Members of the committee, thank you for the invitation to appear.
I'm the president and CEO of Pacific Rim Mining Corporation. My purpose in coming here today is to set the record straight on a very disturbing and fictitious allegation made here in a prior committee meeting by Mr. Richard Steiner, who has made similar allegations elsewhere. I will document our experiences to demonstrate to you why the bill you are considering simply will not work.
Pacific Rim began a new business initiative in 2001. In this initiative, management sought to build a cutting-edge company that set the highest standards for environmental protection and social responsibility. Our strategy is to explore and develop only a certain type of gold deposit called low sulphidation epithermal deposits. These are among the most environmentally clean metal deposits on the planet. Our El Dorado deposit in El Salvador is such a deposit.
El Dorado currently has a resource of 1.4 million gold ounces, a resource that was growing steadily until we were forced to discontinue our work as a result of a program of systematic expropriation by the government of El Salvador. In December 2006, former President Saca ordered the Minister of Economy and MARN, the environmental and natural resources ministry, to stop granting concessions and environmental permits respectively. Slowly the existing concessions are falling off the books, using an obviously planned strategy. With no environmental permit, there's no way a company can fulfill its work program and maintain its mineral rights. Eventually they expire. Every mining company in El Salvador has been damaged.
El Salvador has a relatively new mining law, a competitive investment law, and a new environmental law. We have obeyed and/or exceeded the requirements of all these laws. We entered into El Salvador at the invitation of the highest levels of government. Our $80 million investment created an asset with a market value of hundreds of millions of dollars. Today our market cap is $20 million. Obviously our company has been severely damaged.
We submitted an application for an exploitation concession in late 2004, almost six years ago. Included in that application was a feasibility study for an underground mine, which sets new precedents for environmental protection in the Americas. In our numerous community consultations, we determined that water was a major concern for the people of Cabañas. With this knowledge, we designed a system to collect water in the rainy season for use during the dry season, making extensive use of recycling. This runoff would otherwise flow into the Pacific Ocean.
Mr. Steiner states that the El Dorado impacts include competition for surface water resources. In reality, we will increase the availability of surface waters in the dry season when they are most needed, as we discharge cleaned waters. Water that will flow into this reservoir has been sampled and analyzed for years. It is currently polluted with bacteria, fertilizers, defoliates, pesticides, and detergents. The water leaving the operation will be cleaner than the water that arrived.
The cyanide content of the tailings water is less than the cyanide content of the average cigarette smoker's blood, in sharp contrast to Mr. Steiner's claim that the mine impact includes water contamination from cyanide. The ores in our El Dorado deposits are alkaline. Mr. Steiner incorrectly states that there will be acid mine drainage from this mine site. The waters from the historic workings are alkaline, and our extensive chemical testing demonstrates the lack of acid potential, as is typical with low-sulphidation deposits. The El Dorado ores have a very low accessory metal content. Mr. Steiner incorrectly claims that El Dorado impacts will include contamination by heavy metals.
As exemplified by Mr. Steiner's misinformation, grossly exaggerated statements, if not outright lies, are commonly used in the opposition to extractive industries by certain NGOs—not all, but certain NGOs. These rogue NGOs use the environmental argument as a tool to increase the political cost of a mining decision. Many are ideological groups who oppose foreign investment in developing countries, and their opposition is not limited to mining.
Worst of all, Mr. Steiner testified that Pacific Rim is involved in the murder of anti-mining activists. This accusation is simply outrageous. It is contrary to everything we believe and practise. There are suspects in jail awaiting trial for these crimes, and there is no known connection between the criminals and our company. A three-page investigative piece in the local paper concluded that there was no connection. These allegations are completely unfounded, but through repetition they have gained traction. They have served their designated purpose of increasing the political cost of the mine permit and damaged the good reputation of the company.
Mr. Steiner has made the same murder accusations in El Salvador--Gold, Guns, and Choice:, a report he wrote while being hosted by a local Salvadorian NGO, ADES. ADES is a rogue NGO with a long and disturbing history of violence against our company. They are also the originators of these groundless murder allegations. In fairness to Mr. Steiner, we have no knowledge that he was aware of ADES's violent history, but he did rely on their testimony in his reports.
We attempted to mediate this violence when the first signs of it appeared in 2006. ADES was passing out flyers that read “Death to the Canadian miners”. We met with a well-known American NGO, who is a primary source of funding for ADES activities. We suggested that perhaps we could work jointly to look at a way to improve the social and environmental quality of our project. The response was a cool, “Do you know who we are?”
We then turned to the flyer and we expressed our hope that violence would not be used in the debate. Unfortunately, violence has become a commonly deployed tool. I'll provide a few examples of this violence, almost all of which has occurred not at El Dorado, our development project, but at our Santa Rita exploration project, whose remoteness makes it an easy target. On one occasion, a local water quality NGO and a company environmental scientist were fired upon while sampling a spring.
We sponsor an eye care NGO for the extremely poor. While providing a free clinic, the eye doctor and his team were threatened and forced to leave the community without providing the free eye care. Company employees were held against their will, while others fled on foot in panic.
On two occasions while drilling on our private property at Santa Rita, we were invaded by armed gunmen, some with assault rifles, some hooded, and almost all of them from well outside the community. Mobs damaged the property as well as hacked down the trees we planted as part of our reforestation effort that now totals 50,000 trees. ADES was responsible for planning and executing all of these violent attacks.
We anticipated confrontation early on and continued to meet with our workers on a regular basis to reinforce our policy that confrontation of any kind is strictly forbidden: if you confront, we lose. Our people are instructed to behave like Mahatma Gandhi. They may speak to the issues, but always in a passive manner. At none of these violent incidents have company employees retaliated or confronted their aggressors.
NGOs play a valuable role serving an important balance in the investment and development process. We support the right of NGOs to oppose, to demonstrate, and to lobby. Unfortunately, there are bad actors who spread fabricated lies and operate under the credo of the end justifies the means. There is little in the way of checks and balances for NGOs. They are beyond reproach, and rogue NGOs take full advantage.
Let's not forget who else has been victimized. Cabañas is the single poorest department in El Salvador. Two years ago we reduced our activities, and 200 direct exploration jobs were lost, as well as hundreds of indirect jobs. Our polls clearly show that the vast majority of the people in the area of the El Dorado mine favour the mine. In August 2008 only 25% of Salvadorians were opposed to mining, in general.
El Salvador has been hard hit by the global crisis. U.S.-based foreign investment has plummeted by 60%. Unemployment approaches 40%. Those living in extreme poverty constitute 40% of the population. Our company would be the single greatest taxpayer in the country. Not only would our operation provide desperately needed employment; it would set the bar high for environmental standards for future mine development. Additionally, it would send the message to future foreign investors from all economic sectors that El Salvador obeys the rule of law and is open for business.
Our company has been damaged beyond repair by rogue NGOs. Our mine has been made to appear as an environmental disaster when it is the opposite, a model for environmental protection. We've been cast as demons, responsible for violence, when in reality we are the victims of the violence. There is no place for violence in the mining debate.
To use our company as an example of why this bill is needed turns the truth on its head. The truth is that we attempted to raise the bar for environmental and social responsibility, but we have been victimized by a planned strategy of misinformation and intimidation. The bill before you will create a gridlock. It will add further delay to the already lengthy development process. The business will suffer and the consumers will pay.