Anglo-Australian mining giant Rio Tinto has come under intense criticism for its association with a small company called La Muriel Mining in Colombia (1).
La Muriel was accused of failing to consult Indigenous and Afro-descendant communities adequately at its Mande Norte copper-gold-molybdenum exploration project on the borders of Antioquia and Choco in north western Colombia. The company failed to secure the consent of many of the affected communities before beginning its activities, and its presence led to the militarisation of the area and consequent human rights abuses. The Colombian Constitutional Court decided last year that the company had failed to conduct consultations properly and that before proceeding with the project it had not simply to consult local Indigenous communities, but to secure their consent.
Local communities were being threatened by the presence of paramilitary and guerrilla groups and the national army. Community members were being accompanied and advised by Colombian church organisation Comision Intereclesial de Justicia y Paz (CIJP), the Interchurch Justice and Peace Commission. Since the lives of members of this organisation are under threat, Peace Brigades International (PBI) provided international accompaniment for CIJP workers in the area, in the hope of preventing attacks and assassinations.
Meanwhile, Rio Tinto was funding La Muriel Mining under an agreement which would allow Rio Tinto to acquire the lion’s share of the property and the profits if certain conditions were met.
When British organisation Colombia Solidarity Campaign (a member group of London Mining Network) submitted information about Rio Tinto’s role to the British Parliament’s Joint Committee on Human Rights during a 2009 inquiry into British businesses and human rights (2), La Muriel Mining issued a press release implying that both CIJP workers and Peace Brigades volunteers were in league with left-wing guerrillas. The accusations were baseless; but such accusations are, in Colombia, an invitation for right-wing paramilitaries to assassinate the accused.
Since PBI is a member of ABColombia, and CIJP a partner organisation, letters of protest regarding these actions were sent by ABColombia to the British government, the Joint Committee on Human Rights and the Business and Human rights Website, and La Muriel was forced to retract.
On 17 June last year, representatives of Rio Tinto met with Baroness Miller, a Liberal Democrat Peer in the British House of Lords, together with representatives of ABColombia Group and Colombia Solidarity Campaign. There was concern that Rio Tinto was doing nothing to distance itself from the project or from La Muriel.
During the meeting, Rio Tinto promised to let Baroness Miller know what it intended to do. On 24 November 2010, it finally did so. Eric Finlayson of Rio Tinto Mining and Exploration Limited wrote to the Baroness assuring her that:
‘Rio Tinto has relinquished its option to acquire an interest in the project at this time. We believe that until the security situation at Mande Norte is resolved, there is no possibility of Rio Tinto staff accessing the area to engage with the local communities. Moreover, we do not anticipate an early improvement in the security situation. Ongoing funding of the Mande Norte project is now a matter entirely for Muriel Mining. It is also Muriel’s sole responsibility to satisfy the ruling handed down by the Constitutional Court requiring a comprehensive new communities agreement and an environmental impact study prior to the re-commencement of exploration.’ (3)
Mr Finlayson did not mention that the Colombian Ministry of the Interior is doing its best to reverse the Constitutional Court decision. He did not explain how it might be possible for personnel from la Muriel to ‘access’ the area to ‘engage with the local communities’, if it is not possible for Rio Tinto staff to do so. And he did not mention that Rio Tinto had already paid La Muriel $3.83 million.
However, he was good enough to note in the next paragraph that ‘Rio Tinto will preserve a back-in right to the project exercisable only after a substantial programme of exploration has been successfully completed by Muriel. This back-in right can never be exercised without Muriel meeting the requirements of the Constitutional Court and retaining the support of the local communities.’ (4)
So, to paraphrase Mr Finlayson’s letter, Rio Tinto, having paid a substantial amount of money to its disreputable junior partner, and well aware of the colossal profits to be made if the locals can be persuaded to drop their opposition to the project, will bide its time in the hope that the Court decision will be overturned. If the security conditions remain difficult, as Rio Tinto points outs, then how can a true process of consent be engaged in, in which community members can reject or approve mining projects without feeling pressured to take a particular decision? The continued presence of the army in the area and the failure to investigate previous threats and killings of Indigenous and Afro-descendant community members committed by army-backed paramilitaries raise serious concern that local communities will not be free to make decisions on their future without constraint. Furthermore, statements made by the junior partner suggesting that opposition to the mining project was a guerrilla stance leave communities with one option if they want to guarantee their safety: that of approving the mining project. Until Muriel Mining has made it clear that it retracts its earlier statements and until there is a complete end to impunity in cases of human rights abuses against Indigenous and Afro-descendant communities in the region, conditions will not exist for free, prior and informed consent.
