Pacific Rim Mining to sue El Salvador in CAFTA court

Canadian mining company Pacific Rim, acting through a US-based subsidiary, announced this week that it will sue the Salvadoran government over its refusal to issue mining permits for the El Dorado silver and gold mine in the department of Cabañas. The case will be heard by a special international arbitration court established by the 2006 US-Central America Free Trade Agreement (CAFTA).

Pacific Rim Mining has yet to announce the amount it plans to sue for, but it claims to have already invested over $75 million in exploration for the mining project. CAFTA laws allow companies to sue governments not only for lost investments, but also for lost anticipated revenues that could have resulted from those investments. Legal analysts estimate that Pacific Rim could potentially seek hundreds of millions of dollars from the Salvadoran government.

Metals mining in general, and the El Dorado mine specifically, has been fiercely opposed by Salvadoran civil society, including the Catholic Church. Key civic organizations maintain that the environmentally-responsible mining techniques (called “Green Mining”) that Pacific Rim claims to practice are a farce, and that a silver and gold mine at El Dorado would result in cyanide contamination of drinking water.

The El Dorado site is located in the basin of the Lempa River, the country’s most important source of water. The Lempa provides invaluable irrigation water for much of El Salvador’s agricultural industry, as well as drinking water for over half of the population of the greater San Salvador metropolitan area.

From CISPES, May 4

See our last posts on CAFTA, El Salvador and Central America.