Economy

Mining expansion on hold as environmental protests grow

2nd January 2020

By Ignacio Pereyra

Mining expansion on hold as environmental protests grow

The strong social and political conflict that broke out in Mendoza following the western province’s intention to open up to metal mining has set off alarms within the newly-inaugurated national government, which seeks to boost the mining sector to attract much-needed investments and increase exports.

</p> <p>Everything happened very fast, as 2019 was coming to a close. <a href="https://gettheessential.com/politics/2019/10/03/does-the-strong-mendoza-win-boost-macri-re-election-hopes-ucr-provinces-cambiemos">Rodolfo Suárez</a> of the Radical Civic Union (UCR) party, leader of the <em>Cambia Mendoza</em> coalition that backed Mauricio Macri in the 2019 presidential election, took over as governor of the Mendoza province on December 10. His first measure was to propose changes to Law 7722, which was introduced in 2007 to prohibit the use of certain chemicals to protect water sources.</p> <p>Several environmental groups reacted immediately, protesting against the proposed changes, which would allow the use of cyanide and sulfuric acid as reagents in open pit mining. They also claimed that millions of liters of water would be used for mining while the province has been in a water emergency for ten years due to consecutive droughts.</p> <p>Mendoza is a semi-arid province and its agricultural activity – including its world-famous wines – depends on artificial irrigation and the melting water of the Andes. Experts agree that global warming has reduced the size of glaciers and rainfall is increasingly scarce.</p> <p>&#8220;The amendment to law 7722 allows for the use of sulfuric acid, cyanide and toxic substances in the development of mega-mining, which will generate water pollution in the province,&#8221; said <a href="https://twitter.com/GreenpeaceArg/status/1209113587299553280">Greenpeace Argentina</a>.</p> <p>They also warned, together with a dozen other environmental organizations, that the modification of the norm was against the non-regression principle of Argentina’s 2002 General Environment Law, which prohibits any recession of existing levels of environmental protection.</p> <h2><strong>No “grieta”</strong></h2> <p>From the beginning, Suárez had the support of Argentine President Alberto Fernández, whom he met in Buenos Aires with other UCR governors on December 16, despite being from opposite coalitions. But the protests grew day by day in Mendoza, a province known for its wines and for Mount Aconcagua, the highest peak in the world outside of Asia, which have turned the area into a great tourist attraction.</p> <p>On Friday, December 20, in just over ten hours, Mendoza’s deputies and senators from the opposition and the ruling party reached an agreement and approved the amendments of Law 7722 by majority. The vote took place in a fenced-off legislature and with strong police presence in the city of Mendoza’s central Plaza Independencia, which was full of protesters from throughout the province.</p> <p>&#8220;The strange thing about this reform is that there was no <em>grieta</em> (a common term for Argentines’ entrenched political divide): UCR, Kirchnerism and PRO voted in favor,&#8221; Jorge Difonso, Mendoza MP with the ruling Cambia Mendoza told <em>The Essential</em>.</p> <p>Difonso was in a strange position because he voted against the modification of the law. Even though he is part of the ruling party, he is also one of the authors of Law 7722, which was passed in 2007 during another bout of protests against mining. “It is not a law that bans mining altogether. It does however establish standards for environmental controls. The proposed changes lowered the controls and allowed the use of cyanide and sulfuric acid, which were prohibited.”</p> <p>Difonso said that while Law 7722 was issued with the aim of protecting water, the proposed changes &#8220;can put water at risk because of the chemicals that would be allowed.&#8221; He also questioned the current context: “Mega open-pit metal mining uses millions of liters of water and Mendoza is in a water emergency. We are putting at risk water for our consumption.”</p> <p>The provincial Minister of Economy, Enrique Vaquié, who also co-authored Law 7722 when he was a senator, believes that Mendoza&#8217;s context has changed in the last 12 years, making it unnecessary to hold back on mining. &#8220;Now companies are aware that they are responsible and there is a national government that has started to function accordingly and can guarantee controls,&#8221; he told <a href="https://www.mdzol.com/politica/2019/11/24/las-dos-caras-del-oficialismo-en-el-debate-minero-53161.html">MDZ Radio</a>.</p> <h2><strong>No social consensus</strong></h2> <p>When the amendments were approved on December 20, protests increased. Thousands of people demonstrated in the streets and several roadblocks were put in place. “I think the government didn’t realize that there was no social consensus and people showed it to them in the streets. It was not a small group of extremists protesting, the entire province was against it,” said Difonso.