Blood of Extraction
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The Canadian attitude to the law is summed up by an embassy statement, which suggested the following: “Although not an ideal mining law in its current form, it does open the sector to commercial mining;” with the President of the Chamber of mines adding that the “story must begin somewhere.”972 Soon after the final text of the mining law was published, Correa had lunch with Lapointe, after which he declared that “it’s impressive all the things we could achieve with Canada…a country that has a history of peace and development.”973 By March 13, 2009, suspensions on company activities that had been halted by the mandate were lifted, although companies were told that they needed updated environmental approval before moving ahead—a process that has been prone to long delays in some cases.974 Considering the basic satisfaction of multinational mining capital, taken together with the wider political turn to the Right by the Correa regime following the President’s re-election in 2009, and again in 2013—including public admonishments of the anti-mining, indigenous, and environmental movements and repression when necessary—it is safe to say that the principal progressive components of the mandate, driven by anti-mining activists and their allies in the early period of the Correa administration, have been defeated. Canadian diplomacy on the part of Canadian mining capital in the country played no small part in this defeat.
In short, the defeat of the mining mandate was a victory for the Canadian state and capital, though the new law was far from ideal from the Canadians’ point of view. While clearly wanting Canadian investment, Correa could not simply ignore critics of the industry both inside and outside of his government, some of whom supported his candidacy; nor was Correa willing to totally prostrate himself to Ottawa and Canadian investors. Thus the law, while a setback for supporters of the mandate, does not fully conform to neoliberal standards. And a number of companies were still concerned about the lack of clarity regarding taxes and environmental permits, which would have an impact on the individual negotiations they embarked on with the government in order to get permission to restart their projects. As a consequence, the aggressive diplomatic push that commenced with Correa’s election continued as Canada intervened to ensure that Canadian “companies…have a stable and transparent investment environment in which to carry out their operations.”975 Given the recent history of the relationship between the embassy and industry and Correa, the Canadians felt confident that, however unsatisfactory the new law was, they could nevertheless use Correa to continue to steer the mining regime in a responsible direction. Following Correa’s re-election in April 2009 the embassy observes in a report to Ottawa that “Correa has shown support for Canadian mining investment” and that, given the problems it has faced in the region more broadly, with Correa “Canada has a unique strategic regional opportunity in Ecuador.”976 This should put to rest any belief that the Correa government poses a radical alternative or anti-imperialist development model.
The day after the mining law was passed, in fact, ambassador Lapointe, keeping up his due diligence in support of Canadian investment, had a lunch meeting with Correa.977 The lunch meeting led to a meeting two weeks later in February between Correa, several of his cabinet ministers, and Canadian investors to discuss their future investments in the country, and the yet-to-be written regulations needed to implement the new mining law. (The major mining companies were represented, plus SNC Lavalin, AECON Construction, and Canadian Commercial Corporation.) This seems to have led to direct Canadian participation in the development of the regulations. According to a subsequent report by an official with NRCan, IAMGOLD, “through the Ecuador Mining Council, is working in cooperation with the relevant Ministries towards the preparation of the necessary regulations.”978 Two of the biggest issues with the law that the industry was trying to address in the regulations was the need for a clearer and, in their view, fairer tax structure that does not impede their profit making beyond the acceptable neoliberal bounds, and the protection of the concessions of the many Canadian exploration companies that the Correa government felt had been granted without accountability to the Ministry of Mines and Energy by previous administrations. These points would continue to be a focus of the embassy and industry in meetings with Ecuadorian cabinet ministers into the summer of 2009.979
