By: Jeanfreddy Gutiérrez Torres
Date: October 31st 2016
Source: Mongabay

  • Venezuela has invited foreign companies to play a leading role in developing the Orinoco Mining Arc, potentially opening 12 percent of the country to mining interests, and endangering forests, rivers, national parks and indigenous lands in the remote southeastern part of the nation.
  • The opening of these lands to mining comes as the nation continues its economic free-fall due to plummeting oil prices. The Maduro administration — which is struggling for its political life amid food and medicine shortages and civil unrest — hopes that mining will replace oil as a state cash cow.
  • Venezuela’s southeast is thought to be extremely rich in coltan (vital to electronic devices), gold, copper and diamonds. But it is also rich in forests, rivers and wildlife.
  • The development of the Orinoco Mining Arc would threaten Canaima National Park, a UNESCO World Heritage site, covering 30,000 square kilometers (12,000 square miles). It would also threaten other protected areas and indigenous territory.

The price of oil controls much of what happens in Venezuela, determining the nation’s economic health, policies and politics. In 1995, when that price fell to just 16 dollars per barrel, the nation’s currency was devalued while poverty and inflation soared. From 2008-2010, tumbling oil prices caused by the global economic crisis, prompted socialist President Hugo Chávez to announce the nation’s salvation: it lay in hidden reserves of a dull black metallic ore, vital to the world and worth $100 billion dollars.

The boon, he said, came in the form of coltan, short for columbite-tantalum, widely used in next-generation tantalum capacitors, which are ubiquitous in cell phones, Global Positioning Systems, satellites, guided missiles, and all things electronic.

This stupendous wealth — along with riches of gold, diamonds, iron and copper — was to be found, he said, in the country’s remote southeast, in what Chávez later dubbed the “Arco Minero del Orinoco”, a part of the country until then known primarily for its pristine forests, bountiful wildlife, parks and indigenous areas.

In 2016, with the price of oil down for the fourth year in a row, Chávez successor, President Nicolas Maduro, again promoted the Orinoco Mining Arc, describing it as a Venezuelan promised land, shining bright and safe beyond the economic vagaries of global oil prices.

Maduro’s administration — which is struggling for its political life amid food and medicine shortages and major civil unrest — late this summer announced the opening of vast swathes of the country’s pristine wilderness and the signing of contracts with transnational and domestic mining corporations.

Inside the Orinoco Mining Arc

The Orinoco Mining Arc is a vast region. It covers 111,844 square kilometers (43,183 square miles), and is equivalent to 12.2 percent of Venezuelan territory.

The region lies south of the Orinoco River in the states of Bolívar, Amazonas, Delta Amacuro and on the disputed border with Guyana. The mineral-rich region is also located south of the “Franja Petrolífera del Orinoco” (Orinoco Oil Belt), a similarly huge zone where foreign companies are heavily active in fossil fuel extraction.

Late this summer, Nelson Merentes, president of the Central Bank of Venezuela, invited 150 companies from 35 countries to explore for gold, copper, diamonds, coltan, iron and bauxite inside the new Mining Arc.

Besides the projected US $100 billion in coltan, Venezuelan authorities optimistically estimate that up to 7,000 tons of gold could be certified within the Orinoco Mining Arc, which would make it the second biggest gold reserve in the world, worth $200 billion dollars, calculated at a price of US $1,200 per ounce.

The government also estimates there to be three billion carats in diamonds in the region, and at least 300 thousand metric tons of rare earth elements: cerium, lanthanum, neodymium and thorium.

But standing in the way of open-pit mines and other extreme forms of extractive development are seven Venezuelan natural monuments and five national parks, which are scattered throughout the Mining Arc.

The Parque Nacional Canaima (Canaima National Park) covers 30,000 square kilometers (12,000 square miles), and is a UNESCO World Heritage site. Located in Bolivar state, it is characterized by vast forests, flat-topped plateaus and fantastic cliffs, and is home to jaguars (Panthera onca), giant otters (Pteronura brasiliensis) and giant anteaters (Myrmecophaga tridactyla).