</p> <p>On Monday December 23, protests concentrated in front of Mendoza’s House of Government. Tensions with the police mounted. There were 19 injured police officers and 16 protesters arrested. Mendoza’s Peronist legislators, who days earlier had given their support to greenlight the changes, modified their position: through <a href="https://twitter.com/TodosMza/status/1210301463953629191?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1210301463953629191&amp;ref_url=https%3A%2F%2Fwww.ciudadanodiario.com.ar%2Fnota%2F2019-12-26-18-2-14-el-frente-de-todos-pidio-derogar-la-ley-9-209-y-empezar-de-cero">a statement</a>, they requested to repeal the new law &#8220;in order to start dialogue from scratch&#8221;.</p> <p>The government of Mendoza said that the new law guaranteed the protection of water and the environment, and that controls on mining companies would be strengthened with the creation of an environmental police and the implementation of international audits.</p> <p>But protestors remained skeptical. &#8220;International certifications are not carried out with enough rigor. At the time of the September 2015 spill, the Veladero mine in (neighboring province) San Juan was certified according to ISO standards and respected the international cyanide management code,&#8221; said Marcelo Giraud, professor of geography at the University of Cuyo and member of the Popular Assembly for Water.</p> <h2><strong>Changes suspended – for the moment</strong></h2> <p>Given the growing pressure from different sectors and the massive protests organized by environmentalists, on the eve of a new mass demonstration announced for December 29, Suárez backed down and announced that the law would be repealed on December 30.</p> <p>“People have expressed themselves in the streets and we have heard it. There is no social consensus for mining. The maximum responsibility is that we in Mendoza end the year in peace,” said Suarez at a press conference. “We are going to call everyone to dialogue: the Church, universities, trade unions, political parties, international organizations. And I will be present personally at the debate,” he added.</p> <p><a href="https://www.greenpeace.org/argentina/issues/climayenergia/3637/esta-es-la-victoria-de-la-gente-y-de-la-protesta-pacifica/">Greenpeace Argentina</a> celebrated the decision as a “victory for pacific protests”.</p> <p>When the vote took place on December 30, a large majority in both houses voted in favor of the repeal.</p> <p>Sources within the provincial government told The Essential that the government has understood that people in Mendoza are against mining “at the moment and in these conditions,” although there are sectors that feel harmed by the repeal.</p> <p>“The governor has heard the people, but it is a shame for the productive sector,” UCR Senator Diego Costarelli told <em>The Essential</em>. “Our production model today relies mainly on agribusiness and tourism, and they have reached their top capacity. This is why unemployment keeps growing. Agriculture takes 80% of Mendoza&#8217;s water, its use is inefficient. Mining would only take 1%. We want to do sustainable mining, with audits with international standards endorsed by the United Nations.”</p> <p>Looking ahead, authorities are analyzing the possibility of a new law that contemplates a zoning system for mining exploitation with chemical substances. For example, in Malargüe, in the south of the province, there is consensus in favor of mining and they requested for the repeal not to include them – unsuccessfully.</p> <h2><strong>Jobs, growth and dollars</strong></h2> <p>But the issue goes far beyond provincial concerns. Despite belonging to opposing political camps, Mendoza&#8217;s governor’s decision to carry out mining exploitation is in line with President Fernández&#8217;s plans. The Argentine government is committed to oil, gas and mining to create higher dollar revenues to restart the economy, which is expected to continue in recession for the third consecutive year in 2020.</p> <p>Argentina’s mining industry went from having exports for 2.2 billion dollars in 2015 to 3.9 billion in 2018. The record year was 2004, with exports for 6.3 billion dollars – a figure that the government believes can be achieved in four years.</p> <p>During the election campaign, Fernández met with mining companies and told them about the “great opportunity” they would have if he won. He elected Alberto Hensel as Secretary of Mining, who left his position as Minister of Mining of San Juan, a mining-friendly province that has also been at the heart of environmental discussions.</p> <p>Hensel&#8217;s appointment alarmed environmental organizations in San Juan, Catamarca, Santa Cruz and Chubut. They expressed concern and pointed to the problems that Canada-based mining giant Barrick Gold had in Veladero, the mine it is exploiting in San Juan, where four spills of cyanide solution took place in just two years.