Resource extraction

The Sierra Norte del Puebla: A new frontier for Canadian mining in Mexico

As Almaden Minerals moves forward with an open-pit mine, residents say their water and way of life are at risk
Photo: Arturo Alfaro Galán

On a cold December day, a delegation from the Ixtacamaxtitlán region of the Sierra Norte del Puebla in Mexico met with officials in Ottawa about a Canadian mining company that planned to extract silver and gold near their homes.

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“My house is 300 metres from where the mine crater will be. If they build the mine, it will have a catastrophic impact,” said Francisca Zamora, a farmer and community leader from the village of Santa Mariá Zotoltepec who made the journey to speak with representatives of Global Affairs Canada.

“We want to stop the project from going to the exploitation phase,” she said, adding that her brother already lost the aquifer providing water to his home due to exploratory work done by Vancouver-headquartered Almaden Minerals.

Another farmer, Ignacio Carmona Cruz, from the village of Loma Larga, lives close to where the mine’s tailings dam will be built. He said that Almaden workers entered his land without his consent, damaging his crops and seedlings.

Francisca Zamora, a farmer and community leader from Santa Mariá Zotoltepec in Mexico, outside the offices of Global Affairs Canada.
Zahra Moloo

He put up signs saying “private property,” but they were ignored.

“When they saw me, they would threaten me with aggressive words, saying that if I didn’t allow them onto the land, (they) would use other methods to force me to do so,” he said.

The two farmers’ grievances are among a host of concerns about the project that civil society organizations have been documenting for the past four years.

A community-led Human Rights Impact Assessment published in February 2017 by four such organizations found that Almaden’s Ixtaca mining project “would pose grave risks to the health, water and the environment, from pollution, land destruction and degradation of vital resources such as soil and water.”

Ignacio Carmona Cruz, from the village of Loma Larga, lives close to where the mine's tailings dam will be built.
Zahra Moloo

This includes the creation of 35 million tons of slurry from the mine’s tailings dam which it says will be built on land used for farming by Indigenous communities.

The report also found that Almaden failed to disclose important information to its investors, including that it violated Mexican regulations by drilling 236 more test holes than were allowed, perforating the local aquifer.

Also not disclosed to investors, said the report, was that more than 20,000 people live around the mining site and that legal processes are underway against the company in Mexico, including a nullity trial seeking to cancel the exploration permit and a popular complaint filed by communities of Ixtacamaxtitlán with the Mexican environmental regulator.

Mining in the Sierra Norte del Puebla

Canadian government figures show that Mexico accounted for 12 per cent of all Canadian mining assets abroad in 2013. The Sierra Norte del Puebla, where Almaden’s project is located, is a mountainous and biodiverse region of the country with a sizeable Indigenous population. An estimated 13 per cent of the region’s population speaks an Indigenous language.

The area’s remote location and the scarcity of telecommunications networks, railways and highways have kept it historically separated from the rest of the country. But in the last few years, that has been changing.

"Much of the rest of Mexico is already extracted so it’s the next frontier for capitalist interests, both foreign and Mexican"

According to Ben Cokelet, the founder and executive director of PODER, one of the organizations that compiled the report and accompanied the Mexican delegation to Canada, the Sierra Norte del Puebla is the “most concessioned, but least extracted” part of the country. Almaden’s Ixtaca mine, part of a 7,200 hectare concession acquired by the company in 2001, would be the first open-pit mine in the region.

“Much of the rest of Mexico is already extracted so it’s the next frontier for capitalist interests, both foreign and Mexican,” he said. “If we are able to prevent this open-pit mine from going forward, it will send a message to other mining investors that this is not territory that is welcome for mining investment.”

Douglas McDonald, Almaden Minerals’ vice-president of corporate development, did not grant an interview for this article, but said in an email exchange that the Ixtaca project had brought “positive impacts to the socio-economy of the region,” which would continue if it were to develop into a mine.

He said that the delegation that came to Canada and the groups that wrote the report do not represent the views of the local stakeholders and people actually living in the area.

“We have always enjoyed a good relationship with the communities nearby our projects because we work to ensure that they concur with our activities and enjoy as much benefit as possible from our presence,” he said. “Almaden has interacted with over 20,000 people from over 53 communities.”

The BC Securities Commission “does not take human right concerns seriously.”

This, he added, included organizing community meetings, employing up to 70 local people, and initiating a scholarship program for local students. He said that the company’s exploration work complied with government regulations.

“It is not unusual in Mexico that the environmental enforcement division will audit, and if necessary reprimand companies’ performance. Contrary to the allegations in the report, Almaden has been audited but has never been reprimanded by these authorities,” he said.

Cokelet said it was impossible for the company to have reached 20,000 people.

“It took us a whole year to reach out to 300 people systematically,” he said. “I have spent the last four years going there every weekend. I have never met anyone who wants the mine, other than the company’s own employees and their families.”

