The Struggle for San Pedro

The Struggle for San Pedro:

Metallica Resources Inc. and Mexican Environmentalists Face off over the Cerro de San Pedro Gold and Silver Mine in San Luis Potosí, Mexico


1. Synopsis:


Metallica Resources, a mining company registered in Toronto but headquartered in Colorado, is currently embroiled in one of Mexico’s most important legal, social and environmental conflicts, one triggered by its operation of an open-pit cyanide-leached mining operation at the Cerro de San Pedro in the state of San Luis Potosí.


To date its Mexican subsidiary, Minera San Xavier, has been accused of influence-peddling and corruption amongst state and national-level politicians. This has allowed the company to operate despite numerous rulings by Mexican courts that have revoked the company’s operating permits. Minera San Xavier has also been accused of orchestrating or abetting the murder, harassment and intimidation of local opposition to the mine, one of whom, Enrique Rivera Sierra, is currently in Canada claiming political asylum.


Opposition to the mine is broad and regroups not only the villagers of the Cerro de San Pedro but also civil society and environmental groups (Amnesty International, Greenpeace), intellectuals (Carlos Monsivais, Carlos Montemayor, Lorenzo Meyer), and politicians at the state and federal levels. The core of this opposition is the FAO (Frente Amplio Opositor) that has been organizing at the local, state and national level.


On the 17th of August a delegation of the FAO will be arriving in Canada meet Metallica Resources on home ground. During their ten-day visit they will be organizing workshops on Canadian mining in Mexico and Latin America; meeting with Canadian groups working on Canadian mining elsewhere in Latin America and the world; petitioning the CIBC to disinvest from Metallica Resources Inc.; attending the Quebec Social Forum and organizing political street theatre in Montreal to raise the public’s awareness of the issue.


Canadian mining companies are far and away the most important player in Mexico’s mining sector. The struggle between local and national control over natural resources has long been a focal point of Mexican political history. This helps explain why the case of Metallica Resources is one of the key on-going stories in Mexico today. Canadians may be unaware of this story but it concerns them directly since the actions of Metallica Resourcs (and those of a handful of other Canadian mining companies) are dramatically undermining Canada’s reputation across Mexico.


2. Background:


The setting: Cerro de San Pedro, San Luis Potosi Mexico


The literal translation of Cerro de San Pedro is Saint Peter’s Mount. In 1592 this mountain was the site of the first strikes of gold and silver in the area, mines which gave rise to the city of San Luis Potosí, now the state capital some 12 kilometers away. In the twentieth century the last veins of silver, gold and lead were exhausted and the population of the town at the base of the mountain, Cerro de San Pedro, dwindled from 5000 to the current 60 inhabitants. The capital San Luis Potosi now contains a growing population over one million.

The region is situated in a semi-arid region. Surface water is scarce and most water is drawn from an aquifer whose reserves have been dropping due to over-consumption by the population and local industries.

Metallica Resources Inc. and Cerro de San Pedro – the early years


In 1994, a year after the NAFTA agreement was signed Minera San Xavier began exploring the Cerro San Pedro. The NAFTA connection is important because it was during the negotiations over NAFTA that the Mexican government under Carlos Salinas radically reformed the Mexican constitution and mining code to allow the sale of protected communal lands (ejidos), open-pit mining and the foreign ownership of natural resource companies.


In 1995 Minera San Xavier, then owned by Cambior, succeeded in purchasing land and mining rights to the Cerro San Pedro. Cambior joined then sold its interest to Glamis. Following an internal report on the risks posed by local opposition to the mine and the environmentally-sensitive nature of the project, Glamis resold its interest to Metallica Resources. Metallica Resources is now as before the sole owner of the site and subsidiary Minera San Xavier and pushing this project forward.


As early as 1996, Minera San Xavier in concert with local and federal politicians (including then president Vincente Fox) succeeded in cowing or coopting enough members of the communities to sign the necessary leases and property sales. It was during this period that the mayor of Cerro de San Pedro, Baltazar Reyes, was gunned down and that his son and successor Oscar Laredo publicly announced that he had been threatened by high-ranking officials with the same unless he signed.


Metallica concluded the project safe to continue despite its own environmental impact assessment showing the possibility of cyanide-contaminated drinking water and the displacement of local people. In March 1997 the company claimed it received contracts to lease the land for fifteen years from local ejidatarios (community members holding the rights to the communal lands of Cerro de San Pedro) but it has since come out that these were fake ejidatarios did not have proper land rights on the ejido.


