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In April 2013, a group of Guatemalan farmers, among them Adolpho Augustin Garcia, converged outside the front entrance of Vancouver-based Tahoe Resources’ Escobal mine. Located in southeast Guatemala near the community of San Rafael Las Flores and operated by Tahoe subsidiary Minera San Rafael, the mine was already controversial even though it hadn’t yet begun production.
Garcia and fellow protesters faced off against private security personnel working for Alfa Uno, the firm that Minera San Rafael had contracted to guard Escobal, which went on to become one of the world’s largest silver mines, producing a world record 21.2 million ounces of silver concentrate in 2016. Lucrative as it potentially was, the mine was plagued by protests by the local Indigenous Xinca, small-scale farmers and community leaders, many of whom fear its impact on water and land.
That day, under the orders of the head of security, a Peruvian named Alberto Rotondo, personnel guarding the mine allegedly fired on protesters with rubber bullets as they fled the entrance. Seven were injured.
Six years later, this skirmish is reverberating throughout the Canadian mining industry and has the attention of the country’s legal system.
In June 2014, seven Guatemalan plaintiffs, including Garcia, launched a civil suit against Tahoe Resources in B.C. Supreme Court, alleging negligence and battery at the hands of Escobal mine security. Then in November 2015, Justice Laura Gerow ruled that a Canadian court didn’t have jurisdiction, agreeing with Tahoe that the case should be heard in Guatemala.
However, the plaintiffs appealed a year later, and in 2017 the B.C. court of appeal overturned Gerow’s decision, supporting the argument that the Guatemalans likely wouldn’t get a fair trial in their own country.
(Guatemala ranked 96th out of 113 countries in the 2017-18 Rule of Law Index published by the independent World Justice Project, compared to No. 9 for Canada.)
Tahoe asked the Supreme Court of Canada for leave to appeal, but the request was denied that June. Garcia vs. Tahoe had cleared its final legal hurdle, and this potentially game-changing case is set to proceed in a Vancouver courtroom. (In February 2019, another Vancouver-based company, Pan American Silver, completed its acquisition of Tahoe Resources for roughly $1 billion.)
It’s a shot across the bow of corporate Canada, warning companies that when it comes to overseas operations, they can no longer pawn off responsibility for human rights violations to in-country subsidiaries.
It also marks a legal milestone: the first time a Canadian court has agreed to allow foreign plaintiffs to seek justice in Canadian courts for incidents alleged to have occurred abroad.
Joe Fiorante, a partner at Vancouver law firm Camp Fiorante Matthews Mogerman, represents the seven plaintiffs, three of whom settled out of court with Tahoe.
“In terms of setting precedent, it is very important for there to be a public trial,” Fiorante says. “Our goal is to make the parent company responsible at the highest level,” he adds.
“If a board of directors knows that it will be responsible for the conduct of its subsidiaries abroad, that will have a profound impact on corporate responsibility.”
As of May 2019, no trial date had been set.
In the past, Canadian companies have mounted successful appeals in similar cases by arguing a common-law doctrine known as forum non conveniens, whereby courts may refuse to take jurisdiction over matters where a more appropriate forum is available.
The result: lawsuits filed in Canada by foreign plaintiffs alleging wrongdoings by Canadian companies have been dismissed and sent back to languish or die a quick death in the plaintiffs’ home countries.
But this line of defence is showing cracks.
Canada is the undisputed powerhouse of the mining industry, home to 75 per cent of its companies. Figures from the Mining Association of Canada show that Canadian investment in mining abroad more than tripled between 1999 and 2016.
But with the clout of being the global leader in mining and mining technology sometimes comes uncomfortable scrutiny, especially when Canadian players build operations in countries where the rule of law is weak, democracy fragile, respect for human rights tenuous, corruption rampant and accountability non-existent.
Tahoe isn’t the only B.C. mining company facing a possibly ugly public trial.