A press release issued the previous day in Canada throws a little more light on the matter.
Sunward Resources, a Vancouver-based company which is in the process of acquiring La Muriel Mining (5), informed the world that Rio Tinto and La Muriel ditched their previous agreement on 19 November and replaced it with another one. It seems that the new agreement leaves Rio Tinto even better placed to profit, while distancing itself from the dirty work. According to Sunward (6):
‘As part of this revised agreement, La Muriel will, as soon as practicable, complete a pre-feasibility study or undertake exploration and development programs towards such, at a cost of US$20 million. A maximum of US$3 million relating to costs associated with local, community, and government relations can be applied against this US$20 million threshold. For a period commencing on November 19, 2010 and expiring 60 days following completion of such expenditures (or completion of pre-feasibility study if earlier), Rio Tinto will have the option to acquire a seventy percent (70%) interest in the Murindo Project on payment to La Muriel of US$60 million in cash. La Muriel may elect to require Rio Tinto to increase its interest to eighty percent (80%) by requiring Rio Tinto to fund the next US$15 million in project costs, and it may further elect to require Rio Tinto to acquire the remaining 20% interest for US$20 million in cash. If Rio Tinto does not exercise its option to acquire a 70% interest, it will retain a 1.7% net smelter royalty in the Project in consideration for the US$3.83 million it has previously paid in respect to the Murindo Project.
‘If Rio Tinto exercises its option, the parties will enter into a formal joint venture agreement (the “JVA”) on the Murindo Project, on terms which have been agreed. As part of the JVA, if La Muriel or Rio Tinto fall below a 10% participating interest in the Project, they will be deemed to have withdrawn from the JVA. The remaining party to the JVA will acquire the shares of the withdrawing party in consideration for a 1.7% net smelter return royalty on the Murindo Project.’
So Rio Tinto has done nothing to address the human rights concerns raised – simply tried to make sure that its own employees do not get hurt and the company can wash its hands of any responsibility for harm done by a project that it continues to encourage through this new agreement with La Muriel; and to try to ensure that, whatever happens, it will profit.
19 January 2011
1) For background, see http://londonminingnetwork.org/?s=Mande+Norte
2) See http://www.colombiasolidarity.org.uk/campaigns/20-mining/458-submission-to-the-parliamentary-joint-committee-on-human-rights-inquiry-into-business-a-human-rights
3) Letter from Eric J Finlayson, Rio Tinto Mining and Exploration Limited, to Baroness Sue Miller, 24 November 2010.
5) The Sunward Resources Ltd News Release, Murindo Project Update, 23 November 2010, states that the sole shareholder of La Muriel is Gold Plata Mining International Corporation, a wholly owned subsidiary of Panama-based Goldplata Mining International Corporation (Goldplata Mining) and controlled by Michel Juilland. Mr Juilland was elected to Sunward’s board and appointed non-executive chairman at the annual meeting of shareholders held on 8 September, 2010. According to the ‘Money to Metals’ website, at the end of 2010, US investment company Electrum Strategic Metals LLC (with Tocqueville Asset Management playing a minor role) agreed to pay a combined maximum of US $51.3 million to Sunward Resources, in order to advance that company’s 100%-owned Titiribi gold and copper porphyry project in Antioquia, Colombia. Sunward announced that the deal would also “facilitate closing of Company’s earlier-announced acquisition of La Muriel Mining Corporation (“Murindo Project”), and allow the Company to pursue acquisition of additional highly prospective projects.” See http://moneytometal.org/index.php/Electrum_Strategic_Resources_LLC
6) Sunward Resources Ltd News Release, Murindo Project Update, 23 November 2010