Blood and Gold on Algamarca Hill

Blood and Gold on Algamarca Hill

By Milagros Salazar

ALGAMARCA, Peru, (IPS)

7th May 2007

While two companies are disputing a hill rich in gold in the extreme northwest of Peru, more than 3,000 informal sector miners are working there without the most basic safety or environmental protection measures.

The hillside is dotted with the blue, yellow and red plastic roofs of the miners' tents and shacks. The miners' settlement on Algamarca hill is a 15-minute drive from the village of the same name, home to 200 families, in the province of Cajamarca.

The court that is to determine which company will keep the 26 concessions in dispute is to hold its first hearing this month. But both Sulliden Shahuindo, a local subsidiary of the Canadian corporation Sulliden Exploration, and the Peruvian-Panamanian group Las Algamarcas are prepared to appeal the decision and fight to the last, spokespersons from the firms told IPS.

Meanwhile, the two firms have hired private security guards to watch over what they both regard as their property. The informal miners, who have their own armed guards, are facing off with the companies. Their "chief of security", Juan Álvarez, says he has a team of 14 men, and adds that "We have permits for all of our weapons."

"As farmers we were earning virtually nothing. That's why we are now mining. We are defending what gives us our livelihood," says Ángel Chávez, who works as a "chancador", splitting the big slabs of rock removed from the shafts into chips which are later mixed with cyanide and mercury in tanks.

On the weekends, heavily guarded four-wheel-drive trucks drive up to the foot of the hill or into the centre of the village to buy gold. According to a report by the presidency of the council of ministers, to which IPS had access, a monthly average of 125 kgs of gold is sold this way in the area.

Sulliden and Las Algamarcas have been fighting since 2002 for the right to 26 concessions covering an area of 7,982 hectares, including five hectares on Algamarca hill. According to exploration work carried out by Sulliden, the mines hold an estimated 1.5 million ounces of gold and 35 million ounces of silver, worth some 1.5 billion dollars.

"That hill is no man's land," says César González, the attorney for Inversiones Minera Sudamericana, part of the Las Algamarcas group. "People have died there, and pollution is a problem. We have protested about all of that, but in reprisal, the informal miners burnt down our guard house." Meanwhile, farmers in the district of Chuquibamba, a two-hour drive from the hill, are opposed to all mining activities in the area. "We don't want any kind of mining, neither large-scale nor small nor informal, because we don't want them to pollute our rivers," Walter Marquina, mayor of Chuquibamba, told IPS.

Marquina is also the organisational secretary of the "rondas campesinas" -- unarmed legally-recognised vigilante groups set up to protect the community's land and livestock.

On Jan. 16, farmers from nine villages around Chuquibamba stormed the hill, destroyed 36 cyanide and mercury tanks, and "captured" seven miners who they turned over to the police, according to the report by the council of ministers.

Even the miners themselves are divided. In early March, a worker from Algamarca was killed, apparently by miners from Huamachuco, a community in the neighbouring region of La Libertad. Juan Sánchez told IPS that the dead man's fingernails and teeth had been pulled out.

After the murder, the miners from Algamarca ran the men from Huamachuco out of the area. "There was no reason for the local miners to continue sharing the mineral with people from another region," said Sánchez, a miner from Algamarca.

The opponents of informal mining speculate that dozens of people have died as a result of handling toxic products without the necessary safety measures. But according to the council of ministers report, only the deaths of three miners from that cause have been confirmed. "This case demonstrates two things: the absence of the state and poverty. No one is keeping order in the area, and the people living there are prepared to work in an activity that jeopardises their own lives, to feed their families," said Catholic priest and environmentalist Marco Arana, director of the Group for Training and Intervention for Sustainable Development (GRUFIDES).

A study published this month by the General Office on Environmental Health reported that large concentrations of arsenic were found in the areas near the mining operations. The concentration of arsenic is also two times the maximum limit established by Peruvian law for irrigation and livestock in Chupalla River, one of the tributaries of the Condebamba River, which provides water to the farmers of Chuquibamba.

The results of the study were released on Apr. 10 in the second meeting organised by the Cajamarca provincial government, which since March has been attempting to broker a solution to the conflict between miners and farmers.

Taking part in the talks are informal miners, farmers from Chuquibamba, members of the "rondas campesinas", local authorities and central government officials. However, representatives of the mining companies involved in the dispute are not participating in the negotiations.

The traditional mining industry in Algamarca was brought to a halt in the 1990s by the presence of the Maoist Sendero Luminoso (Shining Path) guerrillas.

In the face of the insurgent threat, the owners of the concessions sold their shares to the two firms that make up the Las Algamarcas group: the Peruvian-owned Algamarca, and Exploraciones Algamarca, made up of 90 percent Panamanian capital. In November 2002, Las Algamarcas sold the 26 concessions to Sulliden Shahuindo, a subsidiary of the Québec-based Sulliden Exploration, for 4.13 million dollars. A few weeks later, the majority shareholder status in Las Algamarcas changed hands, and the new administration refused to honour the contract with Sulliden, questioning whether a sale on that scale would have been arranged with a subsidiary that only had 10,000 dollars in initial capital.

After a string of takeovers, the new majority shareholder in Las Algamarcas ended up being Ohana Overseas, a company registered in Panama and owned by Orlando Sánchez, heir to the Sánchez Paredes family, one of the wealthiest families in La Libertad. Peruvian authorities have found that the family has links to the drug trade.

Besides the court proceedings, an arbitration panel ruled in favour of Sulliden in July 2006 -- a decision that was appealed by Orlando Sánchez's group, which questioned the impartiality of the members of the panel.

The president of Sulliden Shahuindo, Javier Fernández ######, told IPS that what Las Algamarcas did was "common practice" among mining companies, which "refuse to honour contracts in order to later force the purchasing company into new negotiations, with a greater investment."

On the other side of the fence, lawyer José Abanto Verástegui, general manager of Exploraciones Algamarca until April, retorted that Sulliden "has no solid arguments, which is why it is trying to discredit the company in the eyes of public opinion by invoking the Sánchez Paredes family's past."

One of the companies making up the Las Algamarcas group got the prosecutor's office to hand over to it gold confiscated by the police from the informal miners, until the court hands down its verdict. The council of ministers report cites speculation that the companies may be providing the miners with chemical inputs -- an allegation that is denied by the firms involved in the dispute over Algamarca hill.