The efforts of the embassy and industry to weaken the new mining regime immediately following the enactment of the new law were buttressed by Harper’s cabinet and representatives of FAIT and NRCan, who continued their active intervention into Ecuadorian domestic politics. Stockwell Day, Minister of International Trade, travelled to Ecuador in August 2009 and met mining executives, who told him firsthand of their concerns around getting permits and operations approved since the new law came into effect, complaining about the lack of rule of law. He also met with the Ecuadorian Vice President, the Minister of Foreign Affairs, the Minister for Mines and Petroleum, and the Mayor of Quito to “reinforce the importance of a clear, stable, and transparent investment climate for Canadian mining investors and their urgent need to receive authorization to resume exploration activities.”980 Day’s trip was followed that October with a visit to Ottawa and Toronto by a dozen officials of Ecuador’s Ministry of Foreign Affairs, who met with FAIT and NRCan representatives in Ottawa and representatives of the mining industry in Toronto, and by several high-level meetings in Ecuador involving Canadian and Ecuadorian cabinet ministers, senior Ecuadorian civil servants, and Canadian executives.981
Minister of State and key Cabinet pointman on Honduras following the 2009 coup against Zelaya, Peter Kent, also paid a visit to Ecuador in August 2010, which, according to the ambassador, “served as a valuable catalyst for Embassy access to key players.”982 Kent met mining and Quiport executives; representatives of Citizen Participation Organization, which is a watchdog of the Ecuadorian government’s media policy (one of the criticisms often leveled at Correa’s government at home and abroad is its ostensible attack on media independence); and the Latin American Centre for Political Studies, a democracy promotion organization operating in Ecuador. He held a roundtable with Canadian companies to discuss the political situation in Ecuador.983 Kent also met bilaterally with Correa in May 2010 during a visit to Buenos Aires to discuss “the benefits of Canadian investment” in Ecuador, as well as with Ecuador’s Minister of International Relations in June during the OAS General Assembly in Lima, again to discuss Canadian investment interests.984 Finally, in September, Canadian Foreign Affairs minister, Lawrence Cannon, met with Ecuadorian Minister of Foreign Affairs, Commerce and Integration at the U.N. to again discuss the status of mining in the Andean nation.985
PDAC conferences also continued to offer an important opportunity to influence key Ecuadorian policymakers. The embassy stepped up its support for the Ecuadorian delegation for the 2009 edition of the annual celebration of Canadian mining, bringing twenty-six delegates to “strengthen relationships” between the industry and Ecuadorian officials. The Ecuadorian delegates discussed the new mining law with mining executives and officials from NRCan and FAIT, including the Director General for Latin America and the Caribbean and former ambassador to Guatemala, James Lambert.986 In 2010, the Quito embassy brought along the Vice-Minister of Mines, a lawyer from the Vice-Ministry, and a pro-mining indigenous Shuar representative who met with FAIT and NRCan delegates to discuss building support in indigenous communities. A Kinross representative, writing to the Quito embassy, noted that PDAC 2010 is “a really key opportunity for us.”987 According to an embassy report from the conference, the Ecuadorian government representatives said that the government will authorize new mining exploration—which, as noted, was a main Canadian concern—“at a slow pace, in order to avoid…social and political confrontations from many fronts including the Ecuadorian Indigenous Conferederation CONAIE.”988
The Ecuadorian delegation and Canadian and industry representatives also used the PDAC gathering to discuss direct Canadian assistance for the development of the new industrial mining regime through NRCan. This in
cludes training Ecuador’s Ministry of Natural and Non-Renewable Resources staff, and the creation of technical training programs for a new mining workforce, including for mechanical and civil engineers, geologists, industrial mainentance and mechanics, and production workers.989 This discussion around direct support for the development of the mining industry continued in Ecuador as the embassy and industry continued to push for a clearer permitting process for Canadian companies.
