales, the Solicitor of the PDH,has placed himself firmly in support of thereferendum and ILO 169, even calling forMarlin slicence to be revoked.70The Minister ofEnergy and Mines and the President of theCongress have been far less forthcoming.

The Marlin project has sparked an importantdebate within Guatemala around the country spath to development, the degree to which theGuatemalan people will control this path, andthe need for large-scale investments to respecthuman rights, particularly indigenous rights. Theway forward seems uncertain, especially in a

country with such a long history of violence andabuse of human rights. What is becomingincreasingly clear is that this project is turningthe World Bank sattempt to have a positive demonstration impact on its head.

This case study was prepared by the Halifax

Initiative Coalition, in collaboration withAsociacin Estorea Para el DesarolloIntegral (AEPDI), Americas Policy Group ofthe Canadian Council for InternationalCooperation, the Bank Information Centre,Friends of the Earth Canada, KAIROS Canadian Ecumenical Justice Initiatives,Madre Selva, MiningWatch Canada and theSocial Justice Committee.


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ENDNOTES1 http://www.glamis.com/corporate/company.html2 One dead in Guatemala clash , CNN on-line at http://www.cnn.com/2005/WORLD/americas/01/11/guatemala.violence.ap/3IFC public response to January 2005 protests, on-line at http://www.worldbank.org/ogmc/ifcminingglamisgold.htm4After Barrick Gold Corp., Place Dome Inc. and Kinross Gold Corp.5See http://www.glamis.com/properties/index.html for details on its various properties and holdings. According to the May 31, 2001Management proxy and information circular, Francisco Gold Corp. itself acquired all outstanding shares of Montana Gold Corp., a

private BC company, in December 2000. Montana first began exploration in 1996.6 Glamis Gold and Francisco Gold to Merge Creatingthe Premier Intermediate Gold Company ,Glamis Gold Press Release, March6, 2002. Interms of operat ional synergies,for example, Glamis is proposing to use the processing facilities at Sipacapa in San Marcosto process ore from other sites in other Departments when it begins exploiting these.7Ley de Minera- Decreto 48-97 del Congreso de la Republica de Guatemala.8Article 125 of the Guatemalan Constitution, Legislative agreementNo. 18-93 of 17 November 1993. Art. 118also says that the useof natural resources should be done inthe context of increasing the country s wealth, helping achieve full employment, and anequitable distribution of wealth.9Article 63 regarding the percentage of royalties in the Ley de Minera y su Reglamento- Decreto 48-97 del Congreso de laRepublica de Guatemala .This is down from the 7% it had previously been.10 Summary of Discussion at the Meeting of the Board of Directors of IFC, June 3, 2004- Investment in Marlin Gold Guatemala ,IFC/SD2004-0018, p. 6.11Statistics released by the Guatemalanminister of Energy and Mines, April 2005.12Ibid.13Other Canadian mining companies include Skye ResourcesInc.,IconIndustr iesLtd., Goldex ResourcesCorp., Firestone VenturesInc., Silver Crest Mines Inc, and Aurora Gold Corp. Ibid, p. 16.14 Glamis Gold receives key exploitation license for Marlin Project , Glamis Gold Press Release, December 10, 2003.15Since 1994, all Foreign Investment Protection and Promotion Agreements (FIPAs) have been modeled after the North American

