New campaign against Commerce Group gold mine

A coalition of solidarity, environmental, religious, educational and civil society group have commenced a campaign against the Commerce Group San Sebastian gold mine in El Salvador. The campaign coincides with the initial hearing in the international arbitration suit which Commerce Group commenced against the government of El Salvador.

The press release issued by the coalition states:

A coalition of Milwaukee and national organizations called on Commerce Group, a Milwaukee-based mining corporation to drop its controversial $100 million legal case against the government of El Salvador. 58 organizations from across the country signed a statement demanding that the case not only be dropped, but that there be cleanup of environmental damages caused by the mine and compensation to victims of mine pollution. In 2006 the Salvadoran government revoked the company’s mining permits, following evidence that its operations were dumping highly toxic poisons into local water. In retaliation, Commerce Group filed a demand before a World Bank trade court (the International Center for Settlement of Investment Disputes, ICSID) demanding not only payment for its investments but also for tens of millions of dollars in what it claims are “lost profits.” The demand is being filed under the foreign investor “protections” of the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). The first hearing in the case will take place on November 15 in Washington, D.C.

Miguel Rivera, an environmental organizer with the Association for Economic and Social Development (ADES) in El Salvador, warned that the case and the international trade rules that allow it “limit the government’s ability to defend the lives of the residents” and “put economic rights above the people’s right to life.”

Commerce Group’s mining activity in El Salvador over the past 40 years has resulted in severe environmental and public health problems in the municipality of Santa Rosa de Lima, where the mine is located. The Salvadoran government revoked Commerce Group’s mining permit on September 13, 2006, citing devastating environmental damage that can’t be prevented with any existing modern technology.

A 2006 study by Dr. Flaviano Bianchini found that the San Sebastian River, which runs through the town contains 100,000 times more acid than uncontaminated bodies of water in the same region. The study also found levels of poisonous cyanide more than 10 times higher than the maximum allowed by the World Health Organization. The Investment and Trade Research Center in El Salvador has recently filed a lawsuit against Commerce Group with the Salvadoran Attorney General to investigate the connection between mining activities and disproportionate rates of death due to kidney failure in nearby communities, likely related to elevated levels of heavy metals in the San Sebastian River.

According to Al Gedicks, professor of sociology at the University of Wisconsin-La Crosse and author of Resource Rebels, commenting on the case, said “If anything, it is Commerce Group who should be paying for the toxic legacy they have left behind.” Gedicks is one of several scholars who have joined an international coalition of environmental organizations, policy advocates and churches to halt the lawsuit and stop metallic mining in El Salvador. The group, the Midwest Coalition Against Lethal Mining (MCALM), includes several national organizations such as Sister Cities and CISPES, the Committee in Solidarity with the people of El Salvador.

According to Babette Grunow of MCALM, “This lawsuit is a cynical attempt by an unsuccessful company to exploit international trade agreements to make money that they have been unable to make by legitimate means.” Grunow points to Commerce Group’s own filings with the U.S. Securities and Exchange Commission, which shows no earnings since 2002, four years before their permit was revoked. “This lawsuit is nothing but a dishonest ‘get rich quick’ scheme at the expense of an entire nation,” said Grunow.

Chapter 11 of DR-CAFTA, under which Commerce Group has filed its suit, remains one of the most controversial aspects of U.S. trade policy. The equivalent chapter in NAFTA, Chapter 10, has come under fire in recent years, including from President Obama. During his presidential campaign, Obama promised to “strictly limit” foreign investor protections in a renegotiation of NAFTA and to fully exempt any regulation protecting public safety.

A copy of the letter signed by coalition members can be found here. I previously wrote about the environmental concerns and theCommerce Group arbitration claim at this link.

The November 15, 2010 hearing in Washington, D.C. will be broadcast live over the internet, beginning at 9:30AM, EST. The hearing can be watched at this link. The written briefs the parties submitted to the arbitration panel can be found here.