Mining War in Ecuador
by Al Gedicks
Z magazine, March 2005
Ecuador has recently been the setting
for intense resource conflict. In May 2003 attorneys representing
more than 30,000 Ecuadorian Indians filed a billion-dollar lawsuit
against ChevronTexaco Corporation. They charged Chevron-Texaco
with systematically destroying the environment and homeland of
a number of indigenous groups. From 1971 to 1992, the company
dumped millions of gallons of crude oil into human-made lagoons
in the region, causing massive contamination. The suit was filed
in Lago Agrio, a small oil town in' the Ecuadorean Amazon. As
the trial continues, the reckless practices of the oil industry
are being held up for public inspection in Ecuador and elsewhere.
Less well publicized, but of great significance
to Ecuador's attempt to attract foreign mining investment, are
growing conflicts between peasant, indigenous, and environmental
alliances, and transnational mining companies. At the urging of
the World Bank and the International Monetary Fund, Ecuador, along
with many other countries, passed new mining laws in the 1990s
to encourage investment. Ecuador provided a long list of tax breaks
and replaced mineral royalties with minimal annual payments ($1.00
to a maximum of $16.00 per hectare of mining concession during
the peak production phase) to local and national governments.
Environmental regulations were also weakened. Moreover, the Mining
Development and Environmental Control Project, financed by the
World Bank, provided investors with a networked computer database
providing comprehensive information and management of mining claims
on a provincial basis.
Biodiversity Hot Spot
The proposed Junin open pit copper mining
project is situated in the largest remaining remnant of Ecuador's
western cloud forests. After decades of logging and agricultural
encroachment only 12 percent of these forests remain. Nonetheless,
the remaining forests are considered to be, botanically, some
of the most diverse on the planet. It has one of the highest rates
of endemic species of any forest in the world. Jaguars, ocelots,
spider monkeys, and Andean spotted bears inhabit this region.
The proposed mining area is also located within a protected community
conservation reserve and in the buffer zone of the state-owned
Cotacachi-Cayapas Ecological Reserve. Cotacachi county has about
30,000 inhabitants and covers approximately 580 square miles.
Bishimetals Exploration of Japan, a subsidiary
of Mitsubishi Corporation, was the first transnational with rights
to the mining concession. That company's environmental impact
study predicted that the mine would cause widespread deforestation,
desertification, and contamination of rivers and underground water
sources with heavy metals such as lead, arsenic, cadmium and other
toxic substances. Construction of the mine would also require
the resettlement of more than 100 families from 4 communities.
One indication of the company's disregard for the community was
the latrine employees built on the banks of the Junin river so
that human waste flushed directly into the major source of water
for residents downstream used for domestic and farm needs, including
cooking, drinking, bathing, and irrigation.
In May 1997, after repeated attempts to
meet with government officials to express their opposition to
the project, about 200 residents from 8 communities surrounding
the mining area occupied the company's mining camp. When mining
and government authorities failed to appear for the meeting requested
by residents, protestors burned the camp's wooden structure as
an expression of the community's rejection of the mining project.
Prior to lighting the match to the gasoline-soaked building, furniture,
utensils, etc. were inventoried and stored in the community center.
Several weeks later, the items were transported by mule to the
parish seat three hours away where they were delivered to municipal
authorities. Three peasants were charged with terrorism, subversion,
and destruction of private property. Members of the Organization
for the Defense and Conservation of Intag (DECOIN) and Accion
Ecologica, an environmental organization in Quito, were named
as unindicted co-conspirators, though neither organization was
involved in the mining camp incident. Mitsubishi pulled out of
the project shortly afterwards.
Alternatives to Mining
Realizing that it would only be a matter
of time before another company came along to exploit Junin's copper,
local residents worked to develop sustainable development alternatives
to the boom and bust economy of extractive resource exploitation.
