Foreign aid to mining firms

As excavators, heavy haulers and chemical treatment plants dig made-in-Canada mines around the world, Ottawa has taken new steps to ease growing criticism of Canada’s extractive sector.

The Harper government recently announced a publicly funded agreement between three of Canada’s mining giants and three of Canada’s leading non-governmental organizations (NGOs). The agreement, which marks a significant shift in how mining and politics mix, elicited little more than a yawn from the media. But a closer look reveals this partnership is transforming Canada’s aid landscape — with disturbing implications.

‘The Canadian government is using aid to support the expansion of Canadian mining...[and"> to determine development paths inside countries according to the logic of mining companies,’ Yao Graham of Third World Network Africa, a research and advocacy organization based in Ghana, told The Dominion. Graham has seen many communities in Africa ravaged by the exploitative labour practices and lax environmental practices that often accompany mining megaprojects.

In the first phase of this new program, the World University Service of Canada (WUSC) has partnered Rio Tinto Alcan; Plan Canada is paired up with IAMGOLD; and World Vision Canada has joined forces with Barrick Gold. This new funding approach raises some serious ethical and political questions about the role of NGOs, and constitutes a veritable PR coup for a mining industry that has racked up quite the rap sheet of environmental and human rights abuses.

Critics argue that under this new dispensation, industry can counter resistance to its activities by claiming that its presence has brought development to impoverished communities. Cash-strapped NGOs, in an era of shrinking government funding for international development, have found a funding niche. Last but not least, the Canadian government is able to deflect demands for more stringent — and potentially profit-damaging — controls over one of its most lucrative industries.

In the past, while NGOs were bound by financial ties to the state, they still had some nominal autonomy to bear witness to that abuse. Now, they are increasingly tied to government funds earmarked to further Canada’s mining interests, topped up by money from the mining industry itself.

‘When a mine goes in, there is a development deficit created immediately because there are impacts that can last literally thousands of years on water, on land, on the air,’ said Catherine Coumans of MiningWatch Canada. ‘And these impacts can be devastating. It can mean that people literally have to leave that area and live somewhere else because they can’t live there anymore.’

Coumans, who has kept a watchful eye on this evolving relationship, argues that whatever project an NGO gets up and running in one of these mining communities cannot even begin to redress the damage caused by the mining company’s presence there. She calls the NGO presence at mining sites ‘a Band-Aid on a gaping wound.’

Chris Eaton, the Executive Director of WUSC, sees things differently. He argues that this closer working relationship between NGOs and the mining sector will be an opportunity for organizations like WUSC to ‘nudge along good practice.’ He is confident that WUSC’s role in building the capacity of local government to engage with mining companies will reap greater benefits for local people.

Plan Canada, another beneficiary under the new government initiative, did not return our calls. Plan Canada will receive $5.7 million from the Canadian International Development Agency (CIDA) to fund activities relating to IAMGOLD’s mining activities in 13 communities in Burkina Faso.

Plan Canada could be in for a rough ride. Last May, IAMGOLD had to close down operations at its Essakane mine in Burkina Faso due to labour unrest. The company’s CEO, Steve Letwin, warned that he would not tolerate an ‘illegal’ strike ‘and as they will find out, will not tolerate anything that has a negative impact on our stakeholders.’

Given Plan Canada’s stated commitment to ‘work in the best interests of children and the communities in which we work’ will they be prepared to risk their multi-million dollar funding to speak out in protection of their ‘stakeholders’ — namely the communities in which they work — should labour unrest become an issue there?

For the Canadian government, this new troika is simply the latest step in a long process of prying open the door on the planet’s mineral wealth to the benefit of the extractive industry. The last decade saw the Canadian government provide technical and financial support to create industry-friendly mining codes around the world. The Canadian Network on Corporate Accountability documented how government initiatives in Colombia and Tanzania have translated into weaker environmental and social safeguards, reduced royalties for the host countries and new tax holidays.

Canadian cash, technocrats and know-how have also been involved in rewriting mining codes in Malawi, Ghana, Mali and the Democratic Republic of Congo (with, in this last case, civil war as a backdrop). All this has led to rising profits for Canadian companies and dwindling revenues for host countries.

Now that many official hurdles to access to overseas mineral wealth have come down, the government has turned its attention to partnering NGOs with mining firms. At the local level, this kind of agreement is cause for suspicion.

The Canadian government is turning its back on a deeper examination of the structural problems in the relationship between First World mining firms and Third World resources, says Third World Network’s Graham, instead opting for what he calls a ‘palliative’ approach. “It’s a way of sidestepping the need for companies to pay more revenue because they can say, ‘We are doing so much for the community. Why do we have to put more into the central treasury?’”

The mining industry’s dismal reputation is its Achilles heel. Concern about its poor track record overseas is growing — even the mainstream media is starting to take note.

Despite the clarion call from Canadians to put guidelines and mechanisms in place to keep the industry in check, the government has opted for optics instead. ‘The Canadian government is very anxious about the reputation of mining companies and instead of accountability, it is putting money into projects that show that mining leads to development,’ said Coumans. In her view, it is now taxpayers that are footing the bill to polish a tarnished corporate image.

‘CIDA has always worked government-to-government,’ said Coumans. ‘Now what CIDA is doing is channelling Canadian taxpayer money directly to the mine site and basically paying for corporate social responsibility projects, and that is very bizarre.’

MONEY IN MINING
WUSC-Rio Tinto Alcan project
Total budget: $928,000 over 3 years
CIDA: $500,000
WUSC/Rio Tinto Alcan: $428,000
Rio Tinto net profit in 2010: $726,000,000

Plan Canada-IAMGOLD project
Total budget: $7.6 million over 5.5 years
CIDA: $5.7 million
Plan Canada: $0.9 million
IAMGOLD: $1 million
IAMGOLD gross profit in 2010: $597,000,000

World Vision-Barrick Gold project
Total budget: $1 million over 3.5 years
CIDA: $500,000
World Vision/Barrick Gold: $500,000
Barrick Gold net profit in 2010: $3,279,000,000

Source: Canadian International Development Agency, Sedar.com

Eaton insists that WUSC’s work is about community empowerment, not corporate social responsibility (CSR) projects. ‘I don’t think the government should be funding NGOs to do the CSR of mining firms, and I don’t see ourselves doing that in the context of this initiative,’ he said.

In the swirl of controversy around this corporate shift in government aid policy, one thing is clear: the Canadian mining sector has emerged the big winner.

Last year the Canadian mining sector led a successful lobby effort to defeat Bill C-300, the Bill that would have seen the introduction of minor controls on the unregulated overseas activities of Canada’s mining industry.

Now, this same powerful sector has access to even more government funds as well as NGO know-how to help revamp its public image. Little wonder the Mining Association of Canada recently issued a press release encouraging the federal government to continue its support for Canada’s CSR Strategy. It knows a good thing when it sees it.

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* This article was first published in The Dominion.
* Roberto Nieto is a Montreal-based independent journalist and activist who has worked for unions, and as an organizer in support of migrant workers. He is a regular contributor to Amandla!, Canada’s longest running African current affairs radio show. Gwendolyn Schulman is co-founder and co-host of Amandla!
* Please send comments to editor[at]pambazuka[dot]org or comment online at Pambazuka News.