Table of Contents Page Introduction 2

Guatemala’s Marlin Gold Mine:
Suggestions to rectify its most serious errors

Revised: 17 September 2012

Comments & corrections please to: [e-mail]

Table of Contents Page
1. Introduction 2

2. The Marlin Mine and its Issues 2

2.1 The Questionable Role of IFC 4

2.2 Indigenous Peoples 7

2.3 The Sustainability Issue 10

2.4 The Cyanide Issue 11

2.5 Benefits to Guatemala 17

2.6 The Environmental and Social Impact Assessment 11

3. Remedies and Accountability 18

3.1 Environmental and Social Corrective Action Plan 18

Acknowledgements 21

Chronology 21

Guide to further information and sources cited 30

Abbreviations and Acronyms 39

1. Introduction
Mining in remote, weakly governed, and conflict-prone sites is inherently risky (Goodland, 2012). The two most controversial mines in Latin America are Guatemala’s Marlin mine and Peru’s Conga mine. Minewatch predicts that the August 2012 Peruvian Government’s suspension of the $5 billion Conga copper and gold mine means the project is effectively dead.  Despite the widespread violence, shootings, martial law, and state-of-emergency, the World Bank Group is financing both Conga and Latin America’s largest gold mine, the controversial Yanacocha mine nearby.¹
The Marlin gold mine, Guatemala’s largest, is similar to the Conga gold mine in many ways. Both Peru and Guatemala lack effective governance in the remote areas where these mines are located; both mines are in conflict-prone regions. Despite shootings, killings and severe injuries at the hands of the military, both mines received approbation of high project quality from the World Bank’s International Finance Corporation (IFC). Both mines are owned by foreign companies: Conga’s owner, Newmont Mining Corp., is based in Denver, Colorado; Marlin’s owner, Goldcorp Inc., is in Vancouver, Canada. Both corporations are among the wealthiest gold producers on the planet; both have long track records of wreaking massive environmental and social impacts. The impacts of both mines on the local communities (shootings, beatings) have been so terrifying to the protestors that they are willing to face armed military in order to protect their families and livelihoods. This paper briefly outlines the issues of the Marlin mine and proposes how Goldcorp could take six steps to adopt best practices of responsible mining to reduce its social and environmental impact while continuing to make a profit.
2. The Marlin Mine and its Issues
The chronology of events surrounding the Marlin mine is listed at the end of this paper. Marlin obtained its operating permit from Guatemala’s Ministry of Mines (MEM) in 2003 soon after its environmental and social impact assessment (ESIA) was approved. Local protests against Marlin began in 2003, intensified in 2004, and continue to this day. Marlin’s feasibility study was completed in June 2004, the same month that impacted people sent a formal complaint to the International Finance Corporation (IFC). Comments by IFC board members at their June 23, 2004 meeting reportedly included a warning to IFC staff about the mine’s stiff popular opposition, especially by very poor and vulnerable ethnic Mayan Indigenous Peoples, and about seemingly meager development benefits for Guatemala, with a caution to IFC staff that the region was simmering in a fraught post-conflict stage, and that the World Bank/IFC sponsored Extractive Industry Review had urged the Bank Group not to finance extractive projects under these circumstances. Other groups inside Guatemala and elsewhere reinforced these warnings. However, IFC rejected the warnings and judged the project to be “excellent,” stating, “We believe that the company has been a good corporate citizen,” (IFC, 2004). IFC financed Marlin in November 2004.
IFC’s support for the project was partly based on three key decisions, all of which are questionable: (a) an assessment that an impermeable liner to reduce the risks of leakage of cyanide tailings was not necessary, although eliminating the liner was contrary to standard practice, (b) agreement with Glamis Gold, Marlin’s owner at the time, that the company’s consultations with the Indigenous People had been adequate, and (c) a judgment that Glamis’s ESIA was adequate.
These rulings led to a 40-day strike by impacted Indigenous Peoples who blockaded the main highway to the mine from December 2004 and January 2005. Hundreds of military police and soldiers shot into the crowd at Los Encuentros, killing some and wounding many. Between January and February 2005, three or more formal complaints were sent to the International Labor Organization (ILO) and the IFC’s Office of Compliance Advisor/Ombudsman (CAO). In a referendum in the impacted community of Sipacapa with 98 percent of voters participating, voted against Marlin. By December 2005, concern had intensified so much that a delegation of impacted Indigenous Peoples and others met with the World Bank Group president. Less than a year later, IFC decided that its “excellent” project was actually so risky that it irreversibly severed all ties with Marlin. Goldcorp bought out Glamis in 2006.
Goldcorp must have been aware of Marlin’s troubled history before the purchase. Once the trust of impacted people has been shattered, such as by shootings, beatings, and death threats, it is difficult to restore. The only way a new owner could restore a relationship with local peoples is to foster dialog and rectify or compensate all errors of the previous corporation. Commendably, Goldcorp agreed to supply potable water to impacted communities, whose water sources were polluted by the mine. Unfortunately, there has been no discussion of the cyanide liner, no move to rectify the grossly deficient ESIA, no move to comply with UN ILO’s Convention 169 on the Rights of Indigenous and Tribal People, under which the Guatemalan government agreed to consult Indigenous People ahead of any mining exploration or exploitation activities. Nor has Goldcorp stated a goal to achieve free, prior and informed consultation -- or even better, consent -- as later mandated by UN Declaration on the Rights of Indigenous Peoples (UNDRIP) in 2007, and now adopted by IFC.

