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Don’t mention Avatar
News Articles | Financial Post | Peter Koven | March 05, 2010
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Picture this scenario: A sinister mining company travels to a faraway land and with the help of a psychotic militia, it rapes the land of its natural beauty and slaughters its eco-loving inhabitants.
That is the plot of Avatar, the highest-grossing movie to date. But for Canadian mining companies, Avatar is not just the big-budget brainchild of James Cameron – it is a nightmare that played out for real last fall in Ottawa, one that they allegedly conducted.
In committee hearings on Parliament Hill, a succession of speakers accused Canadian miners of violence, corruption, extortion, environmental destruction and a host of other abuses. The hearings concerned Bill C-300, a private member’s bill that attempts to regulate Canadian mining companies overseas.
The bill is not likely to become law in its current form. But the hearings hammered home the fact that the Canadian mining industry has a public relations problem.
It is one of the biggest issues the industry faces on the eve of its largest event, the Prospectors and Developers Association of Canada conference, which begins tomorrow in Toronto.
It goes without saying that the mining sector has never had a soft and cuddly reputation. But experts say there is a shifting global mood, brought to life in Avatar, in which the act of mining is viewed in a completely negative light, especially by young people. More opposition means that more projects could get delayed, shut down, taxed to oblivion or never get off the ground.
“Avatar is worth looking at, because it expresses the attitude host countries have to mining,” says Don Coxe, head of the Coxe Commodity Strategy Fund and one of the world’s foremost experts on resources.
“I know about a major geology class, and I’m not allowed to reveal which one, where nearly half the class was there not to open a new mine, but to prevent new mines from ever being opened, and help shut down those that are out there.”
Mining companies are running into trouble all over the globe. They are getting expropriated from Central Africa (First Quantum Minerals Ltd.), attacked in Guatemala (HudBay Minerals Inc.) and accused of environmental abuses (just about everywhere).
Even mining-friendly regions are causing problems – British Columbia, for example, recently banned mining in the Flathead Valley region after years of protests by environmentalists.
The oil sands remains the biggest public relations problem. This week, with the Oscars looming, an advertisement went out in Variety magazine comparing oil sands mining with that seen in Avatar.
Experts are worried that the protests, shutdowns and expropriations will become more common in the future. While that probably bodes well for metal prices in the long term, it is little consolation for the companies being targeted for closures.
If they ever need to be reminded of what they’re dealing with, it’s right there on the big screen in Avatar.
Companies en garde
In the past 12 months, it has been one PR mess after another for Canada’s mining companies. Below are some of the projects that are in the crosshairs of environmentalists, NGOs or host governments. They are rated from zero to five stars based on how much the allegations against them could inspire James Cameron. It goes without saying that the companies dispute nearly all of these complaints.
Barrick Gold Corp. – Porgera mine (Papua New Guinea)
Porgera is a giant vacuum for mining industry conflict. Every year, Barrick’s annual meeting is disrupted by protestors claiming it is the site of genocide, gang rape and all sorts of other nasty stuff. It got even worse for Barrick last month, when Amnesty International made accusations of police brutality and forced evictions around Porgera. The mine was also a hot-button issue in the C-300 hearings. And Norway’s pension fund dumped its position in Barrick, citing environmental damage at Porgera.
Rating *****
Blackfire Exploration Ltd. – Barite mine (Mexico)
When you’re fingered in a murder investigation, that’s pretty hard to top. Mexican authorities shut down Blackfire’s mine last year, citing environmental violations, after three people with ties to the company were arrested in connection with the murder of an activist who was against the project. A truly inexplicable situation, regardless of where the truth lies.
Rating *****
New Gold Inc. – Cerro San Pedro (Mexico)
Where to begin? There are the endless accusations of environmental destruction, reports that employees assaulted local citizens, a complaint with the Toronto Stock Exchange and British Columbia Securities Commission, and an order from Mexican authorities to shut down the project. Yet the mine is still running.
Rating ****
Barrick Gold Corp. – North Mara (Tanzania)
Last year, NGOs accused Barrick of contaminating water around the North Mara mine, killing wildlife and creating health problems for citizens. It is one of many conflicts to pop up at North Mara, which include a violent riot in 2008. Barrick is in the midst of spinning its Tanzanian mines into a new company.
Rating ***
Teck Resources Ltd. – Red Dog (Alaska)
Mining-friendly locales can turn problematic in a hurry. Investors are worried that Teck may be forced to shutter its Red Dog zinc mine in Alaska after environmental and tribal groups launched multiple appeals against a water discharge permit that the company received. Teck has warned that if permitting delays extend past May, production at Red Dog will likely be curtailed. Somewhere, Sarah Palin is not caring.
Rating **
Agnico-Eagle Mines Ltd. – LaRonde, Goldex and Lapa mines (Quebec)
In northwest Quebec, Agnico is blessed with rich gold deposits, plenty of infrastructure, highly skilled workers, zero NGO opposition and the most mining-friendly government in the world. And big discoveries are still being made on the legendary Abitibi Greenstone Belt. So why isn’t every major gold company here?
Rating: 0
Financial Post
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