Gold mining loses its luster

After a gold mining boom in Central America, activists push back.

By Ezra Fieser - Special to GlobalPost
Published: April 5, 2009 08:26 ET
Page 2 of 3

Five years ago, a report by Glencairn Gold Corp. called the region “a top destination for mining companies,” and an area where government policies “encourage mineral exploration and mining.”

At the same time that the region was becoming increasingly attractive to mining companies, the the price of gold on international markets exploded: The price surged from around $300 an ounce in 2000 to more than $900 an ounce this year.

Mining companies from Canada — home to many of the world’s largest mining firms — began investing heavily in the area. In 2002, they spent $41 million on Central American operations. By 2006, they were spending $1.6 billion, according to Natural Resources Canada, the federal environmental agency.

But spending fell as Latin American governments considered new laws. It dropped 32 percent from 2006 to 2007, according to the most recent data available from the Canadian government.

“We stopped all of our work last July and made it abundantly clear that we're not moving forward," said Barbara Henderson, senior vice president of investor relations for Pacific Rim, which has three mining sites in El Salvador. The laws and protests are “undoubtedly a major deterrent to future investment in the region.”

Through its Nevada-based subsidiary, Pacific Rim plans to sue El Salvador under the Central America Free Trade Agreement to recoup some of the $75 million it has invested in the El Dorado project.

“They say there are environmental concerns. But that’s a red herring,” Henderson said. “In reality, this would be one of the most environmentally benign and environmentally mitigated mines in the region.”

The impact on the environment — particularly the use of cyanide — is a central theme for mining critics.

Gold is rarely found in the thick underground veins that long ago drew prospectors to explore caverns with pickaxes. In modern mining, huge tracts of earth are dug up and crushed in search of tiny specs of gold scattered throughout the crushed rock. Sodium cyanide is then sprayed over crushed ore, dissolving gold and carrying it to a basin, where it is collected and formed into bullion.

Opponents say the use of cyanide contaminates water supplies, kills wildlife and livestock and can lead to health problems for area residents. Cyanide breaks down when exposed to sun and oxygen, but critics of the process say it leaves behind harmful heavy metals.

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Posted by Roberto on April 6, 2009 08:15 ET

You can rest assure that anywhere the Catholic church is involved they want people to be in poverty. Poverty keeps you humble looking to the Pope for direction. Only thing they will let you have is all the children you want and give your tithes to the church. That is why the Catholic church is decling in numbers world wide.

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