Published by The Economist Magazine
THE $4 billion that two Canadian companies, Barrick Gold and Goldcorp, have poured into developing Pueblo Viejo, a gold mine, since 2009 amounts to the largest single foreign investment in the history of the Dominican Republic. The companies say that the money has turned the polluted ruins of what was the state-owned Rosario mine, abandoned in 1999, into a “truly world-class” operation that should provide the country’s government with $10 billion over its 25-year life.
But the project has been controversial. Just weeks after the mining started in January, President Danilo Medina, who was elected last year, declared: “For every $100 of gold exports, Barrick will receive $97 and the Dominican people $3. That is simply unacceptable.” (In fact, Pueblo Viejo Dominicana Corporation, or PVDC, the company operating the mine, is 60% owned by Barrick and 40% by Goldcorp.) Mr Medina demanded that the contract be renegotiated; otherwise, he said, he would raise taxes on the mine’s profits.
This month the two sides agreed to changes that have front-loaded tax payments and could see the government get an extra $1.3 billion in 2013-16 provided that the gold price rises and stays above $1,600 an ounce (it is now around $1,350). Gustavo Montalvo, Mr Medina’s chief of staff, tweeted: “Together we ensured that words like ‘national sovereignty’, ‘justice’ or ‘transparency’ were transformed into something more concrete.”
Yet that may not calm local unrest over the mine, sited about 100 kilometres (60 miles) north of Santo Domingo, the capital. The investment was presented by both the government and company as including a clean-up of Rosario’s toxic mess and the installation of systems to keep local watercourses clean. But residents are suing PVDC, claiming that the new mine is poisoning rivers, causing illnesses and the death of farm animals. They want the government to release the environmental-impact assessment for Pueblo Viejo, which it has so far refused to do.
One farmer, María de la Cruz Mariano, said that she began to suffer skin allergies and other ailments in 2010, after PVDC began work. Tests on her blood conducted by a private laboratory showed high levels of lead, sulphur, cyanide and zinc. Some of her cattle have died from bovine anaemia, which can be caused by ingesting cyanide. Other residents report that previously clean local rivers have become polluted since PVDC built a dam to collect water containing cyanide, which is used to leach gold from crushed rock.
PVDC has signed the international code of practice for the handling of cyanide. It says it is “in the process of capturing all the surface flows” from the old and the new mines, sending the water to storage ponds where it is treated. PVDC says that, together with local people, it conducts regular, public tests on water and air.
But community leaders say they have no knowledge of such tests. The company has not answered requests to provide the dates on which they were conducted. Tests by the environment ministry, released only after a freedom of information request, found the water in the Margajita river downstream from the mine to be highly acidic, as well as containing sulphides and copper above legal limits. The ministry has made little effort to act on these results.
The old Rosario mine left some streams red with acid. PVDC’s clean-up obligations extend only within the mine perimeter; the rest was for the government. The firm points out that it has paid $75m ($37.5m of it a loan) to finance the government’s share of the work. It has also removed around 130,000 cubic metres (4.6m cubic feet) of contaminated soil. But Demóstenes Martínez, a congressman from the ruling party, argues that PVDC is violating both the constitution and the mining law.
It is not clear whether the pollution is being caused by PVDC’s operations, or is a legacy of the past. The government claims to have lost records of past tests on the rivers. But on its own the new agreement may not be enough to ensure that the mine regains the consent of the community. That will require greater candour.