Intervenor: Vol 23. No 3 July - September 1998

The Ugly Canadians: Fear & Loathing of Canadian Mines

When a wave of acid-laced water and mud rushed down Spain's Guadiomar River in April the issue of the inherent environmental risk in large scale mining leapt from the business pages to the front pages of newspapers and onto the airwaves all over Canada. The increasing international role of Canadian-based mining companies and Canadian-raised mining capital was coming under media scrutiny for more than just the Bre-X fraud fiasco.

Boliden, a Swedish controlled company recently incorporated in Canada to raise money on Canadian stock exchanges, had only been in Canada for 18 months. The spill had a "Canadian" connection because Canada has become the premier source of mining capital in the world. The Canada Minerals Yearbook reports that, "In 1996, mining companies listed on Canadian stock exchanges raised over $6 billion in equity financing. ... At the end of 1997, companies of all sizes listed on Canadian stock exchanges held interests in a portfolio of more than 8,000 exploration or producing properties located in more than 100 countries around the world."

The Boliden spill was not the first and will not be the last. It joins an ever growing list- Cambior in Guyana; Placer Dome in the USA, Papua New Guinea and the Philippines; CAMECO in the Kyrgyz Republic-of Canadian based companies helping to put the term "ugly Canadian" into use in communities downstream from Canadian owned mining operations.

Over the past 18 months, CELA has become involved in a growing level of work on mining issues. We have documented the significant weakening of Ontario's regulation of the environmental impacts of mining. We have collaborated with counterparts in Peru (thanks to CIDA funding) and the Environmental Mining Council of BC (EMCBC) to develop materials for community level organizing on mining issues. We have been involved in the formation of a Network on Mining throughout the Americas and collaborated with the EMCBC to prepare a proposal to establish an Environmental Mining Council for Canada. We have completed a review and comparison of environmental regulation of mining in Chile and Canada.

When CBC National's Magazine was planning its full-length segment on "The Ugly Canadians", one of the organizations it sought advice from was CELA. Here are excerpts from that show which aired Monday July 6, 1998....

PAUL HUNTER (CBC NATIONAL): Canadian mining companies, world leaders, have struck a motherlode of trouble. There's growing hostility from Latin America to the South Pacific, and now three burst dams in three years. Mining companies have given Canada a black eye.

ALAN YOUNG(MINING CRITIC): People are saying: "what are you doing? What kind of country do you have? I thought you were a good country. Why are you creating these projects that are bringing so much damage to our communities?" A friend of mine, a colleague in the U.S., was saying "Isn't this a change! Normally it's the ugly American, and now I can sit back because the ugly Canadian's here."

HUNTER: The flood of waste was so high, it nearly reached the roof of ... buildings. When it receded, it dried to a thick crust laced with heavy metals: lead, cadmium, zinc. Farmers are worried that if it isn't all cleaned up before the rainy season this fall, storms could wash the poisons deeper into the soil. Insurance inspectors assess the damage, but the mining company, Toronto's Boliden Limited, accepts no blame for the spill, but it has agreed to pay the farmers for lost crops anyway....

ANDERS BULOW (CEO, BOLIDEN LTD.): I'll volunteer to go down and eat that fruit myself. ... There has been very limited, as far as I know, effects on the soil until now. So for any kind of metals to travel from the tailings via the ground and the root systems and into the fruit, I mean that simply hasn't happened.

HUNTER: There'd been several warnings, including one from a company engineer that the dam was leaking. But Boliden says it was repeatedly tested and found to be rock solid. Strong enough, it says, to withstand even a Richter seven earthquake. But still it broke. ...

HUNTER: Another spill, this one in the Philippines in 1996. It still plagues the industry's reputation and one of Canada's biggest mining companies, Placer Dome. The Marcopper mine had been dumping waste into an empty pit with a plug in the bottom of it. Then the plug collapsed. All life in the river downstream was smothered. Food, water and medical supplies were flown in. Villagers were left stranded for days. The tailings had ruined the waterways. Joe Danni is a vice-president with Placer Dome in Vancouver. He says they still don't know exactly what went wrong.

JOE DANNI (VP, PLACER DOME): We know as much as we're going to know about it. We know that the contributing factor was a seismic event. How much did it contribute? Those are the sorts of things you'll never know.

HUNTER: But a United Nations team of experts saw it differently. Its report called the spill an "environmental disaster," and said environmental management was "not a high priority" for the company, and using an empty mined-out pit to store waste was "unconventional."

DANNI: ... It would be a disservice to the shareholders to apply one set of standards in one place. Is there the rigour of enforcement in some areas of the world that there is in Canada? Probably not. Um ... is it up to the company to, you know, to step into that breach? Yes. But can that be done unilaterally? No. So it really is in our best interest to not only raise ... the levels of standards. But you can have the best standards in the world; you still need to have some level of enforcement.