With its primary forests, waterfalls and biodiversity, the area
has great ecotourism potential. With help from U.S. and European
environmental groups, Carlos Zorrilla, president of DECOIN, raised
funds so that the community was able to buy about 5,000 acres
of land and set up an environmental preserve.
There is also a "fair trade"
coffee-growers' association that markets shade-grown organic coffee
in fair trade venues in the United States, Japan, and Europe.
Association members receive more than double the price paid by
local buyers for their coffee. In September 2000 the Cotacachi
Municipal government approved the declaration making the county
the first Ecological County in Ecuador.
The ordinance provides for the municipal
government to "prioritize and encourage sustainable economic
activities over all others, declares the conservation of native
forests and biodiversity a priority, and prohibits the establishment
of industries that contaminate the environment with toxic substances,
such as heavy metals."
Mining Conflict: Round Two
All this did not discourage Ascendant
Holdings from acquiring the Junin property in July 2004.
Ascendant is not a mining company; it
is a mine promotion company. They speculate on new mining properties,
do feasibility studies, and then sell the property to a large
mining company for a hefty profit. With China's recent industrial
expansion, Chinese corporations are on a mineral acquisition binge
and are willing to pay premium prices for a reliable supply of
copper. Ascendant is registered in Canada and listed on the Bermuda
Stock Exchange. The company is working on a public offering on
the Toronto Stock Exchange, according to CEO Chris Werner of Sheboygan,
Wisconsin. The firm's president, Paul Grist, has an office in
In contrast to the recent past, most mining
companies have recognized that controversial mining projects cannot
proceed without the informed consent of the local community, or
a "social license to operate." Not Ascendant. Without
informing the local government, the in the world" at 1.36
billion tons. This figure exceeds Mitsubishi's earlier estimate
of 318 million tons by such a large margin as to raise serious
questions of misleading and inaccurate information being sent
to potential shareholders. While market conditions frequently
result in upwardly revised estimates of economically recoverable
ore, the magnitude of this discrepancy stretches credibility.
The earlier estimate was based upon diamond drilling; the upwardly
revised estimate is based upon Ascendant's in-house reevaluation.
The time when resource corporations could
ride roughshod over the rights of resource-rich communities in
Latin America is long since past. The centralizing and anti-democratic
tendencies of neoliberal reforms advanced by the World Bank and
the IMF have generated decentralized and democratic tendencies
among indigenous people, peasants and workers. In 2002, popular
protests halted the Bechtel Corporation's privatization of Cochabamba's
water system and several mining ventures in Bolivia. The following
year, President Gonzalo Sanchez de Lozada tried to push through
a controversial deal to export Bolivia's natural gas through Chile
to the U.S. The move provoked mass protests and he was forced
to resign. His successor, President Carlos Mesa, offered a referendum
to give Bolivians a voice in the government's plans for the gas
In neighboring Peru, the Manhattan Mineral
Corporation, a Canadian company, had mistakenly assumed that because
they had acquired a concession from President Fujimori to develop
the Tambo Grande copper-zinc deposit, they could construct a mine.
In June 2002, residents conducted a referendum on the question
of whether the mine should go forward. Over 93 percent of those
participating voted "No." Manhattan Minerals' stock
price fell approximately 30 percent in the following days. In
2003 the Peruvian government terminated the company's option on
Tambo Grande. Canada's Northern Miner, a mining industry newspaper,
editorialized (12/3/04) about the lessons of Manhattan Minerals,
which was forced to write off a $60 million investment for a penny
on the dollar. "It wasn't legal uncertainty that killed the
Tambo Grande project. The development met with sustained resistance
from both local landowners and First World activist groups, who
raised the public's consciousness with a tendentious advertising
campaign against Manhattan Minerals. "
Al Gedicks teaches sociology at the University
of Wisconsin-La Crosse and is the author of Resource Rebels: Native
Challenges to Mining and Oil Corporations (South End Press, 2001).
Mary Ellen Fieweger provided much of the information for this
article. She is a teacher, writer, and translator who has lived
in Ecuador for 27 years.
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