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Infinito Gold: the power of mining corporations in a poor country like Costa Rica

Costa Rica, July, 2013

By Jorge Coronado Marroquín[1]*

Background to the Conflict

minería(Photo taken from: Elpais.cr)

The story of this mining exploration dates back to 1993 when the Canadian mining corporation Placer Dome obtained an exploration license from the Ministry of Environment and Energy. The Crucitas region where the project is located is, according to the company, one of the largest gold deposits in Central America. In 1994 and 1995 the company carried out various explorations, studies and surveys, and in 1998 it sold the Crucitas concession to another Canadian mining transnational, Infinito Gold, which developed a plan to drill 100 wells in the area.

That year, based on the studies carried out, Infinito Gold started the process of obtaining an operating permit which was approved in late 2001. Since then the mining company has presented the “alleged” environmental feasibility studies of the project, which were granted by the Ministry of Environment in 2005. In 2008, President Oscar Arias issued a presidential decree declaring the Crucitas mining project of national interest, which accelerated the operation for the mining company; it should be noted that this decree was made near the end of his administration.

In 2010 the government of President Laura Chinchilla issued an indefinite moratorium on open-pit mining which did not directly affect Infinito Gold because the moratorium applied to pending and new permits.  In the case of the Crucitas mining company they had already obtained approval not only for exploration, but also had the environmental feasibility permit to start operating.

In a December 2010 ruling the Administrative Court declared illegal and annulled all administrative decisions that granted permits to the mining company, including the presidential decree by Oscar Arias. This sentence also called on the Public Prosecutor to initiate investigations into various public officials, the former Minister of the Environment and president Arias himself in order to determine if criminal charges were to be brought against them for their handling of the issue.

The Canadian mining company has presented a series of judicial appeals against this verdict and on June 13, 2013 the Constitutional Court ruled on the last pending appeal.  With this ruling it ratified all of the previous rulings that had upheld the legal validity of the closure of the Crucitas mining project for irregularities in the granting of permits.

The links between transnational economic power and political power

One thing that has been proven with the issue of the Canadian mining company is the strong economic/political link that these transnational mining corporations maintain in poor countries. For over two decades, slowly but surely, the Canadian mining company was buying favors from Costa Rican public officials at various levels in order to obtain the necessary permits.

Court rulings have shown that these permits were given not only in irregular circumstances but also illegally.  They were in violation of procedures and failed to meet necessary requirements, and all of this was achieved thanks to the support of officials who facilitated and created the conditions for these illegal acts to be committed.  This all begs the question of how this network of support of the mining company came about. It is now up to the courts of justice to establish the mechanisms used to obtain the institutional favors that were granted to the mining company.

Where the network of peddling political/economic influence between the mining company and the government of Costa Rica was particularly evident was with the presidential decree by the Arias Sanchez administration which declared the mining project of “public utility”. Why was there a presidential decree to promote open-pit mining? Where was the state policy of Peace with Nature regarding mining activity? One of the issues still to be investigated by the Attorney General involves contributions of up to $ 250,000 from the mining corporation to the Arias Foundation for Peace and Human Progress. The Ministry of the Environment of that administration will also have to explain why it became the main ally of the mining company.

The contradictory discourse of the dominant political sectors has become clear. In their domestic and international speeches they speak about the defense of our natural resources, environmental sensitivity and their commitment to the country’s environmental future. But in practice when it comes to business the market is allowed to prevail, especially when it involves royalties, bribery and the peddling of favors with transnational corporate power.

Social organization as a major factor in the defeat of the mining project

Hand in hand with the legal process against mining promoted by the social movements -that ultimately proved successful- was the process of social organizing to fight the mining company Infinito Gold which became a socially inclusive, cross-sector battle. It was not strictly an environmental struggle that exclusively involved environmental organizations, instead rural communities affected by the project, trade unions, student groups, teachers and even sectors of academia were also mobilized.

Such was the strength of the anti-mining movement that even national polls found that 60% of national public opinion was against the Canadian mining company. There were various local and national mobilizations that enhanced the level of consciousness and awareness of the people.

The main lesson from this struggle is that although the main battleground was legal/judicial the social movements did not restrict themselves to the courts; they managed to shift the legal debate on to the streets and develop a strong level of social support. Although it is not publicly recognized this played an extremely important role in exerting pressure on the judges who could not avoid hearing the massive opposition to and questioning of mining activity in the country.

Immediate future threats associated with mining activity

Although the due process established in the national legal framework has been adhered to, the multinational has been able not only to defend itself, but also to mount a legal counterattack. Today the country is under threat of being taken to international arbitration.

On April 4th last Infinito Gold formally demanded that the State of Costa Rica pay compensation of $1.09 billion for the closure of the mining concession and gave the country six months to pay i.e. until October 4th, 2013.  If it does not pay by that time the corporation will use the Investment Protection Chapter of the Free Trade Agreement between Canada and Costa Rica that has been in force since 2001, as well as the Bilateral Investment Treaty between the two countries that has been in force since 1999, to bring a formal case against Costa Rica in the International Centre for Settlement of Investment Disputes (ICSID).

Once again we see the need to transform the current international investment protection regime as it simply protects the interests of transnational corporations. How can it be possible that a country that adheres to all of its domestic legal institutions can then find itself threatened with international lawsuits, just because the national court ruling is not to the liking of the multinational corporation?

Third world countries often find themselves defenseless in these cases. Not only can they not fully exercise their sovereignty, but they must also pay very high legal expenses to defend themselves and then must pay the compensation payments granted by a body such as ICSID that generally rules in favor of the corporations.

It is necessary to mobilize national and international public opinion against these illegal actions by the Canadian company.  The case of the mining concession has been closed by the Costa Rican justice system and it is unacceptable that attempts are being made to exploit the openings provided by the international investment protection framework to force a decision on to a sovereign country that has already established that it doesn’t want open-cast mining in its national territory.

* Translated from Spanish into English by Thomas Mc Donagh


[1]Sociologist, researcher and social activist, member of the Costa Rica National Coordination Commission (Comisión Nacional de Enlace (CNE)), which is the national member of the Continental Social Alliance (ASC) and the Latin American Debt, Development and Rights Network (LATINDADD)

 

 

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