The region slated for mining development also includes the Imataca Forest Reserve (3,000,800 hectares); the La Paragua and El Caura reserves (5,134,000 combined hectares); the Cerro Guanay Natural Monument; plus the Caroní River watershed (covering 96,000 square kilometers).

The Guri dam is here too; it feeds the main hydroelectric plant in Venezuela, which produces 60 percent of the country’s electricity. This dam’s reservoir and electrical output were at their historic lowest levels in 2015, which helped perpetuate a series of blackouts and power outages across the country. The government claims that the recent El Niño was responsible for the drought, but experts say that deforestation caused by illegal mining and logging across South America has affected the rains in the region for the worse. According to Global Forest Watch, at least five protected areas in Venezuela are already being deforested by illegal mining activities.

According to Ricardo Menéndez, Venezuela’s minister of planning, there are 465 towns located within the Orinoco Mining Arc, inhabited by 1.6 million people, or just under 5 percent of Venezuela’s population. Many would have to be relocated, and concentrated in 27 already existing urban areas if plans for the Mining Arc become reality. Included among that dislocated 5 percent would certainly be thousands of indigenous people forced out of their rural lives into urban settings.

But according to the government, the Orinoco Mining Arc would replace the economic crutch provided by Venezuela’s oil exports with a diversified economy fed by currency exchange with foreign mining investors. The Arc would be part of a comprehensive national development program designed to be inclusive of indigenous people, offering “respect for human beings and the environment”.

“When we talk about the Mining Arc there will be a plan for agricultural and industrial development, also [for] transportation, health, education and community protection,” Menéndez declared. He also announced the results of a meeting held in the community of Los Pijiguaos, where indigenous groups have staunchly declared “untouchable” areas off limits to mining, but where the country hopes to create a new model for urban living that preserves and respects indigenous cultural diversity.

Pushing beyond “childish” environmentalists

Rodolfo Sanz, former Venezuelan minister of Basic Industries, has written a long opinion piece in which he accuses environmentalists and leftists of “childishness” and “innocence” regarding their outspoken criticism of the Orinoco Mining Arc.

He maintains that the region has already suffered immense environmental damage and been “badly exploited” by 80,000 small scale and artisanal miners. He also asserts that the only way to pay for the region’s restoration is through the compensation and taxes that would arise from the large scale mining industrialization of the Arc now proposed by the government.

Indeed, illegal mining is a serious problem in Venezuela’s Southeast. The International Consortium of Investigative Journalists in a series of articles concerning the illegal traffic in coltan titled “Venezuela emerges as new source of ‘conflict’ minerals”, notes that illegal trade between international brokers and a network of miners protected by criminal gangs is well underway, with smuggling taking place on the border of Venezuela with Colombia and Brazil. The series also states that the illegal miners have used Venezuelan military forces as a shield.

Meanwhile, a 2016 report, “Organized Crime and Illegally Mined Gold in Latin America”, issued by the Global Initiative Against Transnational Organized Crime reports that 91 percent of the gold exported from Venezuela (16 tons per year) is produced and exported illegally.

Illegal gold mining, which uses toxic mercury in its production, pollutes rivers and poisons local populations. Venezuela’s Southeast is already suffering from a “perfect storm” of illegality, deforestation and mafias, while there are regular reportsof attacks on miners and indigenous people in the biologically rich Venezuelan Amazon.

Sanz and the government assert that the Mining Arc is the solution to the problem, that the illegal extractive practices common among the artisanal miners will be replaced by modern mining techniques, and that the Orinioco Mining Arc will become a privileged region benefiting from rapid socio-economic development. The former government minister also maintains that the criminal element now controlling mining there will be replaced by law abiding transnational companies and national mining entrepreneurs.

