Human rights and mining

Human rights are increasingly important to mining operations, and yet the issue remains largely on the sidelines.

Mining companies need to respect the rights of indigenous people and communities in the areas of operating mines, both at home and abroad.

Since the Bre-X stock promotion fraud of the late 1990s, Canadian securities regulators introduced National Instrument 43-101, which requires that a “Qualified Person” be involved in preparing reports to ensure adequate disclosure of relevant technical and scientific information material to decisions being made by investors. However, concerns about and attention to social issues should also be addressed as they can lead to large financial losses, as has happened at Bougainville in Papua New Guinea, Tambogrande in Peru, and Esquel in Argentina.

Section 3.4-D of NI 43-101 and item 19-G of the Form 43-101-F1 (technical report) require “a general discussion of the extent to which the estimate of mineral resources and mineral reserves may be materially affected by any known . . . socio-political . . . issues.”

A Qualified Person comfortable only with technical matters could feel ill at ease commenting on unfamiliar social and political issues, especially in foreign countries with volatile social and political conditions in circumstances of weak or corrupt governments. However, in the same way that specialists provide input on technical issues, experts on non-technical aspects could be used for other facets of work. Even if securities regulations require full disclosure, there remains a natural unwillingness to delve into such issues and risk the consequences that could come from offending host governments.

A NI 43-101 report in February 2004 on the Amayapampa gold project in Bolivia included 24 specific references to investigations into technical matters such as geology, drilling, sampling, testing and environmental conditions. But specific mentions of investigations into human rights abuses were not included, suggesting that an accounting of these problems was not material to the mining industry.

The report included a single paragraph alluding to conflicts between mine management and miners that led to a situation where the government sent in the military to “restore peace, but during the process ten people were killed and fifty wounded.” The story doesn’t end there.

Conspicuous by its absence from a list of 24 references in the NI 43-101 report is a citation of a report by the Inter-American Commission on Human Rights’ (IACHR’s) judicial investigation into the human rights situation in the events of Dec. 19-22, 1996, at Amayapampa, Llallagua and Capasirca. IACHR describes a situation that escalated into hostage-taking, workers seizing the operations, and a violent confrontation with the police and military in which nine civilians and a special security group commander were killed and 32 civilians and three police officers were wounded.

The problems started in 1996 when a Canadian junior company, Da Capo Resources (later that year it merged with another junior company, Granges Inc., to form Vista Gold) acquired, from local owners, two gold mines: Capasirca and Amayapampa. The Amayapampa district was initially mined on a small scale by indigenous people prior to the arrival of the Spanish conquistadors. Small-scale mining continued throughout the Spanish colonial period into modern times.

In the mid-1990s, Da Capo Resources acquired Amayapampa for stock and cash payments to the various owners. Da Capo agreed that CEM, a miners co-operative, could continue mining the Amayapampa mine using underground methods at current levels of production (about 220 tonnes per day), processing the ore in two mills on site until Aug. 11, 1996. At the time of the deal, the Amayapampa mine was one of the largest underground gold mines in Bolivia.

The new owners immediately came into conflict with the mineworkers when management wanted to change from traditional work practices in which the union had a prominent role in organizing gold production and extraction. The conflict was exacerbated by ideology and regional poverty — all this against a background of resentment about the way the state had been awarding mining concessions.

Da Capo representatives and union leaders met in La Paz in August 1996 to discuss grievances. The meeting started badly when the miners complained that they had been insulted by the mine’s manager. On the same day, the manager had asked the government to bring in troops and police. The company withdrew its people, leaving the Capasirca mine in the hands of the miners and union. When about 130 police attempted, in mid-November 1996, to detain the secretary-general of a local mining union, locals surrounded the police, seized their weapons and forced them to leave.

The local prefect initiated a meeting on Nov. 20, 1996, in Potosi, in an attempt to reopen dialogue and end the stalemate. The meeting produced a signed statement of intent, but Da Capo representatives failed to attend the following meeting in early December.

Negotiations collapsed when the company learned that mine workers had illegally seized the Amayapampa mine. That morning, residents and mine workers from Amayapampa heard that two workers had been detained and accused of theft by Da Capo, which by that time had changed its name to Vista Gold. The miners were upset by a company edict prohibiting the chewing of coca leaves on the job. The company ended negotiations, declaring that dialogue had broken down. After negotiations collapsed and the Amayapampa mine had been seized, government authorities decided to employ public forces to restore order, remove mine workers, and return the mine to Vista.

Police moved in and a conflict erupted. On one side, the army and police, and on the other, the peasants and miners who had illegally occupied the mines of Amayapampa and Capasirca. Four people were killed, including a 15-year-old student. Also among the dead was a union leader who had tried to seek a peaceful solution.

Shortly thereafter, a colonel was killed and several police officers wounded. At Llallagua, where the townspeople formed a human barrier protecting local miners, military police killed two people, neither of whom was directly involved. In the hills near the Amayapampa mining camp, police and military forces opened fire on civilians, wounding four, including a nurse who later died.

The IACHR concluded that the causes of the tragedy at Amayapampa, Capasirca, and Llallagua were many. They had to do with mishandling of the labour conflict; an attempt to modify production using an untrained and dogmatic labour force; and extreme poverty in the area despite the wealth generated from mining.

The company did not disclose the evolving dispute to its shareholders, and it was kept quiet in a September 1996 filing with the Securities and Exchange Commission.

Vista denied any responsibility for the actions of the police and military but remained concerned that its property, management and economic rights were being threatened. The company lobbied the Bolivian government to heed its complaints and protect the rights of foreign investors. It claimed that the responsibility for the human rights tragedy belonged to others: the lawless miners and peasants, the police and the armed forces.

This example clearly demonstrates a lack of community relations and sensitivity to the concerns of locals. Mining companies need to educate their employees about the political climate and support and promote human rights, good working conditions, competitive wages, and development opportunities.

A starting point for resource companies would be a code of conduct implemented throughout an organization, including all operations. A December 2000 document titled U.S./U.K. Voluntary Principles on Human Rights and Security provides an outline for resource companies to use when designing policies and procedures for operations in foreign countries. To ensure the effectiveness of such voluntary, non-binding approaches, corporations are advised to:

— develop comprehensive codes of conduct;

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– establish training and management procedures to put the codes into practice;

— set up internal audits;

— have independent external audits on performance; and

— publicly report the results.

Mistakes of the past need to be acknowledged and examined to ensure that they are not repeated. Pressure often exists to ignore or bury bad news but with growing demands for full disclosure and transparency, squarely facing up to reality early can avoid subsequent problems. If human rights issues are not considered important enough to be material to the mining industry now, what will it take to put them at the top of the agenda?

— The author is an New York-based international minerals development engineer. He is currently writing a PhD research paper titled Assessment of Risks and Costs to Existing and Potential Mining Operations From Human Rights Issues at the University of British Columbia.