High price of gold encourages mining in El Salvador

The price of gold went above $700 this week. Gold is approaching its all time high, and some analysts expect the price to stay high.

As the price of gold has climbed, so has the economic incentive to pursue gold mining in El Salvador. This can be seen in the increasingly frequent announcements by gold mining companies of progress in their exploration of the Salvadoran countryside. Pacific Rim, a Canadian company with the largest operations in El Salvador announced this week "the best hole drilled yet" on its El Dorado project. Silver Crest Mines reported progress on its El Zapote project. Intrepid Minerals reported on a "promising new prospect" and plans to increase activity throughout 2006.

My view of gold mining in El Salvador:

Gold mining is not inherently evil
. Let's face it -- El Salvador has few enough natural resources or other sources of wealth and if gold may be a way to improve the fortunes of the country then it should be explored.

Environmental costs must be accounted for and mitigated. El Salvador has no track record of protecting the environment or effective regulation of industries like gold mining. No gold mining should proceed unless there can be assurances that water will not be polluted, nor land contaminated with the waste created by gold mining.

Revenues from granting gold mining concessions must be used to improve the situation of the rural poor in El Salvador
. Just generating money for El Salvador is not a sufficient reason to proceed. The money must be funneled into those sectors of society that need it the most. Rural El Salvador needs major improvements in potable water, health care and education.

Unfortunately, my prediction is that El Salvador will permit gold mining to go forward, environmental impacts will be ignored, and the money from mining will serve to increase, not decrease, the gap between rich and poor in the country.


El-Visitador said…
A well-researched post bearing excellent news. Tim, thanks for the write-up.

The El Dorado project alone will generate 340 direct jobs. Well-paid mining jobs, mind you. Jobs that will result in thousands of kids being able to go to school, and in additional jobs for pupuseras, small merchants, etc. 340 jobs San Isidro, Cabañas.

Frankly, I don't give a hoot if the rich get richer (other than the fact that anyone getting richer gets soaked by our income tax, resulting in extra money for... schools, for instance).

But I am ecstatic about 340 new jobs in our rural area. Even the prospecting is already generating jobs: Intrepid dug 27 trenches totalling 566 meters... and I am fairly sure they didn't bring very many Canucks to dig trenches.

For people with a US-centered view of the world: think 340 less emigrants to the US.

And 340 direct jobs is one project by one mining concern! We are talking about thousands of new direct jobs if all three companies' investments in our country pan out!

Everyone should be happy. Even if some are not.
Anonymous said…

Good news? Thousands of kids being able to go to school? You are not being so honest about the reality in EL Salvador. Frankly, you sound cynical. You don't sound ignorant, just dishonest and cynical. Obviously your mind is twisted to the "right" and that is reflected on your comments especially when you "frankly" admit "I don't give a hoot if the rich get richer." - thank-you for your comment, but shame on you!

Do you honestly believe that all these big corporations like Cuscatlan, Banagricola, Banco Salvadoreño, Banco de Comercio, Agrisal, Grupo Poma, Grupo de Sola y Grupo Hill, etc. etc, are "soaked" by income tax? Do you honestly believe they report ALL of their income, when they control most of the government's institutions? I don't think so, especially because I know that they are part of the oligarchy behind ARENA, and it's no surprise for anybody how corrupt the ARENA party is and to whom they serve.

I hope you are joking about the 340 less emigrants to the US, if not, let me say this: let's assume 340 less people won't leave the country in one afternoon, fine, big deal... but what about the thousands that will flee the country on the other 364 days of the year? 340 new jobs! big deal uh? You've got to be kidding! How about creating real jobs for the 55% of the total work force in the country which by the way is informal?

Unfortunately, there are no warranties of benefits much less prosperity for the people who need it the most in the way El Salvador is being governed and particularly in this kind of projects that at the end we all know it will be the same old déjà vu: "the rich will become richer, and the poor will become poorer", and unfortunately, NOT El Salvador, but the ARENA government will permit gold mining to go forward.