If successfully completed this project will erase the historic mountain of San Pedro, demolish the town’s buildings, require forced relocation of its residents, and impose a heavy burden of impact on the local environment.


The company’s 2007 production forecast indicates a 45% full production capacity producing 40,000 ounces of gold and 950,000 ounces of silver. The first gold silver pour occurred in April 2007. This mine is estimated to continue until 2017.


The Company: Minera San Xavier a subsidiary of Metallica Inc


Metallica Resources is based in Denver but is registered as a Canadian company on the TSX. It operates through its Mexican subsidiary Minera San Xavier. It is “a precious and base metal exploration and development company focused in the Americas”. This company is now undergoing the transition from being an exploratory company to being a gold and silver producer.


The Opposition: FAO [Frente Amplio Oppositor/ Broad Opposition Front]


For at least ten years, since the mine’s inception, the FAO has been organizing against the mine. It is comprised of a coalition of concerned citizens including academics, environmentalists, local businessman and students in the San Luis Potosi region. The FAO organizes forums, concerts and marches to raise awareness about the problems associated with the mine. The FAO receives its support from the local people expressed in a local referendum that voted overwhelmingly against the mine. The FAO has also taken on several legal cases in protection of the town and surrounding region. Increasingly frustrated with corruption and collusion the people have felt no choice but to move towards a model of civil disobedience and protest. In late February, 2007 the FAO organized the blockade of the Canadian embassy in Mexico.


Historical Patrimony


As mentioned above this 400-year-old colonial mining town was integral to the historical development of the region. The town and the hill itself are historical landmarks within the state protected area of biodiversity. The hill itself was the founding site for the town in 1592 and is a symbol on the state’s coat of arms. In September 1993 the Mexican National Institute of Anthropology and History [INAH] recognized the history of the region by declaring it an ecologically protected area and decided to protect it from any aggression against the natural environment. It even recognized the lack of water as a fundamental problem and the need to protect it from heavy pollution or high consumption [Periódico Oficial del estado de San Luis Potosí,1993]. The town is now in the process of becoming a recognized UNESCO world heritage site.


The open pit mine is located only 600 meters from the town square. The nature of an open pit mine is to reduce an ore deposit to rubble in this case forming a pit five hundred meters deep and a half-mile crater. Secondary, the rock blasting poses a severe threat to the continuity of the town as heavy boulders roll through the town causing damage to historical buildings.


Environmental Problems:


The transformation of the mountain to a large crater is the least of the town’s worries regarding the environmental impact of the mine. The open pit mine will require the daily use of 25 tons of explosives to blast 75 thousand tons of rock and earth. The water source for the mine is drawn from the local aquifer which provides 73% of the region’s water for agriculture and the nearly 1.5 million people. The cyanide leaching method will require the daily use of 16 tons of cyanide along with 32 million liters of water. The entire operation will produce an estimated 80 million tons of toxic waste and 120 million tons of sulphur waste. All of these factors together will combine to contaminate the surrounding regions extremely arid and fragile ecology.


In 1993 Cerro de San Pedro and the surrounding region was accorded legal environmental protection due to its fragility and importance. The possibility of water contamination by heavy metals, cyanide or toxic materials as well as water depletion is too great a risk for the growing population that has already overburdened the water table. According to the company’s own Environmental Impact Manifestation sites these severe potential problems and the possibility that this project may entail moving the town and its inhabitants.


Legal Issues:


The company is operating this mine in violation of several Mexican laws. These include: the Presidential Decree on June 2nd, 1961 forbidding the extraction of water from the valley of San Luis Potosi; article 35 of the Federal law of fire arms and explosives forbidding use within 1 kilometer of a town; or the Agrarian Law guaranteeing the protection of ejidatarios.


Most court rulings have been in favour of the protection of the town but have been repeatedly appealed or ignored by the company. The FAO has now been active in the courts for over ten years. Until recently they met with success and various tribunals suspended the company’s because its operations contravened Mexican laws relating to the environment, historical patrimony, land tenure, and water use. Since the intervention of state and federal officials (including, apparently, former President Vicente Fox) however, these decisions have been revoked, ignored or contoured. Most famously the Mexican Minister of the Environment (SEMARNAT) Ricardo Juarez, accorded Minera San Xavier a new operating permit in June 2006 even though the existing permit had been suspended by Mexican courts. The most recent judgment by the Mexican Supreme Court on the legality of Minera San Xavier’s operation has been kept secret and not released.