Free Trade Agreement s Chapter 11, granting foreign investors the right to not only challenge government regulations, but to insistupon being treated as domestic companies would be.16For further details, see The Investment Chapter in the Canada-Central America Free Trade Agreement: Threats to CommunityRights , Americas Policy Group, Canadian Council for International Cooperation, forthcoming 2005.17For further details, see Glamis Gold: A Case Study of Investing in Destruction , Oxfam America and Friends of the Earth USA,http://www.oxfamamerica.org/pdfs/glamis_en.pdf18Moran, Robert,NewCountry, Same Story: Review of the Glamis Gold Marlin Project EIA, Guatemala, February 2004, p. 3, on-lineat http://www.miningwatch.ca/issues/Guatemala/Moran_Marlin_rpt_Feb_2005.pdf19International Finance Corporation EIA Summary, on-line a thttp://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/60b8beb20d6bdc7285256e610054690a?OpenDocument20IFC Project Overview, on-line at http://ifcln001.worldbank.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/9e42e13df0ff8b3485256e61006d226a?OpenDocument21As per the company overview of the mine at http://www.glamis.com/properties/guatemala/marlin.html. IFC cites a figure closer to2.4 million. The difference likely reflects the price of gold on which the reserves are estimated.22These figures are based on the overview on the company web site, on-line athttp://www.glamis.com/properties/guatemala/marlin.html. The IFC project overview states that annual production of 217,000 oz peryear. Construction will last one year, production ten years, and closure two years.23Moran, Robert,op. cit., p. 3.24Caused by the exposure of rock waste to the air anddecomposi tion into a weak from of hydrosulphuricacid. Treatment is on-goingand long term.25Sodium cyanide is necessary to leach the gold out of the crushed rock. The tailings are neutralized in a treatment facility and thenstored in a tailings dam26Moran, Robert, op. cit.27It has provided the money to employ 11 schoolteachers,1 doctor, and 50 people to work in the local reforestation project,and hasprovided training to 250 people in vocational skills, and 118 midwives. As highlighted in theIFC public response to the January2005protes ts, on-line at http://www.worldbank.org/ogmc/ifcminingglamisgold.htm28 Montana Exploradora de Guatemala, S.A. Marlin Project Environmental and SocialPerformance Annual Monitoring Report(2004)Executive Summary, March 2005, on-line at:http://www.glamis.com/properties/guatemala/AMR/Marlin%202004%20AMR%20Exec%20Sum.pdf29Environmental Audit and Review, Marlin Mine Project, prepared by Dorey & Associates, LLC, January 2005, on-line athttp://www.glamis.com/properties/guatemala/AMR/Enviro%20Audit%20and%20Review.pdf302004 2ndGlamis Gold Quarter Report, on-line at . http://www.glamis.com/financial/index.html31For the Report by Madre Tierra, see Oro vrs. Piel , Edicion XIX, Oct. 2003 inRevistazo, on-line at www.revistazo.com32Cited in Cuffe, Sandra A Backwards, Upside Down Kind of Development February 2005, p. 22, based on the Pastoral SocialCaritas Arquidiocesana, Resumen Ejecutivodel Estudio Tecnico: Calidadde agua en en el area de explotacionmineral del proyecto

San Martin, ubicado en el municiipo de San Ignacio, departamento de Franciso Morazan Tegucigalpa, March 2004.33Cuffe, Sandra, op cit, p. 23.34In a meeting between civil society and the IFC, April 14, 2005,IFC Director of Mining, Rashad Kaldany, indicated that the companymay be willing to provide an additional percentageof the royalties to the town of Sipacapa.35IFC s Assessment of Expected Project Benefitsto Guatemala at Board Approval, InternationalFinance Corporation, May 31, 200536International Finance Corporation EIA Summary, on-line at http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/60b8beb20d6bdc7285256e610054690a?OpenDocument37Striking a Better Balance The World Bank Group and Extractive Industries, Final Report Vol. 1, January 2004, p.5-6, 12, 14, 19,23 and 3938Marlin Mining Project Public Consultation and Disclosure Plan, on-line at: http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/60b8beb20d6bdc7285256e610054690a/$FILE/PCDP%20%2002-20-04.pdf, Marlin MineIndigenous Peoples Development Plan, on-line at http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c/60b8beb20d6bdc7285256e610054690a/$FILE/IPDP%2002-19-04.pdf


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39Derived from Appendix A: Public Consultat ionand Disclosure Meetings, in Marlin Project Publ ic Consultation and Disclosure Plan,pp.9-1540 The Duty to Consult: The Supreme Court of Canada's Decis ions in theHaida Nationand Taku River Tlingit First NationCases ,

Aboriginal Law Newsletter, January 2005. On-line at http://www.millerthomson.com/mtweb.nsf/Web_Newsletter_Display_en?ReadForm&PageID=mtte6a9bwe4141Personal correspondence from Daniel Vogt, Director and Legal Representative, AEPDI, to James Wolfensohn, April 2004.42Ibid43 Summary of Discussion at the Meeting of the Board of Directors of IFC, June 3, 2004- Investment in Marlin Gold Guatemala ,IFC/SD2004-0018, p. 5.44Ibid, p. 6.45Ibid, p. 6.46IFC Summary of Project Information, on-line at http://www.ifc.org/ifcext/spiwebsite1.nsf/2bc34f011b50ff6e85256a550073ff1c /9e42e13df0ff8b3485256e61006d226a?OpenDocument47Striking a Better Balance The World Bank Group and Extractive Industries, Final Report Vol. 1, January 2004, p. vii.48Ibid, p. viii.49Ibid, p. xii.50Intervention by Ginnette Martin, Political Desk Officer, Canadian Embassy in Guatemala, at a meeting with Foreign Affairs on theGlamis Mining Project, February 24, 2005.51 Rechazan actividad minera en San Marcos ,Prensa Libre, November 4, 2004.52Minera en Canad- Como Guatemala, Canad es reconocido en el mundo entero por la riqueza de sus recursos naturales ,Prensa Libre, November 4, 2004, on-line at http://www.prensalibre.com/pl/2004/noviembre/04/100834.html53Cuffe, Sandra op. cit., p. 4.54Based on accounts in personal correspondence given by Daniel Vogt, AEPDI, on-line at http://www.s-j-c.net/GlamisProtest1 .htm55 Glamis Gold Comments on Transport Incident , Glamis Gold Inc. Press Release, January 13, 2005.56 One dead in Guatemala Clash , Associate Press, 11 January 2005, on-line at