2.1 The Questionable Role of IFC
IFC is said to be part of the “Knowledge Bank”; its financing is claimed to be akin to a seal of good housekeeping or a token of reasonable design and quality. Yet IFC’s financial relationships between Peru’s Yanacocha and Conga mines, South Africa’s Marikana Mine massacre, and, as will be clarified below, with Guatemala’s Marlin mine suggests that IFC is involved in highly questionable mining projects.² Comments from IFC board members reportedly included warnings to IFC³ staff of the major risks and deficiencies of the Marlin mine project before its approval in 2004. Similarly, many other entities alerted IFC to the potential for grave damages to the Indigenous Peoples surrounding the mine site, as well as the enormous environmental impacts. Although IFC officially adopted free prior informed consent (FPIC) (Swiderska et al. 2012) much later, it could have urged Marlin to follow ILO’s Convention 169 on indigenous consultations. Instead, IFC let Glamis, the borrower, get away with inadequate consultation, which IFC financing made mandatory, in the face of widespread local opposition to the mine. It was questionable, or perhaps even illegal, for IFC to have submitted this project for board approval before the environmental and social assessment (ESIA) was received.
When the ESIA finally arrived, IFC judged it to be “excellent,” although it was clearly flawed. It should have been judged unacceptable and rejected until a reliable ESIA could be prepared.
As this was IFC’s first project since the 2001-2004 independent World Bank Group’s Extractive Industry Review (EIR),⁴ IFC should have used the EIR report to scrutinize the mine. EIR emphasizes that extractive industries should not be sited in conflict zones. IFC’s first major mining project, Peru’s Yanacocha gold mine, the biggest in Latin America, said by IFC to be a new green breed of successful mining projects, had led to killings, violence, strikes, and recently to the imposition of martial law.

What is the Marlin Mine?
Marlin is Guatemala’s biggest gold mine. The mine spans the boundary of two municipalities – San Miguel Ixtahuacan (SMI) and Sipacapa, both within the San Marcos Department. About 87 percent of the mine property is currently in San Miguel, with about 13 percent in Sipacapa, some 300 km by road from Guatemala City. The elevation of the site ranges from 1,800 to 2,300 m above sea level.
Montana Exploradora de Guatemala S.A, of Guatemala City, discovered the Marlin deposit in 1998. Francisco Gold Corporation of British Colombia, Canada purchased Montana Exploradora in 2000, and then merged with Glamis Gold, another Canadian company, in 2002. Glamis brought the mine into production in 2005. Goldcorp, also Canadian, acquired Glamis the following year. Goldcorp is the world’s second-largest gold producer by market value. Montana Exploradora, now a wholly owned subsidiary of Goldcorp, continues to operate the mine.
The project consists of two open pits (1+ km wide and several hundred feet deep) plus an underground mine. The mining operations have removed a mountaintop. The main product is gold, with silver as a by-product. The mine facilities also include an ore processing facility using cyanide vat-leaching, a smelter, a tailings storage facility (TSP) including a dam and pond, and a waste rock facility.
Open pit mining will cease production in 2012, but tunnel mining is expected to continue until about 2018. Marlin produced 382,400 ounces of gold in 2011, generating $900 million in revenue. The gold price now exceeds $1,600 per ounce.