But, What about the water contamination caused by mining? What about the diseases caused by such contamination? Who will pay for the medical bills resulting from treatment of those diseases? If right now we have children dying because of diarrhea, can you imagine what's going to happen when people working in those mines and people living nearby start getting diseases caused by such contaminations? What about the tons of waste? like we don't have enough people living in the middle of trash in many neighborhoods in the city, without mentioning the countryside...

Take a look at this: Three-quarters of gold comes from developing countries
For every gold ring made, there are 18 tons of waste. Between 1995 and 2015, roughly half the world's gold will have come from people's lands, much of it without their consent. Source: Cafod.

You can read the rest of this article here:

Anonymous said…
In which country enviromental issues and the 'gap' have been taken into account? Even in the USA this industry is chaotic for the enviroment.
What utility could have the resources of a country if it does not know like operating them or transforming them into wealth?
Tim said…
To Anonymous:

You are quite correct in pointing out the environmental and social consequences of gold mining. But do you rule it out absolutely? Oil is another type of industry extracting minerals with environmental consequences. Is Hugo Chavez wrong to have an enormous oil industry which generates revenue, but also pollution, when he uses the revenue to develop health centers and provide housing in poverty stricken areas of Venezuela? (I'm not a die-hard fan of Chavez, but maybe you are).
El-Visitador said…
I really should ignore anonymous, but I'll bite:

"Do you honestly believe that all these big corporations [...] are "soaked" by income tax?"

Well, someone paid $530.6 million in income taxes in 2004, and it sure wasn't the pupuseras and jornaleros; whereas the middle classes probably paid a disproportionate share, you had better have hard data proving that "the rich" failed to pay income taxes.

Source: page 55, Note 2 to Cuadro No. 8

I'll say this: anonymous seems to be more consumed with envy of "the rich" than concerned about the creation of 340 direct jobs in San Isidro, Cabañas.
Anonymous said…
el-visitador's comments sound like he lives in the USA, or he has some money in his pocket!

Very young mind!!!

Anonymous said…
El Salvador is in the gutter already, so let them gold miners rape the lands! Hell, if it isn't them then it will be the infinite amount of "luxury" housing projects that'll take it's place. If none of these do, then count of the government for building another badly planned road to ruin the environment. Say farewell to El Espino, Planes de Renderos,San Isidro Cabañas, etc. Because predation is here to stay.

... 340 jobs, who'll take those jobs? What will happen to those families that are removed from their lands? Is the environmental impact that unimportant to even consider it? 340 TEMPORAL enslaving jobs, that will displace hundreds more. Also, atop of that, I do wonder on what conditions do these miners work in, do they benefit from the same privileges as the maquila workers?
Tim said…
To the anonymous posters:

I share your sentiments about the problems of gold mining for the environment, but what is your proposal to help elevate the conditions of the poor in the country? If gold cannot be mined under any circumstances, and hotels cannot be built on the coast, and roads cannot be built, how do we expect to have the resources to provide the healthcare, build the schools, and feed the hungry?

Isn't the better approach to acknowledge that El Salvador has certain resources and exploit them for the benefit of all Salvadorans, insisting on environmental protections, safe working conditions and decent living wages? I sincerely doubt that the current government could ever accomplish this, and maybe that is reason enough to oppose gold mining and similar activities.

El Visitador's 340 jobs are not a sufficient reason alone to give carte blanche to mining interests, but suppose you could have 340 jobs with tough environmental safeguards and measures to eliminate any adverse impact on surrounding landowners?
El-Visitador said…
"What will happen to those families that are removed from their lands?"

What planet is this guy from?

In El Salvador, no-one gets "removed." You can SELL your land, if you consider it advantageous. You do not have to sell that which you do not wish to sell. A free country, and all that jazz, you know.

"340 TEMPORAL enslaving jobs"

Enslaving jobs? In El Salvador, there is no slavery. If you elect to work at any given job, it is because you think getting that job is better than an alternative job, or even no job. But taking a job signals you think you are better off!

Temporary jobs? Sure. All jobs are temporary. Some of these projects are expected to last 10 years. So what? Someone will find silver in the next hill, so you can work another 10 years. And so on. And by then, you will have raised a family, sent the kids to school, the whole deal. What's there not to like?

And can we drop the pretense this is about 340 jobs, please? 340 jobs are coming from ONE SITE.

