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Haiti’s gold rush
Submitted by CHAN on August 17, 2012 - 05:04
By Jacob Kushner, published in Guernica Daily, Aug 16, 2012
Guernica: A magazine of arts and politics
Riches beckon from beneath Haiti’s hills, and mining companies are hoping to lock in huge tax breaks to get at them.
By Jacob Kushner, published in Guernica Daily, Aug 16, 2012
Deep in Haiti’s northern mountains, a half-dozen supervisors at a mining exploration site spent their days playing dominoes at a folding table next to a helicopter pad. For weeks they waited in La Miel, off a dirt road deep in the countryside, for Haiti’s government to give them the go-ahead to search for the gold they believe is buried in the hills around them. Fig Newtons and water bottles filled the shelves of their staff tent. On a whiteboard, in scratchy handwriting, was a single-item to-do list for the week: Change $83,000 into Haitian gourdes.
A mile west, a team of locals with shovels widened a dirt road and lined it with a drainage ditch. They were paid by Newmont, the Colorado mining company working at La Miel, to prepare local roads for heavy mining machinery, which moved here when Newmont got permission to dig.
Mineral explorers have long suspected Haiti could be sitting on a wealth of gold deposits, and in the 1970s the United Nations Development Program confirmed it, testing the earth and publishing the results with the hope of attracting foreign mining companies.
Newmont and three other foreign companies took the bait; now, they are exploring much of northern Haiti for signs of gold, silver, and zinc ore. They hope to open a modern mine that might unearth tons of precious metals, while the price of gold is at record highs. In April 2011, VCS Mining, a small U.S.-based mining venture, purchased rights to explore 700 square kilometers at a cost of around $7,000 per year. Canadian explorer Majescor owns permits to explore 450 square kilometers. Last August its stock doubled in a single day after it a reported a high level of gold in some drill samples from Haiti’s northern coast. Canada’s Eurasian Minerals owns permits to 1,770 square kilometers—about 6 percent of Haiti’s entire land mass.
The biggest stakeholder by far, Denver-based Newmont Ventures Limited, has been poking around Haiti on and off since 1996, looking for signs of valuable mineral deposits. Newmont has twice abandoned Haiti because of political unrest, but it returned in 2008. It has been searching for gold here ever since, through permits owned by its partner, Eurasian.
None of the companies scouting Haiti have yet committed to mining. They’re waiting to find out what’s in those exploratory sites. They’re also waiting to see if they’re able to strike it rich with a political gamble. Right now, Newmont and Eurasian are lobbying the Haitian government for tax breaks unprecedented in any global mining operation.
While officials in Port-au-Prince decide Haiti’s mineral future behind closed doors, twenty-three-year-old Anthony Sylvestre walks up a hillside in the northern mountains and stops at a clearing. He picks up his machete and cuts down bushes and weeds, revealing a plastic pipe stuck in the clay earth. Any day now, he’s told, the white men will return with their machine to see what riches are buried underneath.
When Christopher Columbus arrived in 1492, he enslaved the indigenous Tainos and sent them to dig for gold—an arduous process that decimated the island’s native population within sixty years. In the 1600s, the French colonized the western part of the island, importing hundreds of thousands of slaves to harvest sugar, coffee, and indigo. A century later, Haiti had become the most profitable colony in the New World.
When its slaves rebelled and declared Haiti’s independence in 1804, the United States and Europe, fearful of the precedent, largely isolated the new nation. A hundred years later, the U.S. Marines invaded. As Laurent Dubois recounts in Haiti: The Aftershocks of History, the Marines took gold from Haiti’s national bank (to pay alleged delinquent debts), seized its ports, and built roads to help American businessmen export sugarcane, bananas, and coffee. By the mid-twentieth century, Americans and Canadians were also mining, mostly bauxite and copper. Most of their profits went north with the ore, and the country’s two mines never employed more than 900 Haitians.
Today, billions of dollars worth of gold, silver, copper, and zinc are believed to be buried beneath Haiti’s mountains. A new mine could generate thousands of jobs and hundreds of millions of dollars in tax revenue. It could be just what Haiti needs to help wean itself from its dependency upon foreign aid.
Yet many Haitians fear their government won’t negotiate forcefully enough with foreign companies to make sure any future mine maximally benefits Haiti and its people. Already, government officials are acquiescing to company interests.
Since 2009, Haiti’s government ministers have been considering a new convention. This would allow Eurasian, Newmont’s business partner, to explore an additional 1300 square kilometers of land in Haiti’s north. But according to Dieuseul Anglade, Haiti’s mining chief of two decades, unlike previous agreements, this one doesn’t include a limit—standard among mining contracts worldwide—on how much of a mine’s revenue the company can write off as costs. Without any cap, a mining company can claim that a mine has an unusually low profit margin, allowing it to pay fewer taxes to the Haitian state; Anglade opposed these terms, and was fired in May.
