For America’s
Non-governmental organization Friends of the Earth has described the Marlin project as a “tragedy waiting to happen” because it would destroy a rural way of life for thousands of Guatemalan Mayan Indians, while the World Bank has come under fire from one of its own watchdogs for its US$45-million loan to the project.
Meanwhile, against a backdrop of violent protests at the Marlin site, the company’s share price has been volatile at a time when gold is hovering at highs not seen since 1987. Indeed, in January, a 40-day protest by locals turned violent as security guards clashed with demonstators and one person was killed, while in March an off-duty mine security contractor shot dead a local bus driver.
A June referendum showed almost all local people living near the Marlin mine oppose the project, although Glamis said it doubted the reliability of the outcome.
Much of the local anger is driven by fears that the mine could damage the environment and pollute water supplies that are key to farming. Activists say the technique of using cyanide to wash gold from rock is too risky, despite its use worldwide by major miners such as
“The assessment of the mine’s enviromental impact is ridiculous,” said Magali Rey of Guatemala-based NGO Madreselva, which filed a complaint with the World Bank against the project earlier this year.
“There’s been no analysis of underground water sources. . . so it’s impossible to measure the possible dangers of the mine,” she added.
In a draft report leaked to the media in August, the World Bank’s Compliance Adviser Ombudsman said that the Washington-based global lender had approved its loan for the project with insufficient environmental information and had failed to consult the community near the mine. Many company statements on the project were also too technical to allow locals to come to an informed decision, the ombudsman added.
The World Bank “should have considered more systematically the potential risk on human rights at the project,” the draft report said.
Despite a desire by the Guatemalan government to attract investment, many fear that the mine’s low wages — perhaps 5% of what miners in North America would earn — and the export of almost all the metal will result in little benefit for the poor Central American nation.
The criticisms come as anti-mining protests are growing in Latin America, mainly in Peru, but also in Honduras, Chile and Argentina, and as the World Bank is being advised by an independent auditor to phase out its lending to mining ventures because of the controversy they can generate.
Anglo-Australian miner
Barrick’s plans to move part of a glacier along the Argentine-Chilean border to mine its Pascua Lama project have drawn widespread opposition.
Fortunately for Glamis, “there’s been nothing really to date that has interrupted the construction schedule at Marlin,” said Steven Butler, a precious metals analyst at Canaccord Capital. And with a projected annual yield of 217,000 oz. gold and 3.3 million oz. silver at the site, Marlin is crucial for Glamis, which has already invested US$150 million.
“Marlin will be a big driver of Glamis’ earnings and cash flow next year,” Butler said, who added that Marlin potentially had more resources in the surrounding district.
Glamis has promised investors new projects: Marlin, El Sauzal in Mexico (now in operation) and the Milennium project in Nevada.
“If there was any problem with any of the three projects, the market would be annoyed,” said Victor Flores, a gold analyst at HSBC Securities.
Glamis is quick to reassure, however. According to Tim Miller, vice president of Glamis’ Central American operations, the first gold bar at Marlin should be poured, as expected, during the fourth quarter of this year. Miller played down the impact of the anti-mining movement, adding that the project had so far generated 1,000 jobs and “people are very happy” with Marlin.
Moreover, Glamis has estimated the pit will contribute more than US$500 million to the Guatemalan economy during its lifespan, including income taxes and mining royalties. Glamis had also set up the Sierra Madre fund to support local businesses and provide for the region when the mine eventually closes. “For every job we generate in the project, we produce another 8 jobs in activities related to the mine,” Miller said.
He also rejected concerns that a new wave of protests or roadblocks could affect the operations.
“We’ve being doing studies and exploration for three years and we’ve been building the mine for more than a year without any of those problems, so we are confident things will continue as they are,” Miller said.
For many however, the Marlin affair comes down to an issue of communication and the need for today’s miners to do more to work with local communities to make mining profitable for all stakeholders.
“Time and again, major miners are failing to get the message across that they do have very high standards and that they are working on the mine’s closure strategy even before production has started,” said a North American diplomat. “Nobody ever criticizes artisanal miners working small remote mines, but often they do far more damage to the environment,” the diplomat added.
— The author is a freelance writer based in Lima, Peru.
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