HUNTER: Placer Dome sold its stake in the Philippine mine. But two of its executives still face criminal charges, and the Vancouver company continues to pay the cost of the cleanup-$60 million and counting. ...

MANFORD MALLORY (MINING STOCK ANALYST): It costs a lot to clean these spills; insurance consequences, political consequences, certainly negative consequences to the shareholders of these companies and to the local residents of these areas. I think it is simply a case that the industry standard for engineering tailings impoundment can now be judged to be inadequate, given the results that we have seen. ...

HUNTER: The rolling plains of Montana, mining country, where, these days, in the pursuit of gold, the big players, and the big problems, are Canadian. ... The Golden Sunlight mine, in the heart of Montana, is owned by Vancouver's Placer Dome. A huge bite has been taken out of a mountain to get at tiny specks of gold using cyanide-the latest tool of choice for gold diggers. It's a new chemical process that separates the bits of gold from the tonnes of rock that are dug up out of the ground. It makes the mountain worth mining. It used to be that ranchers lived nearby-until cyanide leaked into the groundwater and their drinking wells 15 years ago. The ranchers sued, and Placer Dome settled out of court. The company bought the land. Now people don't live there, only animals do. ... There've been no leaks since. Now Placer Dome wants to make Golden Sunlight even bigger, with a promise it can contain any extra pollution that might bring. But critics have little faith left in the mining industry. They simply don't believe them. And so in the state capital, plans are afoot to fight Placer Dome in court, another legal battle for the Canadian company.

HUNTER: And this isn't the only trouble for Canadians who want a piece of this state. In northern Montana, the little Rocky Mountains are home to another gold mine, Zortman-Landusky. Owned by Canada's Pegasus Gold, it's the largest in Montana. Famous for squeezing gold out of the lowest grade ore in the country, Zortman-Landusky was once known as a Montana "monster mine." It was one of the first in North America to use a process called cyanide heap-leaching. Unlike at Golden Sunlight, tonnes of ground-up rock are simply piled into giant heaps, then sprayed with cyanide and water to "leach" out the tiny bits of gold. Here, in this final stage, it's just water. It's the cheapest way to get what's left out of the ground, but it's also a tough process to manage. And this mine hasn't helped Canada's reputation. Over the years there's been a number of cyanide leaks and spills. In 1996, the company agreed to pay $38 million to settle a water pollution lawsuit-one of the largest penalties of its kind in U.S. history.

JIM JENSEN(FORMER POLITICIAN IN MONTANA AND ENVIRONMENTALIST): There are no fish in the streams up there anymore. The water runs red from acid mine drainage. The red in the water is iron that's dissolved by the acid and indicates the serious acid problem. ... And yet we're allowing this Canadian company to go ahead and mine on this land. We simply shouldn't do that. ...

HUNTER: But it's what happened here along the Essiquibo River in Guyana that may ultimately change the way Canadian miners operate abroad: a lawsuit that's made its way to a small office in Montreal. Researcher Dermod Travis has brought Judith David all the way to Canada to go to court against Montreal's Cambior Limited, hoping to break new legal ground. ... It all started three years ago. Again, a tailings dam broke-this one at Cambior's Omai gold mine. Three billion litres of cyanide-laced water escaped. What wasn't diverted, headed toward the Essiquibo.

JUDITH DAVID (GUYANESE CLASS ACTION CLAIMANT): When we got up that morning, everybody discovered the changing of the colour of the water, and people had wanted to know what it was. But it was not until later on in the day, when the news media released the news of a cyanide spill. Nobody knew that they were using cyanide there.

HUNTER: What went through your head when you heard "cyanide"?

DAVID: Death. And everybody thinks that way.

HUNTER: There was widespread fear. For ten days, nobody could drink the water or eat the fish. Many still won't use the water. Cambior called the spill regrettable, but unforeseeable. An inquiry by the government, which owned part of the mine, absolved Cambior of any criminal liability. But an independent US engineer's report said the dam, "as designed and constructed, was bound to fail." The report concluded "we are at a loss to explain why the design and construction of critical elements of the dam were executed so inadequately." Judith David is asking for $69 million-a class action suit on behalf of the 23,000 Guyanese she says are affected by the spill. ...

DERMOD TRAVIS (PUBLIC RESEARCHER): I think, certainly, by going into Quebec courts, we've achieved something. We have already said to other mining companies and other Canadian companies that we can get in the door; it's going to be for a judge of the superior court to decide how far that door is going to be opened. This is, I think, probably the first and the best opportunity to show Canadian mining companies that there will be a price to pay. And that you can't hide behind a corporate veil or a jurisdictional question to try to avoid paying that price.

Postscript--On August 17, 1998, Quebec Judge, GB Maughan, ruled against the Guyanese, agreeing with Cambior Inc. that the suit belongs in Guyana. He rejected the argument presented on behalf of the claimants that Guyana's courts don't have the resources or the independence needed to hear the case.

Ken Traynor is a researcher, and International Programme coodinator at CELA