In 2014, three Eritrean men filed a suit in B.C. Supreme Court alleging that they were subjected to abusive labour practices by a state-run contractor engaged by Vancouver-headquartered Nevsun Resources for the construction of its Bisha mine in Eritrea, on the Red Sea in Northeast Africa. The original three plaintiffs have since been joined by more than a dozen other former Bisha employees, and this mass tort claim over allegations of modern slavery is another ignominious first for Canada’s mining sector.
Unlike with Tahoe, the Supreme Court allowed Nevsun to appeal a lower court’s decision allowing the case to proceed. This past January, the Supreme Court of Canada heard arguments from both sides, with Nevsun asking for the case to be sent back to Eritrea. While the plaintiffs and defendant await a decision from Canada’s top court, debate continues outside the courtroom.
Amanda Ghahremani, former acting legal director of the Canadian Centre for International Justice and a legal consultant specializing in international law and redress for victims of atrocity crimes , believes it would be hard for the company to successfully argue that Eritrea is an appropriate venue for the plaintiffs to seek justice.
The country of five million, which fought a protracted war of independence with Ethiopia that ended in 2000, is a de facto one-party state with a dismal human rights record that “continues unabated,” according to a 2018 report by United Nations special rapporteur Sheila Keetharuth.
“I hope Canadian mining companies are paying attention to these court cases. They should be,” Ghahremani says. “It’s important for them to understand that they cannot go into foreign countries and commit human rights violations and not be held responsible.”
Industry executives are likely paying close attention to a third lawsuit involving another Canadian company, Hudbay Minerals, that is winding through the Ontario courts.
The company chose not to pursue an appeal of this suit, filed in 2011 by 11 Indigenous Mayan women in Superior Court of Ontario alleging gang rape by security personnel at Fenix Mine in eastern in Guatemala back in 2007. The incident is alleged to have occurred before Hudbay acquired the property from Skye Resources in 2008 and the Toronto-based company has since divested its interest in this property.
Scott Brubacher, director of corporate communications for Hudbay Minerals, said that the court case was at a standstill as of spring 2019. According to Brubacher, confusion around mine ownership at the time of the alleged crimes and misreporting in the media has put Hudbay in a difficult position.
Not surprisingly, many Canadian law firms with mining industry clients are also closely following these courtroom developments.
In a February 2017 blog post, Vancouver-based McCarthy Tetrault called Garcia vs. Tahoe “significant for both Canadian resource companies operating abroad and for foreign individuals alleging that Canadian parent companies are responsible for wrongs committed in the complainants’ home country.”
Though none have been proven in court, allegations of rape, slavery and shooting protestors with rubber bullets don’t burnish the image of the Canadian mining industry, especially when it’s trying to earn social licence for mines in countries that often present complicated social, economic, political and environmental challenges.
However, mining investment can be a powerful trigger for positive change, says one of B.C.’s biggest industry boosters.
Mark O’Dea is a Newfoundland-raised geologist and mining entrepreneur who sold publicly traded Fronteer Gold to U.S. titan Newmont Mining Corp. for CAD$2.3 billion in 2011. He’s also a winner of the Association for Mineral Exploration British Columbia’s Murray Pezim Award for perseverance and success in financing mineral exploration. O’Dea is no stranger to launching mining ventures abroad. As founder and chair of Vancouver-based investment firm Oxygen Capital Corp., he has interests in projects in Ontario, Nevada, Turkey and the West African nation of Burkina Faso.
Although O’Dea wouldn’t comment on Tahoe and Nevsun’s legal troubles, he thinks negative stories involving Canadian mining companies overshadow the economic good that mines bring to developing nations. He points to Karma, a gold mine in Burkina Faso that he developed through one of his companies, True Gold Mining.
O’Dea says the USD$130-million project brought opportunities to a region of the country that was previously without industry and “desolate,” though it also ran into protests from local populations that briefly suspended its construction in 2015.
“Over several years we created 1,000 jobs, with spinoffs to local business, and we damned a seasonal river to provide year-round water,” O’Dea says. “That’s a lasting benefit; that’s long-term.”
The mining sector does a poor job of telling its own good news story, he adds.