Recently the Commission on Environmental Cooperation (established under the terms of NAFTA), substantiated a citizen’s submission indicating that Mexican authorities had not enforced the relevant Mexican environmental laws in the case of the Cerro de San Pedro. The CEC is now expecting a reply from the Mexican secretary of the Environment.


Human Rights Abuses:


Over the years members of the FAO have faced intimidation, violence, criminal charges and exile. In 1999 the municipal President Baltazar Reyes was found dead shot in the head after requesting an audit and penal action against the former municipal president’s relations with MSX. His successor and son, Oscar Laredo, acknowledged to permiting the open pit mining operation out of fear for his life.


Employees of the mine have brutally assaulted members of the FAO. State and municipal police forces have also repressed marches organized against the mine. Students seized by the police in early May, 2007claim to have been subjected to torture and interrogation by local officials trying to inculpate leaders of the FAO. In late May Enrique Rivera Sierra was forced to flee San Luis Potosí. He is now seeking political asylum in Canada. Amnesty International’s latest report on human rights abuses in Mexico singled out the case of the FAO as meriting special attention. On August 3rd Armando Mendoza,a villager opposed to the mine, was fired upon. The local state government of San Luis Potosi has not pressed charges against his assailants.


Recently the company has begun the construction of a fence around the perimeter of the mine some of which illegally runs through citizen’s properties. The constant threat and fear of repression has been increased and focused on the leaders of the FAO.


Enrique Rivera Sierra:


Enrique Rivera was a legal councilor for the FAO who worked on several legal suits as well as an organizer of the opposition to the mine. In April 2006 he was gravely beaten on the streets of Cerro de San Pedro. He claims that the aggressors were employees of MSX. Since this incident he was placed under constant police surveillance and subject to an alleged harassment campaign by local officials. On May 1st 2007 he was called to represent the 5 students incarcerated for their participation in a protest against the mine. At this trial he learned that the police tortured them in order to try and obtain signatures to a document denouncing him and his activities. On the 5th of May his residence was surrounded by the state policy and he went into hiding to be later smuggled out of the country to Canada. He is currently living in Montreal claiming political asylum from the activities of Metallica Inc, a company registered in the very country he is being protected by. He is now awaiting his final hearing before the refugee board.

Alleged Government Collusion


It has been suggested that the mining company’s highly suspect, dangerous and illegal activities could not continue without the support of the government. MSX has tight ties to the governor of the state, including the employment of his nephew. The company’s continuation to extract from the hill despite several lost legal battles without government intervention is extremely worrisome. The inability or reluctance on the part of the Mexican government to enforce its own regulation, as pointed out by the CEC, is also extremely disturbing. Not only does there seem to be implicit government support for Metallica’s operations, this support is explicit as well as witnessed by local and state police actions.


The activities of the governor of the state of San Luis Potosi seem particularly unusual. He allegedly pressured the municipal government of Cerro de San Pedro into granting agrarian permits, pretended to cancel the decree stating ecological zone protection, and exceeded his authority in May 200 by granting authorization of the land against article 7 of San Luis Potosi Environmental Law.


The governor is not alone in his suspect activities. The president of the Mining Chamber of Mexico supported MSX blasting despite judicial decisions against it. The secretary of Economic Development ceded 65% water rights on his land properties. The secretary of the State Government also tried pressuring the Municipal President of the town towards favorable rulings.


The combination of government meddling, lack of will to enforce its own legislation, implicit acceptance of the company’s activities and repressive tactics are extremely worrying and point towards collusion between the mining company and the Mexican government.


The Canadian Connection


Although this is a story of a mine operated in Cerro de San Pedro, San Luis Potosi, Mexico it is also a Canadian story. Although based in Denver, Metallica Inc is a company registered on the TSX in Canada. This company like many others tarnishes Canada’s reputation in the developing world. The Canadian government provides for an economic climate that is not only helpful to these companies but practically breeds these companies. There are currently 585 mining companies based in Canada, home to 40% of the largest mining entities in the world. Yet the Canadian government holds no power to ensure these companies’ activities are accountable despite a recent national roundtable on CSR and the extractive industry overseas.


Canadian involvement is also a lot more tangible and real. Not only is the company Canadian but some of the largest stockholders in Metallica Inc are Canadian based specifically CIBC and Caisse de Depot, the Quebec pension fund.


Canada however is also involved in helping out the FAO by granting Enriquez Rivera a hearing for political asylum. It appears Canada’s left hand is not sure what its right hand is doing.


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