The gold deposits that are to be mined by Pacific Rim are low grade, and so involve processing large quantities of ore. This requires a great deal of water and the use of cyanide to treat the gold. In El Salvador this process has many difficulties.
El Salvador is a small, largely agricultural society with one of the highest population densities in the world. It is mountainous, has five active volcanos and is subject to periodic earthquakes and violent storms. The areas suitable for mining are surrounded by small settlements which already lack a reliable source of water. The River Lempa into which the local rivers drain is the source of water for San Salvador, the capital with over a million inhabitants.
The effects of large scale mining are predictable and catastrophic. The mines will take much of the water from the aquifers and streams on which the local population depends. They will also be affected by the dust from mines. The soil is rich in sulphur, so that when exposed to water it becomes acidic and reacts with other elements to pollute soil and water. Even if the cyanide is held in tailing dams, the geological and climatic risks are high.
In the face of this reality and sustained community pressure, the El Salvadorean government in 2009 suspended the approval of mining. Nevertheless overseas companies, mainly Pacific Rim based in Canada, have pressed for permits to mine. They have naturally tried to persuade politicians of the economic benefits of the mines and targeted parties belonging to the political opposition.
Pacific Rim has also placed economic pressure on the government. Under the rules of the Central American Free Trade Agreement (CAFTA) the company is able to sue the El Salvador Government for preventing the mine from going ahead. The case will be heard in the United States. The amount sought is $200 million, a large part of the national education budget.
The experience of Vidalina Morales and the people of El Salvador are similar to those reported through Catholic Church and other humanitarian agencies working with poor rural communities in the Philippines, India and other Latin American nations. The people affected by mining projects led by companies from developed countries have no say in the decisions that will affect their health and livelihood, and the differences between those who will benefit from mining and those who will be harmed by it often lead to civil strife, which mining companies have been accused of instigating or encouraging.
In Australia the environmental impacts, health, welfare and aspirations of people in areas affected by mining are central in the granting of permits to mine. In such cases it is understood that the economy is for people and not people for the economy. A question for us as a community is whether we are willing to accept a lowering of these standards for the overseas operations of Australian companies. Although these operations may appear distant and of no concern to us, it is often our bank investments and superannuation that funds these projects.