Mining in Latin America: The Interplay Between Natural Resources, Development, and Freedom

The extraction of non-renewable natural resources in the form of large-scale mining projects has intensified in recent years in Latin America. In fact, the World Bank and other international financial institutions have continued to encourage countries to commit to extractive industry growth as a development strategy (Campbell 2008). Not surprisingly the mining industry has responded accordingly and many developing countries – both with and without a mining tradition – have seen significant increases in mining investment coming from developed countries (Bebbington et al. 2008, 4). Canada has the biggest share and largest mining industry in the world and much of its outward investment targets Latin American countries. Many Latin American states are welcoming Canadian mining companies to operate on their territories since revenues from mining can help to increase a country’s Gross Domestic Product and might bolster economic growth which subsequently reduces poverty and unemployment, as the liberal economic discourse purports. However, large-scale mining projects can also have negative effects not only on the environment but also on the communities where mineral extraction takes place.

Sen’s Development as Freedom

These types of unfreedoms, for Sen, can arise either through inadequate processes, such as violation of voting privileges or other political or civil rights, or through inadequate opportunities that some people have for achieving what they minimally would like to achieve, including the absence of such elementary opportunities as the capability to escape premature mortality or preventable morbidity or involuntary starvation (Sen 1999, 17). Another example of an unfreedom is the denial of political and civil liberties by authoritarian regimes like imposed restrictions on the freedom to participate in the social, political, and economic life of the community (Sen 1999, 4). These political liberties and civil freedoms are directly important on their own and do not have to be justified indirectly in terms of their effects on the economy. According to Sen, even when people without political liberty or civil rights do not lack adequate economic security, they are deprived of important freedoms in leading their lives and denied the opportunity to take part in crucial decisions regarding public affairs.

As I will show in the case of Marmato, the citizens of the town are deprived from the decision-making process affecting their lives since the relocation schemes are being implemented without consultation and the consent from many members of the community. These are the kinds deprivations that restrict social and political lives of individuals. Hence, for Sen, development must consist on the removal of various types of unfreedoms which leave people with little choice and little opportunity of exercising their agency. In Sen’s view, development has to be more concerned with enhancing the lives a person leads and the freedoms she or he enjoys. So for Sen “expanding the freedoms that we have reason to value not only makes our lives richer and more unfettered, but also allows us to be fuller social persons, exercising our own volitions and interacting with the world in which we live” (Sen 1999, 15).

The Good, the Bad, and the Ugly of Mineral Extraction

The polemic of the resource curse has been widely debated in mainstream and academic literature for several decades. Economists, political scientists, activists and natural resource industry professionals have all focused on the question of whether the presence of natural resources is beneficial or harmful for developing countries. One of the most contested arguments is with regards to mining, and gold mining in particular. In 2009, the World Gold Council released a special report on the matter in which different aspects of mining were studied. The report, entitled The Golden Building Block: gold mining and the transformation of developing economies, considers the macroeconomic benefits of gold production in developing countries over the entire lifecycle of a mining operation. The report looks in significant detail at the impact of gold mining on a particular economy, Tanzania, and examines the effects on its economy over a 40-year period. According to the report, “Tanzania provides the perfect test case to conduct such a comprehensive assessment of both gold mining’s contribution to date and its potential future contributions to the economy over the life cycle to mine closure” (World Gold Council 2009). The findings of the study uncovered that the most significant contribution that gold mining provides to Tanzania’s economy is its effect on foreign direct investment (FDI) which has been enabled by the mining law reforms introduced over the past 12 years. Particularly, it is clear that government reforms of mining laws have been the common denominator in mining’s contribution to positive economic development in that country (World Gold Council 2009). Indeed, evidence suggests that gold mining can be one of the first sectors to sustain growth in a previously failing economy once minimum mining reforms are in place, as was the case in Tanzania.

