/* Written 5:00 PM Aug 31, 1995 by pchatterjee in igc:soc.cult.carib */
From: Pratap Chatterjee <pchatterjee@igc.apc.org>
Subject: backers of gold mine have history of disaster
FINANCE-GUYANA: Backers of gold mine have history of disaster
By Pratap Chatterjee
WASHINGTON, Aug 31 (IPS) - Backers of the two gold mining
companies implicated in Guyana's biggest environmental disaster
were also associated with the two biggest cyanide-related gold
mining disasters in this country, an IPS investigation has
discovered.
On Aug 19, the holding pond at the Omai gold mine, located some
160 kilometres from the north-eastern Atlantic coast of South
America broke, spilling some four billion litres of
cyanide-laced waste into a tributary of the Essequibo River
over a period of five days.
The mine is run by Cambior of Montreal, Canada, and Golden Star
Resources of Denver, Colorado, which together own 95 percent of
shares in Omai, which produced 252,000 troy ounces of gold last
year.
The Guyanese government owns the remaining five percent.
Profits from the mine contributed about a quarter of the
Guyanese national income of 500 million dollars in 1994,
according to Golden Star officials.
Golden Star Resources was controlled by the man who ran the
Summitville gold mine in Colorado, site of the most expensive
environmental disaster in U.S. history. Cambior bought up a
mining company that ran a South Carolina gold mine which was
the site of the biggest-ever cyanide spill prior to the Omai
disaster.
These two companies also control major mining operations in
Burma, French Guiana, Namibia, Papua New Guinea, Suriname and
Venezuela.
The man who helped raise the money to create Golden Star
Resources was Robert Friedland, a U.S. native who has taken
Canadian citizenship. Friedland once owned a company called
Galactic Resources that operated the Summitville mine in the
San Juan mountains of Colorado.
Summitville, which opened in 1986, introduced a technology
called ''cyanide leaching'' to extract gold from ore. This
process, invented in Scotland and first used in South Africa,
involves spraying cyanide solution on the ore to extract gold.
The cyanide waste that was left over was supposed to be stored
in lined and covered ponds to prevent contact with local
wildlife which can die if they drink the water. Unfortunately,
the cyanide solution did not stay in the ponds but leaked
through the lining into nearby creeks. By 1990, a 27-kilometre
stretch of the Alamosa river was biologically dead.
In September, 1990, an anonymous tip brought the situation to
the attention of the U.S. Environmental Protection Agency
(EPA). Two years later, the EPA seized a 6.7-million-dollar
bond posted by the company to begin cleaning up the site.
In November, 1992, Friedland resigned all his positions at the
company and declared bankruptcy in December. Exactly one month
later, however, the Omai gold mine, Friedland's next project,
began production in Guyana, using the very same technology that
had destroyed the Alamosa.
Clean-up operations at Summitville to date have cost 80 million
dollars and will run much higher, according to local and EPA
officials.
Just as Friedland vanished from Summitville when it was in
trouble, he has now taken flight from Golden Star, according to
Rick Winters, the company spokesman in Colorado. ''We have
nothing to do with him anymore. He sold his shares a long time
ago,'' he told IPS.
On Oct 28, 1990, just one month after Denver EPA officials were
called to the Summitville mine, their counterparts in Atlanta,
Georgia, were called out to a similar disaster in South
Carolina.
Some 39 million litres of cyanide waste had spilt into the
Lynches river after an earthen dam broke at the Brewer gold
mine, which also uses cyanide leaching to recover gold. The
spill killed an estimated 11,000 fish over an 80-kilometre
stretch.
The Brewer mine shut down in January 1993 when Westmont
corporation, the mine's owners, decided that it was no longer
profitable. The miners had extracted a total of 180,000 troy
ounces of gold in the six years that it operated, about
three-quarters of what Omai produced in 1994 alone.
Brewer officials are still at work at the site cleaning up the
environmental mess created by the mining operations, which they
estimate will cost seven million dollars and not be completed
until 1998 at the earliest.
Cambior bought up Westmont in 1993 shortly after Brewer mine
shut down. But the South Carolina site was excluded from the
deal.
''The disasters in Colorado, South Carolina and Guyana show
that cyanide heap leaching just does not work,'' says Will
Patrick, a field officer for the Mineral Policy Centre, an
activist group that tracks mining companies.
Environmental groups have long warned that the owners of Omai
have a disastrous track record. Roger Moody, a British activist
with the London-based group Minewatch, described Friedland's
past history in an article entitled ''The Ugly Canadian: Robert
Friedland and the poisoning of the Americas,'' published in the
Washington-based Multinational Monitor last November.
Moody says that Robert Friedland and his brother Eric operate a
trust called Ivanhoe Capital, which controls mining operations
in Burma, Namibia, Papua New Guinea and Venezuela.
The 1995 Canadian Mines Handbook shows that Golden Star also
controls major mining operations in French Guiana and Suriname
which border Guyana.
In the Monitor article, Moody says that Friedland convinced the
International Finance Corporation, the private finance arm of
the World Bank, to sell off part of Galactic's interests in the
Philippines in the early part of the 1980s.
The Multilateral Investment Guarantee Agency (MIGA), one of the
World Bank's newest divisions, also helped the Omai gold mine
to get going. MIGA officials told IPS that the agency had
re-insured the Omai mine for 49.8 million dollars against
nationalisation, civil war or currency risks in 1992.
That re-insurance raises the possibility that, if Guyana seizes
the mine in the aftermath of the spill, MIGA may have to pay off
the owners.
The World Rainforest Movement (WRM), a British group, has
demanded that MIGA be held accountable for not investigating
the background of these companies before selling them
insurance.
''The World Bank must accept responsibility for the disaster,''
says Marcus Colchester of WRM. But MIGA officials say that they
have no financial obligations to Guyana, according to officials
at their headquarters here.
Five days before the Omai disaster, IPS reported that MIGA had
no independent ability to assess the environmental or social
risks of mining projects it insured. MIGA officials also said
the agency would not take responsibility for damages caused by
its clients' operations.
''Even if there is an environmental disaster, it is not really
our problem,'' said Gerald West, a senior MIGA adviser. ''It
would be a little like appealing to your car insurance company
after you were accused of murder,'' he explained.
The IPS investigation was provoked by complaints from
Indonesian activists that security officials at the Freeport
gold and copper mine had massacred indigenous people who had
protested the company's expansion plans. The expansion was the
very first project guaranteed by MIGA in 1990.
EPA data shows that Freeport is the biggest corporate polluter
in the United States. Investigations into the three U.S. mining
companies insured by MIGA in Peru in 1994 disclosed
environmentally hazardous practices there as well.
MIGA officials told IPS that they do check the environmental
dangers posed by development projects that they insure. This
information is given their board of directors, but there are no
rules on what should be done with it.
''In the Omai case, we contacted Cambior as well as the
Canadian government to find out the situation,'' said MIGA's
Walsh. He said that MIGA had not decided what to do with the
information. (ENDS/IPS/PC/JL/95)
Redistributed with permission.
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