An article on the official website Misión Verdad, explains how the Arco Minero del Orinoco will complement the “Orinoco Oil Belt” via international financial investments. Mining, the website claims, will have “minimal impact on the topsoil” and utilize advanced technologies that only affect subsoils. The website also argues that the Arc initiative will benefit the country by maintaining strict national sovereignty over the new mining operations, rather than giving foreign companies too much control as happened with oil production in the past.

But, say critics, these government promises are vastly overstated. The exploitation of gold, diamonds, iron and rare earth elements will require highly disruptive open-pit mining methods, they insist, resulting in the removal of both topsoil and subsoil. In addition, the implementation of the Orinoco Mining Arc would violate several national laws and international treaties, including possibly the recent Paris Climate Change Agreement.

Critics note that there are constitutional precepts that require public consultation before international mining companies can move into a region, including the engagement of indigenous people in the decision process. The Arc also requires approval of the national legislature. Socio-cultural and environmental impact studies on proposed mining enterprises will also be needed before development goes forward.

Paving the way for the Orinoco Mining Arc

In 2015-16, Venezuela saw its oil prices slump for the fourth straight year, falling from a peak of $112 per barrel to a $40 average. On December 30, 2015 the outgoing National Assembly responded to the crisis by approving the Law for Productive Mining Development of 2016-2018. That legislation established the groundwork for large-scale mining across Venezuela by legitimizing private-public joint ventures (with 55 percent state participation).

In January 2016, a newly chosen legislature agreed to ignore that decree which would have allowed the government to forge ahead on the Orinoco Mining Arc, and it also reformed the Law of Gold Mining. But that legislative decision was then overturned by Venezuela’s Supreme Court, in a power struggle that has aggravated the political and institutional crisis underway in the South American nation. And again, the Mining Arc was back in play.

A new institutional structure has since been inaugurated, which will step beyond the previously existing networks formed by state oil ministries and basic industries. Most importantly, a new military company will give Venezuela’s armed forces the power to explore, produce and sell oil and minerals — while keeping the profits. A similar arrangement in Egypt has created a powerful army there that not only wields power through its unchallenged weaponry, but also via its monopolistic corporate clout.

Also recently established were a new Ministry of Ecological Mining Development, as well as a mining audit and inspection office to “control the environmental, geological, social and labor risk” in the Arc.

In addition, the state issued a law banning the use of mercury in mining as well as the requirement to install cyanide treatment plants at all mines. Mercury is typically used by small scale and artisanal miners to process gold.

Standing against the Arc

Esteban Emilio Mosonyi, renowned Venezuelan linguist and anthropologist, and founder of the Indigenous University of Venezuela and a member of the Presidential Commission for Cultural Diversity of Venezuela, does not see his views as “childish” or “innocent” and he rejects the “managed criticism” contrived by the government in defense of the Mining Arc.

In May 2016, he participated in a forum at the Central University of Venezuela to discuss the government’s Orinoco Mining Arc decrees. He could not believe what he was hearing from President Maduro, noting that the Arc, “is a project on a scale that no country has [ever] dared attempt,” likely resulting in thousands of displaced indigenous people who will be forced to become a “suburban sub-proletariat”.

The university event hosted several other dissident left spokespersons, who attacked the mining proposal as an example of “neoliberal exploitation and corporate extractivism,” and as an assault on popular social movements.

Ana Elisa Osorio, a former environment minister, was asked to review the government mining agreements and she declared her surprise over President Maduro’s sponsoring of the massive extraction measures. In a March 2016 interviewgiven to the official website Aporrea.org, Osorio rejected the creation of the Ministry of Ecological Mining Development. “There is no possibility that open-pit mining can be environmentally friendly,” she said. “[W]ith the use of cyanide [as part of the extraction process],… the damage will be, effectively, irreversible.”

Economist Víctor Álvarez has also joined in the criticism, noting that the large scale “extractionist-rentier model” eliminates the possibility for other sustainable economic activities in the region such as tourism, clean energy or agro-ecology. He maintained that the government has abandoned its former eco-socialism stance and embraced large scale mining as a means of offsetting the loss of foreign currency once brought by oil, and in order to maintain and pay for a high volume of imports.