http://www.cnn.com/2005/WORLD/americas/01/11/guatemala.violence.ap/57Accounts vary on the exact number of injuries from ten to twenty.Reports in Guatemala s La Prensa, Un muerto y 20 heridos endisturbios en Solol ,January12, on-line at http://www.prensalibre.com/pl/2005/enero/12/105342.htmlcites 20 injuries. The reportfromthe Associated Press One dead in Guatemala Clash , 11 January 2005, on-line athttp://www.cnn.com/2005/WORLD/americas/01/11/guatemala.violence.ap/ci tes twelveinjuries. Later accountsfrom the ground cite ten.58Rights Action Canada, Friends of the Earth International, Global Response, Mining Watch Canada, Kairos Canada, Oxfam USAand the Halifax Initiative Coalition all sent letters and action alerts along these lines.59 Glamis Gold Comments on Transport Incident , Glamis Gold Inc. Press Release, January 13, 2005.60 Glamis Gold Ltd.'s Montana Exploradora Marlin Project in Guatemala, World Bank Group response to internationalcorrespondence, January 28m 2005, on-line at: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,contentMDK:20421886~pagePK:148956~piPK:216618~theSitePK:336930,00.html61Glamis Gold 2004 Annual Report, p. 2562 Cardenal responde a Oscar Berger , La Prensa Libre, 17 January 2005, on-line athttp://www.prensalibre.com/pl/2005/enero/17/105676.html63 scarBerger se compromete a revisar concesiones , La Prensa Libre, 25 January 2005, on-line athttp://www.prensalibre.com/pl/2005/enero/25/106209.html

64Alcaldes exigen cese de minera en el pas, La Prensa Libre, February 7, 2005http://www.prensalibre.com/pl/2005/febrero/07/107136.html65 Mining Guatemala: Government, church leaders consider moratorium on gold pit , Jill Replogle,Special to the Vermont Guardian,

April1, 200566 Habitantes de Sipacapa tienen va libre para consultaPrensa Libre, Friday June17 2005, on-line athttp://www.prensalibre.com/pl/2005/junio/17/116815.html67 Dicen 'no' a la minera Vecinos de Sipacapa, San Marcos, votan en medio de pugna legal ,La Prensa Libre, June 19,2005, on-line http://www.prensalibre.com/pl/2005/junio/19/116942.html68Glamis considers legal challenge to anti-mining referendum Guatemala, Published: Thursday,June 16, 2005 17:07 (GMT-0400),BNAmericas.com and Glamis Gold Comments on Sipacapa Referendum , online athttp://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20050623005733&newsLang=en69 Dicen 'no' a la minera Vecinos de Sipacapa, San Marcos, votan en medio de pugna legal ,Prensa Libre, June 19, 2005, andSipacapenses piden que se respete su territorio, Prensa Libre, June 22, 2005.In absolute numbers, of the 5,720 eligible votersacross all 13 communities, a total of 2,448 voted against mining and 35 voted in favour. To put this in perspective, the Mayor ofSipacapa won his seat with only 1200 votes.Taken from Dicen 'no' a la mineraVecinos de Sipacapa, San Marcos, votanen mediode pugna legal ,Prensa Libre, June 19, 2005, andSipacapenses piden que se respete su territorio,Prensa Libre, June 22, 2005.70See La Actividad Minera en Guatemala Human Rights Solici tor (Procuraduria de los derechos humanos (PDH)), May 2005and La PDH gestiona que consulta sea vinculante Prensa Libre, June 29, 2005

the world bank and extractive industries – the divisive ‘demonstration impact’ of the marlin...

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