“I told them, ‘Better to leave the minerals underground, and let future generations exploit them,’” than to give them away for a pittance. But he says government ministers at the time removed the cap anyway–and didn’t even provide him a copy of the draft agreement. Lugner Remarais, the current mining minister, declined to discuss the pending agreement with me this June.
Haiti’s mining law says an MOU must be approved by the minister of the mining bureau. Rather than changing the law, at times, Haitian officials are opting to simply ignore it altogether. In April, Newmont announced it had reached a memorandum of understanding with Haiti’s government to begin testing for gold at its La Miel site near the Dominican border, even though its permit to do so still hasn’t come through. Yet both Anglade and Remarais deny signing the memorandum, which Newmont claimed in an email was instead “approved” by the new minister of finance and the minister of public works. The supervisors at La Miel put away their dominoes, moved their machines to the test sites, and began drilling.
There are also signs of the usual revolving door of politics, in which officials who play along are rewarded with a company job upon retirement, while those who don’t are ushered out of power. One of the first official acts by newly sworn in Prime Minister Laurent Lamothe was to remove Anglade from the post he’s held for nearly twenty years, replacing him with a man who’s never worked in the mining sector. A former finance minister who oversaw mining agreements now works as a contractor for Newmont.
If you were to board a plane along the north coast and fly southwest, you’d first pass mountainsides terraced with vegetable gardens and dirt trails forged by farmers walking to a river below. The paths would widen into roads, and the land would turn from garden-green to brown. As Origéne Louis, a Haitian radio journalist from the nearby town of Limbé, puts it, “All the land you see that doesn’t have gardens–” 50 square kilometers–“that’s the land they bought.”
A sharp turn east-southeast and you’d pass over Haiti’s mineral-rich Massif du Nord mountain range, and then over La Miel. Then, almost instantly, the view would change. The barren mountaintops of Haiti’s deforested terrain become lush treetops. This is the border between Haiti and the Dominican Republic, which occupies the eastern two-thirds of Hispaniola. The border divides a place best known for its extreme poverty from the country with the second-fastest growing economy in all of North America and the Caribbean. Another 100 or so miles deeper into the D.R., those trees give way to massive rock pits, lakes, roads, machines, and the processing plant of the Pueblo Viejo gold mine.
Occupying 50 square kilometers in the Dominican Republic’s central plateau, the mine will begin producing gold, copper, and silver this year, after nearly a decade of planning and construction. The $3.8 billion mine is the largest investment in Dominican history. Its price tag is four times Haiti’s annual budget. To Haiti’s government ministers, politicians, and businessmen, it’s a tantalizing example of what mining might bring to their side of the border.
The Pueblo Viejo mine is owned by two of the world’s largest mining corporations–primary shareholder Barrick and its junior partner Goldcorp, both Canadian. The Canadian company that negotiated the original rights to the mine in 2002–when reserves were estimated at 14 million ounces and gold prices hovered around $310 per ounce–was bought out by Barrick in 2006. In the decade since the original agreement, the value of gold on the world market has risen more than fivefold. Further company research found that nearly twice as much gold is buried at the site than previously thought.
The Dominican government operated a gold mine on the same spot in the 1980s and ’90s. The mine contaminated nearby rivers, which still run a murky orange-red, like metal from an ancient shipwreck. Fishing and agriculture became all but impossible, and residents suffered the consequences. Barrick has agreed to clean up the mess as best it can as a condition of operating its own mine, says Jorge Esteva, a Barrick spokesman and the site’s de facto tour guide.
Esteva offers his visitors coffee before showing them a PowerPoint presentation that includes such pertinent warnings as “Don’t take flowers from the site” (there aren’t any), “Don’t wash your car in the lake water,” and horn honking as a system of communication. Two short honks means a vehicle is about to advance; three means it’s headed in reverse. “We don’t allow long beeps,” he explains, “because that’s a sign of aggression and we don’t allow aggression on the site.”
At Pueblo Viejo, there are no picks, shovels, or wheelbarrows. Instead, workers use explosives to break the rock wall of the pit into chunks. Massive trucks carry the boulders to a series of crushers that break the rock down into baseball-sized pieces, and later, into dust. The dust is mixed with water from a nearby river to create a sort of sludge, which passes through a dizzying set of tubes, tanks, and machines, each step helping isolate specks of gold dust from the millions of tons of ore where they’re lodged. Cyanide is mixed in to help loosen the gold particles; then it’s removed in one of four giant pressure cookers. The leftover rock sludge is piped to a dumping area nearby. If all goes well, this process will yield nearly one million ounces of gold each year at Pueblo Viejo—enough, if melted into standard gold bars, to fill a Mini Cooper.
Pueblo Viejo’s gold reserves are worth an estimated $37 billion at current market prices. Potentially more important for Dominicans, their government will tax half of the mine’s profits and has promised to pump those taxes back into the Dominican economy. The mine, meanwhile, will employ some 1,500 workers, according to Esteva.