In addition to mining reforms, export earnings from gold mining in Tanzania are already at US $770 million, and these are estimated to more than double in the following decade. Job creation, although not typically among the greatest benefits of large-scale mining due to its capital-intensive nature, is in fact an important direct benefit of gold mining in the country. The mining industry employs more than Tanzania’s utility sectors combined, including gas, electricity and water, and the increase in wages injected into the economy has helped to develop other sectors, especially service providers. The report also finds that large-scale gold mining has been found to be a major factor in bolstering the economies of other developing countries. For example Chile1 and Ghana have both experienced clear improvements in the living conditions of their populations and increased economic development as their own mining industries have expanded. In Chile, these improvements have translated into the enhancement of living conditions and poverty reduction. Most significantly, these gains have been most substantial in mining-related regions of the country, the report states. These regions could also see the promotion of local development since it increases the demand of labour at the local and regional level. This could have significant effects in helping local suppliers of services which might help to reduce unemployment due to the generation of direct and indirect sources of income. At the national level, mining activities could bring economic advantages from higher tax incomes that could be re-invested into society as social services or as infrastructure building.

Nevertheless, mining also has negative consequences. The most well known effect of mining is with regards to environmental degradation. There is evidence that suggests that mining is inherently damaging to the environment, and sometimes disastrously so. According to Jaime Kneen, beyond the diversion and contamination of water, the persistent toxic leaks, and periodic catastrophic spills, large-scale mining projects plays an important role in opening remote wilderness areas to industrial development, as it pushes roads and seismic lines into forests, mountains, and tundra, followed by highways, electrical transmission lines, hydroelectric dams, and even ore slurry pipelines and port facilities (Kneen 2007, 3). Deforestation and despoliation are the main negative results as trees and wildlife alike suffer from the direct damages of mining. Furthermore, with new mining technologies, local and regional landscape transformations associated with mining become all the more significant. Mining is essentially a waste management industry. Whether a mine is underground or open-pit, most of what is mined is discarded, leaving millions of tons of waste rock and ‘tailings’ loaded with dangerous heavy metals that had previously been more or less safely bound up in the rock. Gold and silver are among the most wasteful metals in the world, with more than 99 per cent of ore extracted ending up as waste. For example, to make a gold ring, the average amount of rock waste generated is over 3 tons.

In addition to these negative environmental effects, mining can also have devastating consequences to communities found in close proximity to a mine. In some Latin American countries for example, most new areas of mining investment are on inhabited lands, and even when these areas are not directly inhabited, communities nearby are commonly affected by the inevitable environmental repercussions of mining, which include industrial run-off affecting local water sources, or the loss of arable land resulting from the infrastructural development accompanying mining (Gordon & Weber 2008, 68). Large-scale mining activities often produce or worsen poverty on the ground even as it generates prosperity for mining companies and for the local elites, as villages are displaced, farms destroyed, watersheds dried up or contaminated, etc. in exchange for temporary jobs for a portion of those affected. Displacement may result in very serious social problems, including marginalization, food insecurity, loss of access to common resources and public services, and social breakdown. An example of a community devastated by mining is the city of Potosí in Bolivia – once comparable in size to London and a hive of extractive activity in the heart of the Andes, now a poor capital of a chronically impoverished department (Bebbington et al. 2008, 2).

As stated above, the enormous wasteful consumption of water that is required for mining activities generally reduces and pollutes the water table around the site drying up wells and springs that could have been used by a community for irrigation or as drinking water. Water usually ends up being contaminated by the acid drainage due to the air and water exposure of the acids formed in certain types of ore – particularly sulphuric acids – as a result of mining activities, which in turn react with other exposed minerals (World Rainforest Movement 2008, 21). A self-perpetuated dumping of acid toxic material is also generated and this can go on for hundreds or even thousands of years. These small particulates of heavy metals that with time separate from the waste are disseminated by the wind, landing on the soil and in the beds of watercourses and slowly integrate the tissues of living organisms, humans included.

In short, mining can be considered a short-term activity with long-term effects. Mining comes along with its promise of wealth and jobs, but there are millions of people throughout the world who can testify to the high social costs that mining brings, such as the appropriation of lands belonging to the local communities, impacts on health, alteration of social relationships, destruction of forms of community subsistence and life, social disintegration, radical and abrupt changes in regional cultures, displacement of present and/or future local economic activities. All this is added to the hazardous and unhealthy working conditions of this type of activity. Mining accidents are well known throughout the world, the most recent tragedy in New Zealand in 2010 claims truth to that.