Later, in 2005, IFC’s CAO commendably judged Marlin’s ESIA to be deficient in certain aspects, but by then it was too late. CAO found that Glamis had "interacted extensively" with local communities. However, "public disclosures prepared by the company – including the environmental and social assessment were highly technical and did not at the time have sufficient information to allow for an informed view of the likely adverse impacts of the project." Goldcorp did not seek to upgrade the ESIA. By the time the United Nations ILO (February 2010), InterAmerican Commission of Human Rights (May, 2010) and the Guatemalan government (June, 2010) all officially called for suspension of the Marlin mine, IFC and CAO had severed all ties with Goldcorp, hence no longer had the leverage of a major financier to prevent violence and other adverse impacts.

The Marlin Mine Controversy is Polarized:

Goldcorp’s side of the story
Goldcorp denies most of the social and environmental grievances of the surrounding communities on which this paper focuses. In “Dispelling the Myths of Marlin,”⁵ a long press release issued July 13, 2012, Goldcorp responds to 11 allegations and presents its side of the issues outlined here. Gradually – through the years – Goldcorp is starting to remedy some of its shortcomings, but it is still a long way from meeting the standards of a good-practice corporation. For example, it was not until 2012 that Goldcorp said it will – at an unspecified date in the future – design and publish mine closure plans and back them up with realizable, financial surety bonds big enough to cover closure and reclamation. Similarly, after protesters were shot, killed, and injured in 2005, it took Goldcorp five years to publish a Human Rights Assessment,⁶ which still fails to mention the most important step of complying with UNDRIP’s free prior informed consent (FPIC) requirement. The World Bank Group’s IFC now complies with FPIC.
CAO’s 2005 evaluation identifies a series of faults and flaws in social and environmental procedures on the part of both Goldcorp and the IFC. It also notes the Guatemalan government’s lack of regulatory capacity to control the mining sector (Holt-Gimenez & Spang, 2005). The CAO’s strongest criticisms were reserved for the IFC, which the CAO claimed has not been rigorous in its evaluation or supervision of the project:

The basis on which the IFC determined that the ESIA was adequate is not clear. At the time of this assessment no documentation was made available that reflects that any detailed and specific consideration had been given to how the IFC has and will ensure that the project complies with each of the applicable IFC polices and other basic procedural requirements—such as the requirements for dam safety plans. IFC documentation does not systematically define how concerns are raised in early reviews of the ESIA, or even during the appraisal itself, are monitored to insure implementation. The situation is not helpful in the context of the current conflict, because many of the external observers look to IFC to demonstrate a high level of scrutiny to ensure that IFC requirements for ESIA are met. (p. 20, emphasis added.)

The 2005 CAO report emphasized that the IFC waived the requirement to have a finalized plan for management of dangerous materials and for emergency cases completed before the Bank disbursed the first loan tranche in 2004. The IFC also failed to establish criteria for, or recognize the necessity of, performing new EIAs for the cumulative impacts associated with widely known plans for the expansion of the Marlin mine beyond the scope of the original project. Additionally, the IFC did not specify how it would regulate the closure of the mine (Holt-Gimenez & Spang 2005). Moran (2005) notes that the “The CAO has also discounted the chances for development of acid rock drainage (ARD) from the 43 million tons of waste rock.”

