What’s in Haiti’s hills?

Published 30 May 2012
Part 2 of 4 parts

Why would Newmont, Eurasian and others wait for years to get a convention signed, and break Haitian law with a "Memorandum of Understanding (MOU)?

If geologists’ calculations are correct, Haiti’s northern mountains contain hundreds of millions of ounces of gold. With gold prices currently topping $1,600 an ounce, one estimate puts the eventual take at $20 billion.

The Pueblo Viejo mine, just across the Dominican border in the same “mineralization belt” that runs across the island, has the largest gold reserve in the Americas. It has already produced 5.5 million ounces of gold and contains at least another 23.7 million. It’s also rich in silver: 25.2 million ounces already and another 141.8 million to go.

Aerial view of the Pueblo Viejo mine, which is slated to start up production
again in late 2012.
Photo: Ben Depp

With Haiti's apparently vast reserves (and weak government), it is no wonder mining behemoth Newmont partnered with Eurasian, which is headed by a former Newmont executive. Eurasian, via its local partner Marien Mining, controls various kinds of licenses for more of Haiti's land than any other company: the equivalent of one-tenth the country’s territory. 

Eurasian Minerals says the area in green is an "area of interest."
From: Eurasian Minerals website

A small Haitian-American mining venture – VCS and its local partner Delta Mining – has or until very recently, controlled, licenses for over 300 square kilometers in the north; Canadian explorer Majescor and its Haitian partners are sitting on licenses for another 450 square kilometers. Taken together, foreign companies are sitting on research or exploration permits for one-third of Haiti’s north, 15 percent of the country’s territory.

The feet of Antonio Sylvestre, a farmer who worked for VCS in 2010
when the company was doing test drills in Morne Bossa. The concrete
marker indicates a drill site.
Photo: Ben Depp

Majescor is ahead of its rivals, having recently moved to the “exploitation” phase for one if its licenses. But VCS and Newmont/Eurasian are close on its heels. All of the companies recognize Haiti’s potential.

“Haiti is the sleeping giant of the Caribbean!” a Majescor partner said recently, while Eurasian president David Cole boasted on a radio show: “We control over 1,100 square miles of real estate.”

Eurasian Minerals CEO David Cole in a video posted on the Eurasian website.

An investor who calls himself a “mercenary geologist” wrote: “It is obvious there is substantial geopolitical risk in Haiti. But the geology is just so damn good.”

The geology is good. One small Eurasian site alone – the Grand Bois deposit – appears to contain at least 339,000 ounces of gold (worth about US$5,400 million at today’s prices) and 2,300 million ounces of silver.

But the geology is not cheap.

Pit mines on the horizon

Because in most locations the copper, silver and gold deposits are mostly spread out as tiny specks in the dirt and rock – what is sometimes called “invisible gold” – expensive pit mining will often be the only option, but Eurasian’s partner Newmont knows its pits. The gold giant opened the world’s first pit mine in Nevada in 1962 and later dug in Ghana, New Zealand, Indonesia, and other countries.

In Peru, Newmont runs one of the world’s largest open pit gold mines: the 251-square kilometer Yanacocha mine. Not long ago, Newmont was accused of influence peddling there when it was linked to former Peruvian spymaster Vladimiro Montesinos. After allegedly assisting Newmont negotiate favorable terms, a former US State Department employee ended up on the Newmont payroll. The company was also accused of mercury and cyanide spills.

A view of part of the Yanacocha mine, near Cajamarca, Peru. Photo: Euyasik

Undaunted, Newmont recently embarked on an effort to open a second mega-mine nearby – called the Minas Conga – but so far, farmers, environmentalists, and local authorities have fought back with massive protests and in the courts. Last month, a government-hired panel of European experts tasked with studying the plans, told Newmont it would not be allowed to drain two high Andes lakes for the new mine.

As of May 28, Newmont had yet not decided on its course of action, but an April 27 Associated Press story quoted Newmontʼs Richard OʼBrien as saying “if the $4.8 billion project cannot be developed ‘in a safe, socially and environmentally responsible manner’ while also earning shareholders ‘an acceptable return’ Newmont will ‘reallocate that capital to other development projects in our portfolio’.”

Newmont has had problems in other countries too, more recently Ghana. The “Ahafo South” mine is located in a farming region known as Ghana’s “breadbasket.” So far, it has displaced about 9,500 people, 95 percent of whom were subsistence farmers, according to Environmental News Service.

In addition to forcing farmers from the land, Newmont poisoned local water supplies at least once, by its own admission. In 2010, the company agreed to pay US$5 million compensation to the government for a 2009 cyanide spill that killed fish and polluted drinking water. Newmont conceded proper procedures were not followed, and that its staff also failed to properly notify Ghanaian government authorities.

While welcoming the possible benefits well-built and -supervised mines might bring to Haiti, Anglade and other Haitian experts are worried that a pit mine, which would likely use significant amounts of cyanide to recuperate gold from ore and dirt, could be dangerous to Haiti’s already fragile environment.

In the neighboring Dominican Republic, a government-controlled gold mine caused so much contamination that the region’s rivers still run red as rain releases metals from the ore left lying about.

Acid run-off from mining tailings has killed plants and wildlife in and
around the Pueblo Viejo site.
Photo: Ben Depp

“Mines can cause big problems for the environment,” Haiti’s former Environment Minister noted in a recent interview with HGW.

While serving in the mid-nineties, Yves-Andre Wainwright signed both of the existing mining conventions. The agronomist by training noted that, in addition to his heavy metal worries, some of the areas under license are “humid mountains,” meaning they play “an important biodiversity role and need to be protected, starting in the prospection phase.” They are also home to tens of thousands of farming families. But no Environment Ministry personnel has been seen a mine sites, according to community radio journalists.

Farmer Antonio Sylvestre walking down from Morne Bossa. Farmers' fields
and fruit trees fill the plain, known as "Plaine du Nord" or "Northern Plain."

Photo: Ben Depp

Finally, what concerns Wainwright, as well as Anglade and other observers, is the likely incapacity of Haiti’s “weak state” to control the mining companies and the potential environmental damage.

“We have competent staff at the Mining Bureau, but they don’t have the means to carry out their jobs,” Wainwright said. “All the money that comes in from the sand mines, and other mines, goes straight to the Ministry of Finance. Therefore, even though it is a sector that makes money, the BME is impoverished.”

Wainwright’s assessment appears correct.

An audit of BME vehicles shared in January showed that of 17 vehicles, only five were in working condition. Twelve were out of service. And with a budget of about $1 million, the BME is also strapped for human resources. Only one-quarter of the 100 employees have university degrees. Another 13 percent are “technicians.” The rest are secretarial and “support” staff.

“The government doesn’t give us the means we need to be able to supervise the companies,” Anglade confirmed in an interview while still head of the BME. “Most of our budget goes to salaries. We don’t really have an operating budget.”

The World Bank’s private sector investment arm – the International Finance Corporation – has invested $5 million in Eurasian’s Haiti explorations. The bank says Eurasian and Newmont have good track records, but it also knows about mining’s potential negative impacts. Bank representatives said they recognize the challenges facing Haiti’s government and other “weak states.”

“Often the host country government doesn’t have a lot of capacity, especially on the environmental and social aspects,” Tom Butler, IFC’s global head for mining, explained. “[But] one thing we don’t do is get into telling the government what to do with the money it receives.”


End of part 2 of 4 parts

Read part 3 – Haiti lags in the “royalties race”

Read Haiti’s Grim History of Being “Open for Business”

Return to the Introduction