The Guatemalan government has announced plans to suspend mining at Goldcorp‘s (G-T, GG-N) contentious Marlin mine over concerns the mine is contaminating the local water supply but it appears the mine will remain in operation for now.
Goldcorp has come under fire in recent months over an array of human rights issues including environmental and health problems connected to the Marlin mine, which came into operation in 2005. The Inter-American Commission on Human Rights (IACHR), part of the Organization of American States, asked the Guatemalan government in May to suspend operations based on these claims.
In the meantime, Goldcorp has been defending its practices by pointing out that extensive monitoring and testing by the Guatemalan government and the company have demonstrated that there is no evidence that water supplies have been contaminated.
The Guatemalan government also says that the Ministry of Health and Social Welfare has not detected any diseases related to the alleged contamination but says it wants to take the necessary precautions to protect the health and safety of its citizens.
“We concur with the statement of the Guatemalan government that there is no evidence of pollution or ill effects to health or the environment as a result of Marlin mine’s presence,” Goldcorp president and CEO Chuck Jeannes said in a statement. The company didn’t respond to an interview request.
The Marlin mine was forecast to produce 280,000 oz. of gold in 2010, about 11% of Goldcorp’s total production for the year so depending on if or when the mine actually ceases production, it could eat away at about half of the company’s target for Marlin, or 140,000 oz. gold.
Although Goldcorp shares only dropped 32¢, less than 1%, to $46.09 in Toronto on June 24 when the announcement came out, one analyst pointed out that the company has already been underperforming by about 4% compared to its peers, Barrick Gold (ABX-T, ABX-N) and Kinross Gold (K-T, KGC-N).
“The stock has underperformed since the Marlin story initially broke, so some of this is already priced into the stock,” the analyst says, noting that the G-20 summit, which has spurred much of Bay Street to flee the city, helped the stock hold on.
“The full impact would be a full suspension and a full shut down of the mine and I think we are along way away from that,” the analyst says. “But when people get back to their desks on Monday, that’s the thought process they are going to run into.”
The mine is still running as usual at this point but the government says it will be initiating the applicable administrative process under the laws of Guatemala in order to comply with the IACHR. A delegation is supposed to visit the mine in July but how exactly they plan to assess the water contamination problems is not clear since IACHR does not have the in-house technical capacity.
The government has said this process to shut down the mine could take months, however, Kristen Genovese, a senior attorney with the Center for International Environmental Law, says if that’s the case it would be surprising.
“I hope the government isn’t using this as a delay tactic,” Genovese says. “There is no reason that administrative processes would take months.”
She says suspending operations now is a precautionary step to avoid further immediate harm while all of the studies to confirm the allegations will take much longer.
Goldcorp has not ignored its problems with the Marlin mine. The company, which acquired the mine from Glamis Gold, agreed to let an independent firm, On Common Ground Consultants in Vancouver, conduct a human rights assessment. It was released in May at the time of Goldcorp’s annual shareholder meeting and highlighted the company’s shortcomings including consulting with indigenous communities, water supply issues and the company’s closure and reclamation plan. Goldcorp has been given credit for opening itself up to such a comprehensive independent report and the company says it wants to improve the situation at Marlin.
“I do know that we are doing very good work in the company around the areas of human rights, environmental performance and corporate social responsibly and an I know from experience there tends to be a lot of exaggeration and innuendo from the other side,” Goldcorp CEO Chuck Jeannes told The Northern Miner after the annual shareholder meeting in May. “But you heard me say during the meeting that we are always open to hear from those people because if they have something that we don’t know or if there is someone in our organization that’s not conducting themselves properly, I want to hear about it.”
The company has also been cooperative in providing documents to the Independent International Panel on the Human Rights Impacts of the Marlin Mine, a four member panel composed of three academics from the Center for Civil and Human Rights of Notre Dame Law School and a lawyer from Oxfam Americas. The panel expects to finish its assessment in July.
“Goldcorp does deserve credit for the positive steps its taken,” says Douglass Cassel, a professor of law at Notre Dame and a member of the four-person panel.
However, Cassel disagrees with many of Goldcorp’s interpretation of studies.
“On the environmental side, we’ve looked at the same testing data that Goldcorp has looked at,” Cassel says. “I do not agree with the company and the government that current testing reveals no problems. It shows potential for serious problems.”
Two University of Michigan professors looked specifically at the levels of toxic metals in the blood and urine of people living near the Marlin mine and their study will be included in the international panel’s analysis.
This second assessment will consider the responsibility of the government of Guatemala, the government of Canada and Goldcorp, Cassel says.
“The frontline responsibility is with the government of Guatemala but everyone knows Guatemala’s government is weak, underfunded and the legal and regulatory system is inefficient to put it mildly,” Cassel says.
“The wide spread consensus is that the company has a greater responsibility that it doesn’t violate human rights,” Cassel says. “It becomes all the more important for Canada to be vigilant over potential impact of Canadian companies overseas.”
The mines are where they are because certain minerals occur in natural abundance at these sites. Surely baseline water studies were performed before the larger mining companies became involved? As with most of these claims of “contamination”, the water is naturally contaminated by naturally elevated levels of minerals, many of which are toxic to humans, in the surrounding terrain prior to modern mining. Artesinal mining, without the benefit of modern technology, would also expose more contaminants. Most modern mining operations actually provide cleaner water than Mother Nature in these areas.
The mines are where they are because certain minerals occur in natural abundance at these sites. Surely baseline water studies were performed before the larger mining companies became involved? As with most of these claims of “contamination”, the water is naturally contaminated by naturally elevated levels of minerals, many of which are toxic to humans, in the surrounding terrain prior to modern mining. Artesinal mining, without the benefit of modern technology, would also expose more contaminants. Most modern mining operations actually provide cleaner water than Mother Nature in these areas.