PODER’s impact assessment also accused Mexican authorities for failing to take action against Almaden. It condemned authorities “at all three levels of government” for not protecting human rights or consulting the “opinion of the people living within their jurisdictions,” the Ministry of Economy for granting mining concessions without verifying whether the land was inhabited or not, and other government agencies for not monitoring mining activity “as mandated under Mexican law.”

Cokelet hopes that the report’s findings will pressure investors to withdraw their support from the project.

Disclosure requirements in Canada

Under Canadian securities regulations, companies are required to “immediately disclose a ‘material change’ in their business.” These changes include the “business, operations, or capital of an issuer that would reasonably be expected to have a significant impact on the market price of the issuers’ securities,” such as “external political, economic and social developments.”

Shin Imai, a lawyer and the director of the Corporate Accountability Project at Osgoode Law School in Toronto, said that the lawsuits filed in Mexico by community members from Ixtaca and the level of community opposition to Almaden’s project should be disclosed to investors.

“If I was going to buy the stock, those are the things I’d want to know,” he said.

“There have been some spectacular situations where community or Indigenous opposition has brought a mine to a halt and investors have lost money and sued companies because they did not disclose information.”

In a case involving a mine in Guatemala operated by Tahoe Minerals, a company incorporated in British Columbia, Imai and the Justice and Accountability Project submitted a report to the British Columbia Securities Commission requesting them to investigate the company for misstating or omitting material facts that would enable Canadian investors to accurately understand the risks of investing in Tahoe.

According to Imai, the BC Securities Commission “does not take human right concerns seriously” and did not follow up. In July 2017, the company’s mining permit for its Escobal Mine in Guatemala was suspended, following an order from the country’s Supreme Court, after a civil society organization argued that the Xinca Indigenous people were not consulted before the license was awarded.

After the suspension, Tahoe had a net loss of $18 million in the fourth quarter of 2017.

In May 2017, civil society groups filed a request to the BC Securities Commission to have Almaden’s Ixtaca project investigated for concealing information from investors.

In response to a request for an interview, the BC Securities Commission said it was not able to comment on specific issuers.

Erich Meier, CEO and fund manager of Swiss company Konwave Investment, an equity investor that has 2.8 per cent of the share capital in Almaden, said that the allegations in the report, including that investors have been misled by Almaden, are not true.

“I am very surprised that they actually attack Almaden because Almaden from our point of view has one of the strongest CSR (corporate social responsibility) engagements among small cap mining companies,” he said.

Meier said that his team went to the mining site three years ago and saw “big support for the project” in the “communities adjacent to the mines.” He said they spoke to “many local people,” though he was unable to name the locations they had visited or the people they had spoken to.

Meier also said that Konwave not been directly in touch with Mexican regulators.

“If you have a village of let’s say 10,000 people, an NGO will always find a few people who would prefer that there would be no mine,” he said when asked about the delegation of Mexicans who had traveled to Canada.

“Often these people aren’t really aware of the positive impacts of a modern mine or are ideologically driven,” he said. “The question is really, do you trust an NGO where you know they need to do a story, or do you trust the management team you have known since 30 years?”

Other major investors, including Adrian Day Asset Management, Tocqueville Asset Management and Sprott, did not agree to be interviewed for this article.

Addressing the Accountability Gap

In January 2018, following years of controversies over the activities of Canadian mining companies abroad, the Canadian government announced the creation of an independent office, the Ombudsperson for Responsible Enterprise, to investigate “allegations of human rights abuses linked to Canadian corporate activity abroad.”

Prior to the creation of the office, there existed only two non-judicial mechanisms focused on the activities of Canadian corporations abroad. According to Emily Dwyer, the coordinator of the Canadian Network for Corporate Accountability, both these mechanisms centered around the “possibility of fostering dialogue between impacted people and companies.”

She said this “sounds nice in theory but in reality meant that communities affected by human rights abuses had the opportunity to sit at a table with the company whom they alleged was causing harm.” She said not only was that inappropriate, but these offices have historically “not led to an improvement in the situation for communities.”

“We value green gold, not yellow gold.”

The Office of the Ombudsperson, by contrast, will be able to independently investigate allegations of abuse, report them, recommend policy remedies and monitor their implementation. Dwyer is optimistic that the office will be robust.

While not a “complete answer to the complex and broad accountability gap that exists in the world,” she said, “it does fill a really important gap in access to remedy for the communities.”

In response to queries about whether the Ombudsperson will be able to investigate imminent risks of harm rather than only harms that have already occurred, Jesse Wilson, a communications advisor for Global Affairs Canada, said that the priority of the Ombudsperson, when in place, “will be on addressing allegations of human rights abuses that are current or where the past abuses and harms caused as a result, are continuing.”

The details of how the office will investigate risks of imminent harm, such as in the case of Almaden Mineral’s Ixtaca Mine, is still unclear.

In the meantime, the inhabitants of Puebla say they will continue mobilizing.

“We live from the land and we have a healthy life. We will defend our land so that things stay the way they are,” said Zamora.

“We value green gold, not yellow gold. We don’t want mining here.”

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