There are 37 prospecting licenses, and Tim's research revealed that at least some of the prospects have 3 or 4 SITES...

Gentlemen, we are talking thousands of DIRECT jobs, plus many many more jobs to be created when the miners buy pupusas, shoes, school supplies, clothing, phones...
Hodad said…
1. mining gold causes long term environmentaldegradation
2. Chave, Castro, ARE fans of mine, Cubans are the most educated Latinos,
Chavez,Cuba, Mexico are the 1st to show up at the natural disasters I have been involved in for the past 30 years in Latinolandia,Mex,Sal,Guate,Nica Costa Etc.]
3.only few really make the big bux w/ AU,
4. Salvador has other resources on the land and subsequent space other than mining gold,
5. 340 jobs, yes but..... seems lots of valid points are argued, but the best is the assured trickle down of any positive aspects for 'la gente'
because they are the most valuable resource El Salvador has, the labour, they just need guidance and supervision
6. mine gold, if it is there, it is needed mainly as a conductor, but do it RESPONSIBLY and look at the effects of same in New Guinea first it is documented, even in Nat.Geo.
7. anything to create jobs in El Salvador is good, just be fair to the worker,

Anonymous said…
Tim, is there data available about the track record of the particular companies that are applying to mine the gold? What is their record for being responsible about protecting the environment and the water supply? With your skills at digging up information, this data might put to rest some of the arguments raised on this issue. Keep up the good work, enjoy your blog.
Anonymous said…
A few observations:
1. about the 340 temporary jobs- this number includes about 100 highly-skilled jobs (chemists, geologists, etc) that will almost certainly be awarded to foreigners. That leaves only 140 temporary jobs for a community of about 10,000, and those jobs require handling cianide, using explosives, and working in the underground tunnels.
2. The El Dorado project is expected to use 104 liters per second of water, which amounts to some 327,970,000 L per year. As anyone who knows of the water situation in El Salvador can attest, this is a very significant fact.
3. Although the mine will only operate for 10.2 years, contamination of the watershed with the chemicals used could take 500 years or more to be repaired. Look to the past accounts in other countries, notably Canada and the US.
4. El Salvador mining law requires that only a pitiful 1% of the profits go to the nat'l gov't, and another 1% to the local municipality. http://www.asamblea.gob.sv
Pacific Rim expects to gross $43.6 million. It seems hard to argue with a straight face that mining is going to bring wealth to the country, let along help the situation of the poor.
5. Pacific Rim does not hold insurance coverage for environmental damage or pollution, but admits that “Mining operations have inherent risks and liabilities associated with possible pollution of the environment and with the disposal of waste products occurring as a result of mineral exploration or the production of metals from producing mines." Much of this information and more about the project is available in Pacific Rim's own company documents (Prospectus, Pre-Feasibility Statements, etc) that are available at www. sedar.com.
Hope this helps the discussion...
Tim said…
Thanks. That's some good data.
Anonymous said…
Tim, what's your best guess now that we're full-swing in the 2009 election season whether the permits will be granted, imagining each party wins. Does it make a difference who wins? Thanks for your insight!
Unknown said…
You Are A Stupid Motherfucker to Think. THIS GOLD MINING.... Will in Anyway Benefit Our Country..2 say The Least. All it is Going to Do is Enslave us More Than we Have Already Been for Decades.... El Salvador is Rich in Other Natural Resources Other Than Gold That will & Can Provide Numerous of Jobs & Employment For Our People.... & Benefit The Land As Well... You're Clearly A Dumb Ass, by the comment u Made.....For Example just to Name A Few .. Hydro Electric power, Geothermal power, Petroleum Gasoline/Oil, Arabel Land, Mineral Mining, Also goods Like Coffee, Sugar, Vegetable oil, Leather Goods, Cement , & Cotton... 340 People from El Salvador Are Better Off Preying To God!!!. TO HELP YOU BETTER UNDERSTAND THE KEY 2 HAPPINESS.. IS NOT ALWAYS.... Revenue & Riches but More Important....LOVE & PEACE Which funny Thing is Both Are FREE. Have a wonderful Day.....ignorant