El Salvador’s right to decide on mining projects upheld

Published: 13th October 2016

Oxfam hailed today’s ruling against mining company OceanaGold, which effectively ended the company’s lawsuit against El Salvador for not granting it a mining permit.

The ruling, handed down today by the International Center for the Settlement of Investment Disputes (ICSID) in Washington D.C., upheld the Salvadoran people’s rights to determine how and when to develop their natural resources. The Salvadoran government had maintained that the company failed to fulfill the legal requirements for a gold mining project, and that the project posed a risk to the country’s water supply.

Keith Slack, Oxfam’s Extractive Industries Global Program Director said: “Mining companies must respect the human rights of the communities in which they seek to operate, full stop. Companies around the world should heed the lesson of today’s ruling and stop pushing projects that governments and local communities don’t want.”

The case began with Pacific Rim, a Canadian company that tried to develop a gold mine in northern El Salvador. Having failed to obtain approval for the project from the Salvadoran government, PacificRim, which was later bought by Australian company OceanaGold, bypassed El Salvador’s democratically-elected government and initiated international arbitration to pressure El Salvador to pay for lost exploration costs and future profits.

Ivan Morales, Oxfam’s country director in El Salvador said: “OceanaGold sought to undermine the sovereignty of El Salvador by taking decisions about mining regulations and environmental protection out of Salvadorians’ hands and into a foreign tribunal, but they have failed. The rights and the voice of the people to determine if and how their natural resources should be developed must never be taken away.”

El Salvador, which is the smallest and most densely populated country in Central America, has been experiencing a clean water crisis, according to the UNDP, with more than 90 percent of the surface water contaminated. Concerned about the risk to water supplies from mining, after a mining site run by another company contaminated the San Sebastian River with toxic levels of cyanide and iron, the democratically-elected government announced in 2012 it would continue the de facto ban on mining. Tensions over mining have resulted in threats, violence and even murders, with three anti-mining activists killed.

Pacific Rim originally filed a complaint against El Salvador in 2009. In 2012, ICSID ruled that the case could proceed under El Salvador’s foreign investment law, which has since been amended to prevent international companies from bypassing Salvadoran courts.

Pacific Rim failed to meet three key legal requirements for a mining permit: it failed to get government approval for its Environmental Impact Study, it failed to submit a required feasibility study; and it failed  to meet the requirement that it held titles to (or permission to mine in) all the land for which it requested a concession. The majority of the Salvadoran people were not - and are not - supportive of their plans to mine in Cabañas. Pacific Rim had less than 13 percent of the required land holdings.

“The people of El Salvador have spoken against this project and they have a right to be heard. Oceana Gold did not hear the voices of the communities, they did not hear the voices of the democratically elected government, but today, they should hear them loud and clear: they are not entitled to mine in El Salvador,” said Morales. 

Contact information

Becky Davis, +1 202 777 2939 / +1 202 390 5587 / bdavis@oxfamamerica.org