What might have been

To almost nobody’s surprise, the past week saw another controversial mining development stalled. On Dec. 10, Minera de Centro del Peru (better known as Centromin) gave notice it was terminating the agreement under which Manhattan Minerals could exercise its option to take up a 75% interest in the Tambo Grande property.

It’s facile to see this as a project derailed by local protests, but the evidence — a referendum one way, a petition the other; a mayor against the mine, a local administrator for it — stacked up on both sides. And in the end, it wasn’t permits or protests that sank it.

Two conditions always hung over the Manhattan option: it had to operate, “either directly or in association with another company,” a 10,000-tonne-per-day mine, and it had to have US$100 million in net assets. Centromin needed to see those conditions fulfilled at the beginning of the month; it didn’t.

Manhattan had one hope: to find a partner that would fulfil the conditions of the option agreement for it. It was no coincidence that the company went on the hunt for a big partner as the deadline date loomed. But nobody bit, and given the uncertainties surrounding the project, nobody could be blamed for that.

It can be fairly said that the original Manhattan-Centromin agreement was signed in 1996, and that — back then in the Summer of Love and Cheap Capital — it may have seemed that US$100 million and a 10,000-tonne-per-day mine weren’t enormous hurdles for a small gold mining company. It is an unfortunate detail of history that gold prices collapsed and Manhattan got smaller still.

So it doesn’t need to be a surprise when, seven years later, Manhattan couldn’t make the grade on what Centromin had said it needed in an operating partner. There hangs another lesson for junior companies: don’t let yourself be locked into that kind of a deal, or you may find you have to make unfavourable terms with a partner later on.

The anti-mining cabal — here, in the persons of Mining Watch Canada, Oxfam America, the Mineral Policy Centre, and the Lima-based group CooperAccion — has hailed the termination of the Tambo Grande agreement as a victory for the “recognition of community rights.” Er, not quite: Centromin terminated the agreement because Manhattan didn’t qualify to exercise the option.

Still, the groups managed to be tendentious even as they crowed. Jamie Kneen of Mining Watch said “Manhattan and other Canadian mining companies are always saying they respect their host communities. But obviously they have to be forced to do so.” Similarly CooperAccion’s Jose de Echave talked about stopping “a project that would have trampled on human rights.” Yet Manhattan jumped all the public-consultation hoops put in front of it, and still the anti-mining groups weren’t satisfied.

Others succeeded in seeing the future. “Now the area’s farming economy can flourish without the immediate threat of mine waste contaminating precious water supplies,” said the Mineral Policy Centre’s Payal Sampat. Keith Slack, Oxfam America’s policy advisor, just knew that thwarting Big Gold at Tambo Grande meant “the global mining industry avoids a big black eye.”

If First World anti-mining groups helped to kill the project at all, they only did so through the back door, by making Tambo Grande their own cause clbre, which no doubt contributed to the difficulties Manhattan faced. But jumping in to contribute to local demagogy has nothing to do with “community rights” and everything to do with pursuing an agenda.

So here we, and the people of Tambogrande, are. Manhattan consults its lawyers, but may end up walking away. The Mineral Policy Centre tells a few more lies to the public. The Tambo Grande deposit stays in the ground, for now.

Mining, far more than agriculture, brings skills and technology. Skills and technology bring prosperity. Prosperity brings health, brings enlightenment, brings the social change the policy industry always says it wants to see.

And all this might have been.