Mining

Meridian Gold is a multinational company with base in Canada, interested in exploiting an open air, gold and silver mine in Esquel, Argentina. It promised employment for 300 workers, but a group of neighbors started a campaign to bar operations. Since the separation of gold and silver from their ores requires the use of cyanide and arsenic respectively, people were worried about the possible contamination of rivers and ground water. They formed a neighbor assembly, organized peaceful protests and finally convinced the communal authorities to call for a plebiscite. The voting options: yes to the mine, no to the mine.

In turn, Meridian Gold organized "information events" designed to convince the constituency of the supposed safety of their intended enterprise. Barbecue, training shoes and other gifts were offered to those attending, a strategy that has been common in the political past ("past"?) of Argentina.

In any case, people ate the barbecue, accepted the shoes and other gifts and in march 2003 went to vote. 75% of the municipality's voters showed up, a record high. Of all ballots, 81% went to "No to the mine". This should have been the end of the matter.

"A people who do not sell themselves cannot be bought", said an inhabitant of Esquel on TV. But there is always a but, and money has its weight, particularly when there is a lot of it to go around among politicians and corrupt union workers. You may not want to be bought, but you might still be sold. Of course, again, one may wonder why ethically enlightened nations allow unethical companies based on their soil to conduct such unethical business with such unethical partners.

In any case, and since we are talking about corruption, consider the following facts:

1) Meridian Gold's work plan would mean an extraction of gold from the Esquel mine equivalent to 2.5 billion dollars in 10 years. Silver production is not included in these calculations.

2) Law 25.161 states that the argentinean nation may only receive a maximal 3% in commissions from any company exploiting mineral deposits within its borders. These commissions will be calculated on the value of the mineral as it is extracted from the mine, which is always much lower than after refinement. Incidentally, the same laws say that the argentinean state can exploit mineral deposits only through private companies (it still would have to prove to me that it would do a cleaner job, but at least it'd have more incentives to do so. In any case, this fact does give an idea of the thinking behind such laws. Let's encourage investment by all means, right?).

3) In round numbers, and assuming that the value of the gold, as extracted from the mine, were equivalent 2 billion dollars in 10 years, the part corresponding to the state would be some 60 million dollars. However, since the 3% figure is only a maximum set by national law, Chubut province (where Esquel is) has legislated that 2% should be enough (Provincial Law 004018). We are down to 40 million dollars.

4) Another couple of interesting national laws that help illustrate the situation are 23.018 & 24.490. In order to favor exports from Patagonia, the state will reimburse 5% of the value of such exports to the exporters. This would mean that Meridian Gold would be receiving 125 million additional dollars.

THUS, ARGENTINA WOULD BE PAYING 85 MILLION DOLLARS TO MERIDIAN GOLD SO THAT THEY CAN TAKE 2.5 BILLION DOLLARS AWAY!

And this is without taking into account other "incentives", such as a 100% deduction of prospecting expenses (law 24.196), the promise that taxing will remain constant for 30 years (same law), and a long etc.

Going back to the situation in Esquel, here are the developments after the plebiscite.

The company promised to respect the decision, but started lobbying for exploitation again shortly after. Public resistance continued and, finally, on july 14th of this year the province proclaimed a moratorium on mining in the Esquel area... for a period of three years (hoping that it will be long enough for people to forget?). Then, this month, the argentinean subsidiary of Meridian Gold took six citizens of Esquel to the federal court, accused of making public a recording of a 2003 meeting of CEOs and consultants of the firm. In it one of the executives is clearly heard saying: "the people of Esquel must not know that we intend to bend their will".

You can find more information about all of this on:

www.noalamina.org (Spanish. This is the site created by the Esquel neighbors.)
http://www.anred.org/article.php3?id_article=1786 (Spanish)
http://www.nodirtygold.org/esquel_argentina.cfm (English, but a bit dated: 2003)

If you want to hear the company's side of the story, here is their website:

http://www.meridiangold.com

You can phone them at their headquarters and ask them (phone is the only choice, as the only e-mail they publish on their website is for you to contact them if you want employment):

Meridian Gold Inc.
9670 Gateway Drive, Suite 200
Reno, Nevada 89521
Telephone: +1 775 850 3777

Also, to learn more about mining investment policies in Argentina, you can go to

http://www.inversiones.gov.ar/documentos/mineria.pdf

You can check there that i'm not exaggerating. Again, unfortunately, this is only for Spanish speakers.

Finally, here are some people you can call:

Matilde Lenzano: +54 2945 453713
Lino Pizzolon: +54 2945 453679
Silvia Pérez: +54 2945 454811
Chuni Botto: +54 2945 452521

These are some of the Esquel inhabitants in the neighbor assembly. The one i talked to is Silvia Pérez.