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TMCNet:  HudBay Minerals Meets a Legacy of Guatemalan Violence in Canadian Court [Engineering and Mining Journal]

[December 14, 2013]

HudBay Minerals Meets a Legacy of Guatemalan Violence in Canadian Court [Engineering and Mining Journal]

(Engineering and Mining Journal Via Acquire Media NewsEdge) Five years ago, officials at Canada's Skye Resources Inc. had a simple goal: to become a mid-tier nickel producer representing 1% of the global market by 2015 through developing their open-pit Phoenix project in El Estor, Guatemala, with a local subsidiary.


But as with many things in the troubled Central American nation, the focus was doomed from the start. Within two years, the Vancouver-based miner and Compania Guatemalteca de Niquel (GCN) would stand accused of colluding with private security forces and the local military in the gang rape of 11 indigenous women and two other attacks that left one man dead and another paralyzed, while clearing land for operations.

Such incidents are not unique to Guatemala. Indeed, the nation of 13 million heaves equally under drug trafficking violence and the simmering legacy of a brutal 35-year civil war, which claimed more than 250,000 lives and displaced more than 1.5 million. What is novel about this case, however, was its arrival before Hud Bay Minerals Inc.-which bought Skye in 2008 and abandoned Phoenix in 2011-in three separate lawsuits in a Canadian court this summer.

These will be the first such trials in the world's top mining nation following three attempts by other foreign plaintiffs to hold Canadian miners accountable to their own court systems since 1997. These include allegations over a Guyanese tailings dam spill, a suit by Ecuadorians against Copper Mesa Mining Corp. over human rights breaches, and 2012 litigation against Anvil Mining over a Democratic Republic of Congo (DRC) massacre.

This case also illustrates the perils miners may increasingly face without knowing the full history of the companies they acquire-and their volatile jurisdictions. As Corporate Social Responsibility (CSR) issues emerge more prominently than ever, that is, the need for such vigilance cannot be underestimated-and HudBay may learn a hard lesson.

Superior Court of Ontario Judge Carole Brown ruled the suits, together seeking $57 million, could proceed to trial on July 22, six months after HudBay abandoned an appeal. More publicity followed in October, however, when the female plaintiffs claimed GCN was threatening them with defamation litigation unless they drop their suit; last month, meanwhile, a film on the subject and the Kekchi Mayan people premiered in Toronto.

The first lawsuit, based on complaints filed by Toronto law firm Klippensteins, centers on a January 17, 2007, incident-a year after a group of Kekchi families moved to the area they considered historically theirs in the hamlet of Lote Ocho. Before burning village huts to the ground, according to the filing, police, military and private security personnel raped 11 women, forcing two miscarriages.

The second suit alleges that, on September 27, 2009, during a protest over another eviction, school teacher and community organizer Adolfo Ich was beaten and hacked to death with a machete by the same men after he sought to intervene peacefully. That day, according to the third suit, German Chub Choc, a young father, was approached by security personnel while watching a soccer match nearby and shot point blank; he is now paralyzed below the waist and missing a lung.

At the time of both events, GCN's parent was HMI Nickel Inc., later acquired by Toronto-based HudBay; the plaintiffs thus hold the company "vicariously liable" for the acts of its subsidiaries; with operations in northern Manitoba, Ontario, Yukon and Peru, HudBay has since sold its single Guatemala asset to a Russian firm.

HudBay officials have been forthright in their defense, noting the reported incidents predate their Guatemala business, while no charges have been filed locally. "Official government accounts indicate that substantial effort was made to keep evictions nonviolent and, in accordance with Guatemalan law, were carried out by unarmed police officers," the company said in a statement. John Vincic, vice president of investor relations, noted that Hudbay voluntarily dropped its opposition to the suit's venue to avoid complex proceedings in Guatemala.

"We are confident that their allegations are untrue and the cases will be favorably resolved at trial," he added.

By any measure, Guatemala is a rough place to find justice. Moreover, according to Guatemala's Human Rights Commission, more than 90% of the country's crimes go unpunished- and, of the remainder, 4% go without sentencing. An epidemic of vigilante violence meanwhile, has led to a government anti-lynching campaign, while, land conflicts affect more than 1.1 million people across the country, according to La Prensa Libre newspaper.

HudBay representatives noted that protestors had been threatening GCN workers and destroying company property. "After investigating GCN complaints, a Guatemalan prosecutor initiated proceedings and, ultimately, the court issued eviction orders," HudBay said.

The suit, on the other hand, maintains Skye's management itself was directly involved in the evictions and communicated with the Canadian Embassy and high-level Guatemalan officials. The filings also cite Doctors Without Borders, the international medical nongovernmental organization (NGO), referring to sexual violence against indigenous Guatemalan women as a "humanitarian crisis"-and that Skye should have known about it.

"Many of the security people were unlicensed and carried unlicensed guns," said attorney Murray Klippenstein. "That situation was just loaded for violence." In any event, it's just a small part of a long, sad narrative for native Guatemalans. Following early 19th century independence, a fiercely independent and aristocratic landowning elite ruled in a country predominated by indigenous groups of which 50% had been landless since Spanish conquest began in 1529. Unsurprisingly, land issues drove the strife from 1960 to 1996, as the U.S.backed military inflicted exceptional cruelty on Guatemala's tribal groups- whether press-ganging them into militias, or punishing them for suspected alliances with communist guerillas.

Echoing Washington's cold war agenda, fighting incorporated the scorched earth doctrines simultaneously unfolding in Southeast Asia half a world away, and included some 47,000 disappearances and 620 massacres while leaving behind 300,000 orphans. Overall, Guatemala's Commission for Historical Clarification ruled 93% of the atrocities were government-committed and 86% of victims indigenous. These largely impoverished groups, accordingly, reject land claims stemming from this era- the Phoenix project included.

Awareness of abuses by Canadian miners in Canada and around the world is increasing: a 2010 report commissioned by the Prospectors and Developers Association of Canada (PDAC) most notably revealed that, since 1999, of 171 high-profile incidents involving mining companies, 34% were Canadian; these violations included environmental degradation, conflicts with communities and human rights abuses.

To this end, say observers, the legal actions may open a new chapter for Canada's mining companies, which, according to the PDAC report, have also been involved in four times as many unfavorable mining incidents as Australia's.

This is a natural reflection of failures of much-touted Canadian efforts at voluntary self-regulation, according to Penelope Simons, an expert in transnational corporate accountability. "However, the Choc v. HudBay cases should put Canadian extractive companies in other states on notice," she told Canadian Lawyer magazine, "particularly those operating in weak governance zones." "Many of the security people were unlicensed and carried unlicensed guns," said attorney Murray Klippenstein. "That situation was just loaded for violence." By Joseph Kirschke, News Editor-Mining (c) 2013 Mining Media, Inc.

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