2.2 Indigenous Peoples
Goldcorp is familiar with Indigenous Peoples living around its mines. Goldcorp’s first mine in Canada, Red Lake mine in Ontario – Canada’s biggest – opened in 1949. The impacted stakeholders, almost all Indigenous Peoples, had no agreement with Goldcorp at the time and claim to have received minimal net economic benefits from the mine. Rather than expecting economic benefits, Sheikh (2012) notes that native Canadians fear the mining boom, as do Indigenous Peoples impacted by Goldcorp’s overseas mines (e.g., Bacon, 2012).
In 2010, severe economic and racial inequality ranked Guatemala 116^th out of 169 countries on UNDP’s Human Development Index (UNDP, 2010). Guatemala ranks 120^th out of 182 nations on Transparency International’s Corruption Index.⁷ Most of Guatemala’s population lives in poverty, which is rising with recent economic crises. From 1960 to 1996, Guatemala’s 36-year civil war claimed the lives of more than 250,000 Indigenous People. The United Nations-sponsored Truth Commission found that the government of Guatemala committed acts of genocide. The Altiplano, including San Marcos, suffered the most intense violence. “Is it proper to benefit from over half a century of repression, violence, destruction, and elimination of democracy?" Noam Chomsky asks in the video “Extraction.”⁸
Related to the UN-brokered 1996 Peace Accords between the government of Guatemala, the country’s armed forces, and the protesters was the signing and ratification of the ILO’s Convention 169 on the Rights of Indigenous and Tribal People. ILO Convention 169 grants Guatemala’s Indigenous Peoples rights to decide their own development priorities and specifically safeguards their rights to the “use, management and conservation” of natural resources pertaining to their lands. When subsurface resources are owned by the state, as in Guatemala, ILO 169 calls for the government to consult Indigenous People ahead of any mining exploration or exploitation activities. IFC’s own policies mandated that Indigenous Peoples be consulted in a free, prior and informed manner. Commendably, this was later strengthened to free prior informed consent (FPIC). In the case of Marlin mine, the consultation with local people was a charade devoid of detailed information according to the local Indigenous People which riled the Indigenous Peoples. Goldcorp doesn’t even mention adopting FPIC, although it is now mandated by IFC as part of the official UN Declaration on the Rights of Indigenous Peoples (UNDRIP), ratified by Canada and Guatemala. UNDRIP was adopted by the UN General Assembly in 2007, strengthens and reaffirms ILO Convention 169.
The Marlin mine straddles the towns of San Miguel Ixtahuacan (SMI) and Sipacapa. Mayan-Mams and Mayan-Sipacapense Indigenous Peoples populate SMI. SMI consists of a municipal capital, 17 villages and 43 communities for a total population of about 37,000; Sipacapa has about 14,000 residents in 12 villages and 19 communities. The people in the bordering communities live literally on or near the edge of the mine. A primary school overlooks the mine’s tailings pond.
Poverty rates in SMI and Sipacapa are very high: 97.5 percent of the population lives in poverty and 80 percent in absolute poverty (Van de Sandt, 2009). The major industry is subsistence farming: inhabitants grow corn and beans and keep livestock on land held by individual families but that forms part of the collective property of the community. Infertile soils and little irrigation infrastructure, mean that agricultural income is very low and is supplemented by seasonal labor in coastal sugar cane and coffee plantations.
As a condition of its loan, the IFC commendably required Glamis to hold consultations with local communities in SMI and Sipacapa.⁹ About 3,000 people participated in a series of informational workshops, which the company interpreted as signaling a high level of popular endorsement. Many residents, however, had deep objections to the mine and perceived the workshops as unilaterally informing them about a “done deal,” rather than seeking consultation or providing an assessment of potential environmental and social impacts. Tensions erupted in January 2005 when a group of mine protestors made up of indigenous, environmental, religious and farmer groups confronted trucks carrying equipment to the mine. One protestor was killed and 16 wounded (Stevenson, 2005).
In March 2005, communities in Sipacapa filed a complaint with IFC’s CAO raising concerns that the Marlin mine would reduce access to and contaminate local water supplies. The complaint also alleged that the project was being developed without adequate consultation. As of late 2012, relations between the impacted Indigenous Peoples and the mining corporation were few and fraught. When, at the July 2012 tribunal, impacted people in Sipacapa and SMI were asked if there were open lines of communication with Goldcorp, the answer was negative.
Although Goldcorp managed it, the 2010 shareholder-requested human rights review of Marlin highlighted the gap between Goldcorp’s public commitment to international corporate and social responsibility (CSR) standards and its incorporation of those standards into company policies. Goldcorp says it ‘‘implements’’ international standards at the mine without formally adopting them, which limits board of directors’ accountability and oversight, and avoids the requirements for external auditing that come with formal adoption of international standards. (On Common Ground Consultants Inc., 2010, p. 214; Slack, 2012).
Apart from those already mentioned, some of the most severe social impacts¹⁰ of the mine include:

1. Conflict both in the communities and within families between those in favor and those against the mine; the type of ‘divide-and-conquer’ strategy of low quality mining companies worldwide. For example, families with commonly one son employed by the mine may be riven.

2. A huge increase in alcohol consumption since mine opening. The number of cantinas has risen from one to 50 today. This is accompanied by an increase in violence against women.