Though Tahoe didn’t respond to interview requests, the company’s story in Guatemala is much more nuanced than you’d gather from sordid tales of security forces firing indiscriminately on protestors. Many local Guatemalans, both mine workers and business owners, support Escobal. Yet the project remains mired in controversy, and efforts by mine managers and Guatemalan government officials to suppress local dissent are well documented.
While Tahoe was preparing to defend itself in B.C. Supreme Court this past summer, troubles continued to mount at its Guatemalan silver mine.
In July, Escobal protester Ángel Estuardo Quevedo was murdered, and the perpetrators haven’t been identified.
Earlier in 2018, the Constitutional Court of Guatemala suspended Tahoe’s mining licence, asking for a third-party review of both Escobal’s environmental impact study, along with the Guatemalan Ministry of Energy and Mines’ consultation process that resulted in its permitting in 2013.
The mine, which has been shut since mid-2017, remains the target of blockades, as well as protests 40 kilometres away in the nation’s capital, Guatemala City.
Lawyer Fiorante, whose connection to Guatemala dates back to travels there in the early 1990s, when the country was still crippled by civil war, says he’s “open to discussions about the benefits of mining.” (He now serves as volunteer legal counsel for Project Somos, a Vancouver charity that helps orphaned Guatemalan children.) “But in countries like Eritrea and Guatemala where there is so much corruption, I don’t think you can have any assurance that these benefits will trickle down to local people.”
Compared to the developing world, Canada has relatively stringent mine assessment and permitting procedures — so stringent that Oxygen Capital’s O’Dea says it’s become difficult to develop projects on his home turf in a reasonable time frame.
(Still, there are problems on home turf, too, with taxpayers shouldering the burden for abandoned mines like the Giant Mine in Yellowknife and a massive 2014 tailings dam failure at the Mount Polley mine resulting in 25 billion litres of contaminated materials entering Polley Lake, Hazeltine Creek and Quesnel Lake, a source of drinking water and major spawning grounds for sockeye salmon.)
When a Canadian company makes a foreign play, especially in jurisdictions where democratic institutions are brittle, it takes a next-level commitment to corporate responsibility and oversight to ensure that the project meets Canadian standards. Factor in local contractors that may be accustomed to playing by a different set of ethical and legal rules, and events can quickly spiral out of control.
That’s a big reason why in January 2018, the federal government announced $6.8 million in funding over six years for the creation of CORE, the Canadian Ombudsperson for Responsible Enterprise, tasked with investigating allegations of human rights abuses involving Canadian companies of all stripes operating outside the country.
Ottawa is also establishing a multi-stakeholder advisory body to guide government and the ombudsperson on “responsible business conduct abroad.”
Even at the highest level of mining industry advocacy, it’s widely accepted that Canada needs to step up its corporate responsibility game on foreign soil.
Ben Chalmers, VP of sustainable development for the Mining Association of Canada, says his organization sees the new willingness of Canadian courts to try cases involving foreign plaintiffs and Canadian companies as a step forward when it comes to transparency and clarity.
In 2004, the mining association began implementing its “towards sustainable mining” initiative. Chalmers calls it a response to some high-profile tailings pond failures during the 1990s, such as the one near Virginia, South Africa, in 1994, when the Merriespruit tailings dam collapsed, killing 17 people and destroying 80 houses.
The initiative provides protocols and frameworks for companies on all aspects of operations, including aboriginal and community engagement, greenhouse gas emissions and tailings management, biodiversity conservation, health and safety, crisis management, mine closures and the prevention of child and forced labour.
To achieve verification, a company must conduct annual self-assessments, get an external verification every three years and provide a CEO letter of assurance confirming that the outside assessment meets the standards, Chalmers says.
“We’re not without problems as an industry. But I’d say as a country, we’re doing more than most to address conflicts that arise between companies and the communities in which they operate overseas,” he asserts.
“I also think that we’re seeing more companies adopting progressive and proactive policies on their own.”
As proof of Canada’s commitment to socially responsible mining, Chalmers cites a 2018 study by Paul Haslam, an associate professor in the University of Ottawa’s faculty of social sciences, which rates 634 mining properties in five Latin American countries for their impact on local communities. Out of this total, Haslam and his fellow researchers identified 128 mines with known social conflict, nearly 33 per cent of them Canadian-owned.