In July 2010, representatives of the Canadian industry’s environmental front, the Responsible Mining Council of Ecuador, met with embassy staff. According to an embassy report, the meeting involved “high level officials from Ecuadorian Ministries,” and discussion included, “the needs of the Ecuadorian mining industry for labour and training,” and the “national training plan,” as well as the “capacity building needs within the Ministries of Environment and Water,” which are central to the process of licensing companies and permitting them to proceed with exploration and exploitation. These needs were then passed on to Correa.990 The embassy, mining company executives, and FAIT officials in Ottawa also discussed bringing in people from NRCan and the Canadian Environmental Agency to train Ecuadorian Ministry of Environment and Mining staff.991 The University of British Columbia had already entered into a partnership with the Universidades del Azuay and Cuenca for a mining geology diploma, which, as the embassy’s trade commissioner commented to a mining executive, is important for companies’ “future needs for skilled human resources.”992
As was the case during the mandate period, Canadian First Nation “representatives” were once again used to stump for Canadian mining capital. At this point in the mining debate, Correa publicly heralded Canadian mining’s relations with indigenous peoples in Canada as part of his Canadian-CSR propaganda pitch to those Ecuadorians still wavering on large-scale mining. In early 2009, Correa reflected in a radio interview, clearly echoing sentiments undoubtedly expressed by the embassy and industry, that
due to the experience Canada has with responsible mining, the first to have benefitted are the ancestral peoples which is why I ask their ambassador to bring representatives of those ancient peoples to give their testimony and show the fallacy of those who lead certain radical groups that (try to) speak for all but do not represent anybody.993
The implication of course is that the “radical groups” in Ecuador are both mistaken and irrational in their opposition, as their indigenous counterparts in Canada support and benefit from Canadian mining. The trip to which Correa was referring involved Glen Nolan, Chief of the Missanabie Cree, who has a long history of involvement in mining and would become PDAC’s first indigenous president. On the occasion, Nolan stressed Canada’s and the industry’s commitment to CSR.994 The embassy also organized a trip to Canada for Ecuadorian Mining Ministry officials to meet with Canadian counterparts and pro-mining indigenous groups. They asked Kinross if they had a mine in Canada near an indigenous group that would be “a good example” of relations with indigenous communities: Kinross replied that, unfortunately, they did not have operating mines in Canada.995
Furthermore, the embassy dangled the carrot of badly-needed infrastructural support in exchange for greater security for mining companies. Short on investment capital options in the wake of its refusal to payback a relatively small amount of international foreign debt, the Correa government was unable to attain the necessary financing for its growing infrastructural needs on its own. One request for infrastructural investment and credit made to the ambassador during a meeting to which he was invited by Ecuador’s Deputy Minister of International Trade came, Lapointe comments, “now that President Correa is delivering on his promise of a new mining law and opening of the sector.” But not fully satisfied with the new law and the Deputy Minister’s plea that, in the words of Lapointe, “the President delivered on his part of the deal,” the ambassador “repeatedly stated that resolution of our mining company concerns must be seen before any discussions can begin” and demanded that “the Ministry of Mines re-establish a dialogue with all [i.e., exploration companies too] Canadian companies as a soon as possible.” The ambassador concluded in his report to Ottawa “that Ecuador would be increasingly dependent on the mining sector, and had limited options concerning partners and financing.”996 Canada also used the opportunity of a discussion on a possible loan to Ecuador at the Inter-American Development Bank to publicly chastize the country. Although ultimately supporting the IADB loan, it raised concerns about Ecuador’s respect for foreign investment and whether it is economically responsible enough to be granted loans. (Moreover, this is not the only case in which Canada has used multilateral aid loans as an opportunity to punish, or threaten to punish, a poor country that has not acted responsibly [in the eyes of Canadian government and industry] vis-à-vis Canadian mining companies. Another of many possible examples is Canada’s attempt to stop the Paris Club from writing down a portion of the Democratic Republic of the Congo’s debt in 2009 and 2010.)997