The National Academy of Natural Sciences has also come out against the Orinoco Mining Arc plan. Mongabay spoke with Academic Secretary, Professor Antonio Machado-Allison, who has published and collaborated for 50 years on various studies documenting environmental damage caused by mining in the river basins of southern Venezuela.

Machado-Allison quoted a past report by the National Assembly that rejected open-pit mining because it was banned in several countries due to “major accidents and environmental liabilities.”

He stated that the Orinoco Mining Arc would result in extreme deforestation along with disastrous health issues for local inhabitants. He also finds it difficult to believe that the government will be able to deal effectively with the small scale and artisanal miners in the region who have formed criminal gangs and are supported by guerrilla bands and paramilitary units in the region. He wonders whether the foreign companies might simply hire these criminal elements to do their mining.

He argues against large scale exploitation by international and national mining companies, and instead proposes a more measured and sustainable approach to growing Venezuela’s economy that integrates quality of life and protection of the environment for future generations.

He points to sustainable agriculture, industry, and tourism development successes in other countries. “There is, in Amazonas and Bolívar, a large number of tree species with fruits unknown in other parts of our country that could serve as food for our people — these are fruits being harvested successfully by other neighbor countries, and already part of their food industry,” Machado-Allison said. He also argued for the economic possibilities offered by Venezuela’s Southeast forests for pharmaceutical research and development, tourism or the breeding of game for hunting and export.

Meanwhile, the NGO Phynatura, directed by former mining assessor Luis Jiménez, has shown a sustainable way forward. The NGO has signed conservation agreements for the sustainable use of 156,000 hectares of protected forest with indigenous communities including Piapoco, Hibi and Sanemá, located in the Cauca Basin. Phynatura will grow organic cocoa and orchids (to produce natural vanilla), and produce high value essences for the global perfume industry (utilizing tonka beans and copaiba). This ecological business model employs improved agroforestry methods that preserve the quality of soils without logging or burning as occurs with so many other crops.

Orinoco Mining Arc could add to carbon emissions

Juan Carlos Sánchez, co-winner of the Nobel Peace Prize as part of the United Nations Intergovernmental Panel on Climate Change (IPCC), agrees with Machado-Allison and rejects the government’s obsession with large-scale mining. In a conversation with Mongabay, he outlined the potentially disastrous environmental consequences of the Orinoco Mining Arc, including the acidification of rivers; increased turbidity and sedimentation of waterways; and the pollution of 10-100 cubic meters of water per ton of ore processed. Add to that the dust, noise and infrastructure damage caused by the regular detonation of mining explosives and by unceasing truck traffic.

He dismisses the government’s ecological mining concept as fantasy. The extraction, he explains, of gold and diamonds requires deforestation and soil removal over large areas causing “irreversible damage”, along with cascading impacts: including the wholesale destruction of wildlife habitat and the loss of tremendous biological wealth.

“Remember that the fragility of the area originally led to the creation of Canaima National Park,” he said. “In the Mining Arc region, even without being sufficiently studied, [we know that there are] at least 225 species of reptile, 180 species of amphibian and 1,200 species of birds.”

Sánchez points out that as a participant in the 2015 Paris Climate Change Agreement, Venezuela committed to reduce its greenhouse gas emissions by 20 percent by 2030, but that the country’s national emissions inventory has not been updated since 2000, nor has it developed a mitigation plan for its emissions, nor a plan to adapt the country to the consequences of climate change.

The significant loss of forests brought by the implementation of the Mining Arc would, he said, have the double effect of reducing the country’s future carbon sink capacity, while also releasing significant amounts of carbon from the trees cut to the atmosphere.

Impacts on indigenous people

Gregorio Mirabal, general coordinator of the Regional Organization of Indigenous Amazonian People (ORPIA), once an ally to President Chávez, rejected the Orinoco Mining Arc when Chávez first proposed it, and he rejects its reactivation now.