Barrick economists say the metals sold from the mine will boost the nation’s total export value by as much as 15 percent, an estimate the Dominican Republic’s chief mining officer calls modest.
“This is a grand project,” says Octavio López, the mining chief, in an office overlooking industrialized Santo Domingo. “Any country in the world would want it.”
When I met Dieuseul Anglade last October, neither of us knew his two-decade term as mining minister was coming to an end. A few years before, Anglade drove his personal car north to the town of Limbé, near Newmont’s Grand Bois testing site. He had heard that a Haitian businessman from the city was trying to buy up land there in the hopes of later selling it to the company at a profit. When Anglade arrived, he told the resident farmers what riches were thought to be buried beneath.
“I spent my own money because the bureau didn’t have any,” he says. “I told the people that their land had gold in it, and they had better not sell their land. Despite that, they sold out.” Some sold their plots for as little as $30 US.
As the law stands, Haiti’s mining bureau would get 10 percent of the value of any new contract between the company and the Haitian state. But it could take years for that money to begin trickling in, says Anglade, and the most important time to supervise the companies is right now, as the contracts are being written. Not only must the mining bureau make sure companies are playing by the rules of exploration and land acquisition, but when a mine is proposed, it will have to oversee environmental impact studies to avoid ecological catastrophes like the one that turned the Margajita River red. Mining is notoriously toxic, and Newmont–the biggest investor in Haiti’s mining sector–has a poor track record: A 2010 cyanide spill at its gold mine in Ghana killed fish and poisoned the local drinking water supply; Newmont agreed to pay the Ghanian government $5 million for failing to inform officials of the spill in a timely matter.
When a company submits a proposal to open a mine, Haiti’s government must also weigh the extent to which the project would generate gainful and long-term employment in the local community. Companies like Newmont are relying on teams of rural Haitians to improve roads near their test sites—but these are only temporary, usually limited to just two weeks and minimal pay.
“They’re not bringing work to very many of us,” says Elsie Florestan, member of a peasant movement near Newmont’s now-defunct Grand Bois site. Along with others in the community, Florestan had been pressuring company representatives to employ more people to improve roads to the drill site, and to pay them more than the $6.25 a day minimum wage. “That’s really only enough for them to eat,” she says. “The kids still can’t go to school, and we can’t do anything but stand by and watch.”
Haiti’s weak government is in little position to be able to inform its rural citizenry about their rights, advocate for their gainful employment, or supervise the work of a mining giant like Newmont. But when it comes to dealing with Newmont and the other foreign mining companies, Haitian officials have a bargaining chip—the minerals themselves. Angalde and others want to see the Haitian government play hardball with companies, demanding a cap on expense deductions and inviting the Haitian public to be informed of, and comment on, changes in mining laws that will affect them in decades to come. So far, the government appears interested only in acquiescing to the companies’ interests.
Laurent Lamothe, appointed Haiti’s prime minister in May, and Lugner Remarais, the country’s incoming mining chief, argue that Haiti’s outdated mining law—unchanged since 1976—is stalling the progress of companies like Newmont, leaving their employees no choice but to play dominoes while they await permission to dig. Unlike other countries, Haiti requires that myriad ministers and other officials set terms for a potential mine before a company may even begin testing for minerals.
But Anglade worries that updating the law will only further weaken Haiti’s ability to negotiate forcefully with companies like Newmont. “We know that that kind of ‘modernization,’ if it happens, will be in the advantage of the companies,” Anglade says.
Already the second largest gold producer in the world, Newmont profited $6.1 billion from its worldwide operations last year, twice what it earned just three years earlier. The value of gold on the world market has been skyrocketing the past decade, roughly doubling every four years.
Like these mining companies, Haitians see this as a moment of opportunity. “We want to use these riches,” says Jude Pierre, a temporary worker at an exploratory Newmont/Eurasian site at Grand Bois. “But once they begin [mining], there may be riches for them, but more misery for us.”
Unless Haiti’s leaders secure favorable terms with the companies now, Pierre suspects the wealth will simply go elsewhere. Last November, he joined Limbé residents in blocking a road used by Newmont and demanding the company improve more roads, build schools, and create steady employment. Instead, Newmont pulled out of the site in April to begin testing at La Miel.
There, atop a grassy hill, Newmont digs deep into the earth, chasing the elusive promise of unprecedented riches.
Guernica: A magazine of arts and politics
This article was supported by a grant from the Pulitzer Center on Crisis Reporting. Haiti Grassroots Watch, an investigative reporting consortium, contributed to this report.
Jacob Kushner is a multimedia journalist who has worked for the Wisconsin Center for Investigative Journalism, La Comunidad News in Madison, and the Daily Cardinal. In 2007, he spent six months in the Dominican Republic conducting research that examined how the education system there reinforces societal prejudices toward Haitians. His current work focuses on immigration topics and foreign investment in Haiti including development aid. His work has also appeared with the Associated Press, GlobalPost, and Newsweek, among others.