3. Rampant prostitution, which didn't exist before mine opening. The rise in prostitution and HIV/AIDS is closely related to the arrival of male and paid employees from elsewhere who are single or who come to the mine without their families. 
Normally, good-practice mines worldwide have a grievance system, often with toll-free hotlines, e-mail addresses, letter drop boxes, information centers, regular meetings between the company and the impacted people, and an annual report of dialog, grievances, and remedies. Good-practice corporations ensure that grievance mechanisms conform fully to principles outlined in the United Nation’s “Protect, Respect and Remedy” framework to ensure that that they are legitimate, accessible, predictable, equitable, transparent and compatible with internationally recognized human rights standards.¹¹ This is amplified in the UN Special Rapporteur’s August 16, 2012 report on the rights of Indigenous Peoples, and in the July 16, 2012 UN Expert Mechanism statement on the rights of Indigenous Peoples relating to extractive industries.¹²
Marlin’s seven information centers will be useful when trust has been regained so that impacted people start to use them. Goldcorp notes that a single grievance was reported in 2009, the most recent year I can find as reported. There are few meaningful “town hall” meetings, no “round tables,” no football matches, no joint facilities. In its Red Lake mine in Ontario, Goldcorp now offers a joint recreational facility with health clinics, swimming pools, curling, and bowling facilities. Such double standards between domestic and overseas practice are far from good practice. True, Marlin’s impacted stakeholders are terrified of Goldcorp’s security guards and there are accounts of intimidation, rape, and shootings of Indigenous Peoples. Commendably, Goldcorp’s website states: “To send a question or to report a suspected violation of Goldcorp's Code of Conduct, please use the following contact information: Email: [e-mail].”  But much more proactivity is needed so that impacted Indigenous Peoples without access to e-mail can avail themselves of such opportunities.
Part of the remedy, if Goldcorp wants to repair hostile relationships with impacted communities, is clear and low cost with potentially enormous benefits to both parties: appoint a sympathetic and permanent official, possibly an anthropologist, or human rights professional to foster mutual relationships with impacted stakeholders and stop further intimidation, repression, beatings or shootings of impacted stakeholders. Avoid double standards between Canada and Guatemala. The liaison official should implement systematic, regular, respectful and meaningful dialog with impacted Indigenous Peoples. The company should implement standard processes such as annual grievance reports, letter-boxes, hotlines, info centers, joint facilities and joint recreation events.

2.3 The Sustainability Issue
As an extractive industry, mining inherently depletes a stock resource. Metal recycling and efficiency can postpone exhaustion, but cannot make mining sustainable. Utilizing the concept of “weak or quasi-sustainability” (El Serafy, 1996), however, mining can be considered broadly to contribute to sustainable development if economic benefits outweigh social and environmental costs, and if mining revenues are invested in building sustainable industries, enterprises, and productive capacities (e.g., education).
The “weak sustainability” principle, however, posits that different forms of capital (natural, human, physical) are substitutable. In fact, there is some substitutability between the various forms of capital, but not much. Activities can be considered “sustainable” if the overall stock of capital is at least not diminished and preferably augmented. This broader definition suggests that mining can contribute to sustainable development if “it gives rise to long-term net benefits (environmental, social or economic) that equal or exceed the values that existed prior to exploitation” (Amezaga et al, 2011, p. 21). The “net” is important as the social and environmental costs and all the external costs must be subtracted from the benefits. In addition, the “trickle down theory” that some fraction of the benefits accrued by the rich (e.g., recipients of most royalties, profits, and taxes) may eventually trickle down to the impacted people is aspirational.
In the Marlin case, Guatemala’s Asociacion de Investigacion y Estudios Sociales (ASIES) (ASIS, 2010) calculated that the costs of the mine exceed the benefits. Zarsky and Stanley (2012) came to the conclusion that “due primarily to weak governance, the Marlin mine has a poor performance on all five counts (FPIC, government of Guatemala’s share of benefits, local benefits, investment of benefits in development, and mitigation of environmental risks) so that net benefits are likely to be negative.” Even the stated benefits to Guatemala are much lower than normal. The impacts or costs are likely to soar once the ore is depleted yet environmental impacts from the mining continue. Furthermore, the impacted people received little in the way of compensation for the repression and killings.