“It affects us because we are talking about mining, extractivism and a quest for resources at a very high cost for [indigenous people], because it translates to destruction of forests and watersheds of the most important rivers in the Venezuelan Amazon,” he said to the NGO Provea in March of this year.

The Coordination of Indigenous Organizations of the Amazon (COIAM) has also rejected the Arc initiative. In a statement, its 15 member groups said they were not consulted by the government and that the “pronounced capitalist overtones” of the project are “contrary to our conception of life and Mother Nature as [providing] welfare for collective livelihoods”.

Vladimir Aguilar, lawyer, political scientist and director of the Working Group for Indigenous Affairs (GTAI), told Mongabay that the government should give up the mining scheme and instead rely on the demarcation of indigenous lands for the purposes of ecotourism through “natural protection and cultural development of national parks and natural monuments with sustainability criteria to boost the economy of the region.”

He rejects the supposedly progressive Maduro government’s new economic model as merely an exchange of oil-based capitalism for mining-based capitalism, and labeled Maduro’s approach as “developmentalist leftism” aligned with “neo-extractivism.”

He admits that indigenous groups are somewhat divided on the issue because of “political cooptation” by the current government, but says that those living in Venezuela’s Southeast reject the “intentions of transnational capital [working] with the government”. Aguilar perceives the Orinoco Mining Arc as “an aberration and legal antinomy” — a gross contradiction of progressive values and an assault against the environmental and land rights of Creole and indigenous Venezuelans.

Transnational companies mobilize to mine the Arc

One company that has potentially agreed to enter the Orinoco Mining Arc is Canada’s Gold Reserve Inc., a firm that in 2014 won an international arbitration settlement of US $740 million from Venezuela after the socialist-run state revoked the firm’s Las Brisas gold concession in 2009. According to Reuters, Venezuela must pay $600 million by October 31st and the rest before the end of the year as compensation.

Meanwhile, the Canadian firm has allegedly already approved a two billion dollar investment plan for the Orinoco Mining Arc. Oddly, President Maduro announced that commitment last February, but four months later the company assured the media that this agreement had not yet materialized.

Chávez, in 2009, expelled foreign mining companies including Crystallex and Rusoro (which won an arbitration of US $1,200 million), accusing them of contaminating Venezuela’s rivers with mercury. He also suspended the extraction of coal in La Guajira, on the border with Colombia, claiming that he preferred to conserve water and forests. Maduro, in a turnabout seemingly favoring international interests, has now decreed the reopening of these mines.

Other mining companies, like Venezuelan FAOZ Mining, only displays an empty web page regarding participation in the Arc; while Afridiam offices in Congo, the United Arab Emirates and the United Kingdom, did not respond to phone calls or emails from the media. Mongabay also was unable to obtain a response.

It has also been announced by President Maduro that the China CAMC Engineering Company, a subsidiary of China National Machinery Industry Corporation, will certify the Orinoco Mining Arc mineral reserves, but this firm is currently disabled as a contractor in Venezuela, as specified within its listing on the National Register of Contractors. Despite this prohibition, Roberto Mirabal, Venezuela’s eco-mining development minister, announced the beginning of “scientific exploration” to certify the amount of ore reserves at the start of September. Companies from China, Angola and Namibia are to conduct the ore certification studies.

The Maduro administration’s bold announcement of the Orinoco Mining Arc, far from being seen as Venezuela’s economic salvation, has met with a tsunami of social, political, economic and environmental opposition. As of 2013, mining represented less than 0,4 percent of Venezuela’s Gross National Product. Significantly upping that percentage could result in the destruction of one of the most biodiverse regions on earth, and put the nation’s water and energy resources, and indigenous people at risk.

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Photo source: Luis Marquez via Flickr/Creative Commons (CC By-NC-ND 2.0). Photo: © Luis Marquez

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