Although Chalmers think it’s a decent batting average, Catherine Coumans, research coordinator for MiningWatch Canada, says if this is how Canadian mining companies are playing ball, they need to strive for a much better standard on the international stage. In her view, the mining association’s sustainable mining effort smacks of the fox guarding the henhouse.
Case in point: in 2016, the Mining Association of Canada gave a leadership award to Hudbay Minerals for its Hudson Bay Mining and Smelting Co. at the same time the company was defending itself against alleged human rights infringements at its former mine in Guatemala.
“We don’t think [towards sustainable mining] is the highest standard that it could be,” Coumans says from MiningWatch Canada’s Ottawa headquarters.
Activists and industry watchers are anticipating the full implementation of an independent set of standards known as the Initiative for Responsible Mining Assurance, she notes.
The fact that the Initiative for Responsible Mining Assurance has been 12 years in the making is a testament to the socioeconomic complexity of mining.
Where the “towards sustainable mining” program was driven internally by the Canadian mining sector, the Initiative for Responsible Mining Assurance emerged after citizen activists started showing up with placards at retailers like American luxury jewelry chain Tiffany & Co. in the mid-2000s, when the public shaming of so-called blood diamonds from Africa was hitting a fever pitch and consumers demanded to know more about precious-gem and metals procurement policies. When these retailers approached non-governmental organizations for guidance in identifying the “green miners,” Seattle-based Initiative for Responsible Mining Assurance coordinator Aimee Boulanger explains, they found there was no credible body to help them separate good and bad actors.
“It has been a hard process because mining is so complex. No two sites are the same, from the geochemical conditions to the water conditions of a mine, or the sociopolitical conditions of a given jurisdiction,” Boulanger says. “The strength of [the Initiative for Responsible Mining Assurance] will be the fact that the third-party verification will be just as important as the standards themselves.”
The Initiative for Responsible Mining Assurance launched in 2019 with a heavyweight steering committee including representatives from the mining giants Anglo American and ArcelorMittal, downstream purchasers like Microsoft Corp. and Tiffany, human rights and environmental non-governmental organizations, labour groups and Indigenous leaders.
Currently two mines, Anglo-American’s Baro Alto Mine in Brazil and the Carrizal Mine in Mexico are using the Initiative for Responsible Mining Assurance self-assessment tool to measure their social and environmental performance and are sharing their findings publicly on a responsible mining map.
“We don’t yet have any Canadian mines that have come in asking to be recognized by [the Initiative for Responsible Mining Assurances] system, but we hope some soon will,” Boulanger says, adding that the initiative is working with the Mining Association of Canada on a project to explore a possible level of shared recognition.
Boulanger places mining in a similar phase as the garment and forestry industries more than a decade ago, when consumers and activists began placing their practices in a glaring spotlight, whether it was a sweatshop in Bangladesh or old-growth clear-cutting in B.C. Such pressure helped put corporate and social responsibility at the top of boardroom agendas in those industries; Boulanger believes mining’s day of reckoning is next.
“My hope is that CEOs will realize that they won’t be able to avoid this level of corporate responsibility indefinitely,” she says.
Mining is already a much different world than it was in the 1990s. Organizations like ResponsibleSteel and the Responsible Jewellery Council, both based in the U.K., are targeting their sectors to raise ethical standards.
Loose language from the Canadian government exhorting Canadian companies to respect the law of whatever country they’re operating in no longer cuts it. Consumers, buyers and now Canadian courts are expecting more.
In turn, lawsuits like the ones faced by Tahoe and Nevsun playing out in Vancouver courtrooms, and Hudbay Minerals in Ontario, have put Canadian miners on notice.
“Canada is actively mining in many countries where the rule of law is loose,” attorney Fiorante says.
“We’re trying to place legal responsibility right at the top of these companies.”
A version of this article originally appeared in BC Business.
*Updated 11 a.m. June 12, 2019, to reflect the fact that Tahoe Resources was acquired by Pan American Silver in February 2019.
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