Mine Sues Government

A subsidary of Canada-based miner Pacific Rim Mining has filed a suit against the government of Salvadoran President Mauricio Funes, after he refused to allow the company to start production at one of its mines, citing environmental risks.

Pacific Rim, which owns the El Dorado mine, one of the most controversial in Central America, under permits from former right-wing governments, which have ruled El Salvador for decades, until leftist Funes took office in June 2009.

Despite the permits, Funes refused to approve the remaining paperwork that would allow the company to begin operations there, because of potential contamination from cyanide, which is used to extract the gold, and the risk that the local water supply could be put at risk.

Pacific Rim has said that the mine, in Cabañas department, would create hundreds of jobs in one of the poorest areas of El Salvador. But both the government and local organizations have long argued that the risk is too great, and two prominent anti-mining activists have been killed – including a pregnant woman – and no convictions have been made.

Still, Pacific Rim is seeking at least $72 million in investments, plus other expenses, from the government, arguing that it has violated international law. Pacific Rim, while based in Canada, has an office in Nevada and has brought the case to the World Bank´s International Center for Investment Disputes, and said El Salvador cannot jeopardize its investments in the country, an act it says constitutes a violation of the Central America Free Trade Agreement, or CAFTA.

El Salvador denies the claims, and says the company has failed to take environmental precautions required to operate in the country, and that the Environment Ministry never even accepted the environmental impact plan.

“The damages that they allege to have suffered are not caused by El Salvador, but by their own decisions not to comply with those requisites. The problem is that they want to continue exploring and opening new mines with one and only concession,” Luis Parada, El Salvador´s attorney, told Diario de Hoy.



Share Your Perspective