</p> <p>Veladero is a microcosm of the dilemma that the sector faces. While <a href="https://www.greenpeace.org/argentina/issues/climayenergia/1565/4-razones-para-pedir-el-cierre-de-la-mina-veladero/">Greenpeace</a> has called for its closure, its exploitation between 2005 and 2018 generated 10.6 <a href="https://www.infobae.com/inhouse/2019/08/24/barrick-anuncio-inversiones-en-san-juan-para-extender-veladero-hasta-2028/">billion dollars</a> in exports.</p> <p>Given the current context, the national government understands that the situation was poorly managed in Mendoza, where they believe that it was necessary to explain in detail “the viability and sustainable imprint of the project”, summoning all sectors. Hensel said that “mining can be done without environmental pollution” but that these activities must be carried out with “social backing”.</p> <p>“The initiative promoted by governor Suárez failed to raise the issue from a social point of view, it was very untimely,&#8221; said Hensel, who said that mining is done all over the world: &#8220;I would like us to look like Canada and Australia, which developed economically thanks to mining.”</p> <p>Since Fernández took the oath on December 10, mining was one of the sectors that benefited from a 12% to 8% decrease in export taxes. His pick of Hansel was also an indication that he is determined to boost mining activity, and that many of the mining sector growth seen in San Juan could be imitated in other provinces.</p> <p>Despite coming from different parties, both Hansel and Suárez believe mining is necessary to generate jobs in the provinces: “40% of the population are below the poverty line, they do not eat or cannot send their children to school and they are having a hard time. In those places, with social consensus, with strict controls, mining development had to be carried out, preserving our most precious resource that is water,” Suárez said lately.</p> <p>But this argument is not enough for environmentalists like Eduardo Sosa, former chief of staff of the Ministry of Environment and Land Management of Mendoza (2015-2017), who compiled a <a href="https://ecososa.files.wordpress.com/2019/12/anc3a1lisis-de-la-reforma-de-la-ley-7722-final.pdf">document</a> in which he analyzed the proposed modifications, questioning some of the arguments in favor. “How could they create 17,000 jobs in the short term when the province of San Juan has just over 6,600 jobs for all the provincial mining activity?”</p> <h2><strong>Support for mining in trouble</strong></h2> <p>Argentina has the largest reserves of lithium worldwide, it comes sixth when it comes to silver and tenth with regards to gold. Mining is the fourth largest export and its development is key for some provinces: it amounts to 80% of exports in Catamarca, 74% of those in San Juan and 71% of those in Santa Cruz, according to the Argentine Chamber of Commerce and Services (CAC).</p> <p>But the protests are proving to be contagious. After Mendoza, anti-mining protests followed in Chubut province, in the southern Patagonia region.</p> <p>Chubut has great mining potential, with reserves of silver, lead, gold and uranium; but open-pit exploitation is prohibited under Law 5001, approved in 2003. Last week, when the Chubut provincial government made public its intention to modify the law, street protests started. Finally, the Chubut legislature did not discuss any changes to the current legislation.</p> <p>Chubut’s most developed project is Navidad, considered the largest untapped silver deposit in the world, which would require an initial private investment of US$ 1 billion through the Pan American Silver corporation. For now, it will remain on hold. Similar cases can be found across the country, which some mining enthusiasts see as under-exploited when compared to others in the region.</p> <p>At the moment, two of the 25 largest gold mines in the world are located in Argentina, including Veladero, operated by Barrick Gold Shandong (Canadian and Chinese capitals) in San Juan, and Cerro Moro, in Santa Cruz, by Goldcorp (Canadian), according to the <a href="https://www.europeangoldforum.org/wp-content/uploads/sites/8/2019/04/Gold-Focus-2019-compressed.pdf">Gold Focus 2019</a> report.</p> <p>The same report indicates that Peru remained the top regional producer at 158.4t. Brazil is the second-largest, producing 97.1t in 2018, up by 1.3t. Argentina remains third-largest at 60t, 5% lower than in 2017. In 2018 Argentine costs fell 3%, with 41% devaluation in the Argentina peso offsetting high local inflation, said the report by <a href="https://www.metalsfocus.com/">Metals Focus</a>, one of the world’s leading precious metals consultancies.</p> <p>But even if the country is cheaper for production, many see the conflict as being about much more than money. Having seen stories of accidents and large environmental transformations in neighboring countries and provinces, it will be hard to persuade locals about the benefit of opening ventures of this kind just a few miles away from their backyards.</p> <p>

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Ignacio Pereyra

Ignacio Pereyra is a freelance reporter and photographer. For close to a decade, he was the Argentina correspondent for the Spanish-language service of dpa news agency. He also reported out of Buenos Aires for Río Negro, Patagonia's largest newspaper.