The concern Canadian companies harboured about the mining law and its unpredictable tax regime proved well-placed when the Ecuadorian government declared in 2011 that it intended to push for higher royalty rates on projects than the minimum of 5 percent required in the new law.998 The Ecuadorian government’s position was behind Andrew Shisko’s (who replaced Christian Lapointe as ambassador) rebuke of the mining tax regime in an interview on national radio as one of the most expensive in the world.999 The government’s position prompted Kinross, which had received both environmental and water permits in 2009 but still had to negotiate its tax commitments, to denounce the tax regime and to refuse to sign an agreement with the government to start its Fruta del Norte project. The company complained that under the new tax regime it would have to pay just over half of its post-production income in taxes and royalties, and if the price of gold were to rise above US$1,700/ounce, 70 percent of the extra (or windfall) earnings would be collected by the government. Deciding that such taxation was excessive—in a context in which it faced financial problems involving a significant writedown on a major African investment—its CEO, Tye Burt, threatened the company “won’t proceed there [in Ecuador] unless we have a better economic deal.” Ecuador’s Minister of Mines and Energy, Wilson Pastor, responded by publicly declaring that Kinross was unreasonable and no deal could be concluded.1000 However, Correa himself suggested that Kinross’s demands were “reasonable,” and supported a legal reform in August 2012 that delays taxes until after a company has earned back its initial investment and establishes a maximum threshold on royalties, the lack of which had been a major concern of Kinross and other companies.1001
Several years after the mining mandate, and with a new law in place, the Canadians, as we argued above, have had important victories. The more radical stance toward Canadian investors in the indigenous and environmental movements, which received expression in the mandate, has been, for the time being at least, contained. And Correa, who was never in the radical camp (despite statements critical of mining during his first campaign and halting a couple Canadian projects early in his first mandate) but whose nationalist inclinations represented a real uncertainty for Canada, was pushed decisively in favour of Canadian capital in the context of Canada’s full-spectrum diplomatic assault on Ecuador. Questions lingered regarding the restarting of concessions, the establishment of new contracts and the windfall tax, and these uncertainties have engendered moments of tension between the Ecuadorian government and Canadian capital and the embassy, which, to be sure, would have preferred a more unambiguously neoliberal mining law with lower and standardized taxes. Continuing investor angst regarding the new political context in Ecuador has been expressed in the decisions of several mining companies. EcuaCorriente sold its assets to the Chinese Tongling Non-Ferrous Metals in 2009. In June 2013, after two years of negotiations and still no deal, Kinross finally decided to walk away from the country, exasperated and unwilling to accept the terms of the windfall tax. In June 2012
, IAMGOLD announced that it sold its Quimsacocha project to Canadian junior company, INV Metals. Delays with the Ecuadorian government and political risks were cited as the reason for the sale by IAMGOLD.
However, in its deal with INV, IAMGOLD will actually get 40 to 45 percent ownership of the junior company, suggesting that it “is downloading all its Ecuador risk to a junior while maintaining a hefty stake in what could be a profitable mining project if it gets developed.”1002 A large number of Canadian exploration companies also remain. If this signals anything, it is that however uncertain it may have been in recent years for Canadians, and however much the Correa government makes recourse to nationalist rhetoric, these things were not perceived as perilous threats to a significant segment of Canadian capital, thanks in large part to the aggressive intervention by the embassy, Ottawa, and the industry itself.1003 With the mandate defeated and a new law in place, a Kinross executive observed in 2009 that the government had “clarified the mining law very significantly…[and] sets the framework quite clearly for future development.”1004 The Correa government has also publicly displayed its ongoing support for large-scale private mining initiatives with the deployment of security forces against anti-mining opponents after complaints by the industry. In the fall of 2010, a Kinross executive used his connections to “inform authorities about the extent of informal mining taking place…for authorities to take the appropriate decision.”1005 Correa ultimately dispatched two thousand soldiers to El Dorado in the province of Zamora after a group of indigenous artisanal miners—“illegal” miners in the words of the embassy—erected a blockade against Kinross concessions. The embassy, in a report to Ottawa, suggests happily that Correa’s aggressive response “has demonstrated clearly that the Ecuadorian government is increasingly serious about developing and protecting the mining industry.”1006 In 2011, Correa dispatched the military to Esmeraldas province in the northwestern part of the country to forcefully stop artisanal gold mine operations, and the military blew up equipment belonging to these small-scale miners in the process.1007 In the end, Correa’s Ecuador is open to large-scale transnational mining; it is only the cut of the profit that the Ecuadorian government is seeking which Canadians find objectionable. Ultimately, while the Correa government is trying to squeeze Canadian companies for a bigger slice of the profit pie, Correa is not a threat to their overall interests. Instead, the biggest danger facing Canadian investors is grassroots community resistance.