Antofagasta: the Goliath which is crushing Caimanes

“All the biggest companies at the top of the international rankings in Chile are English,” Lucio Cuenca tells me. “Not just Antofagasta, which was originally Chilean but now has offices here in London, but also Anglo American, Glencore, BHP Billiton…” An engineer by trade, Cuenca is now director of the Latin American Observatory of Environmental Conflicts (or OLCA, by its Spanish abbreviation), a Santiago-based NGO which monitors environmental conflicts and provides assistance to communities affected. But the main purpose of his visit to London was to attend the Antofagasta AGM, on the invitation of London Mining Network. Antofagasta is one of Chile’s largest mining companies and is still 65% owned by the powerful Luksic family.

“We’ve identified three types of connection with England,” he continues. “One is the direct presence of the companies. The second relates to investment funds that are supporting projects, particularly in Chile. And the third relates to English public pension funds that are investing in Chilean mining companies.” As an example of the latter he cites the Tyne and Wear Pension Fund (TWPF), a pension fund for local government employees in the northeast of England, which invested in the Sociedad Química y Minera de Chile (SQM). SQM, a giant lithium and fertiliser producer, is currently embroiled in a major corruption scandal in Chile, having paid bribes to dozens of politicians and their family members via a fake invoicing scheme. The scandal touches figures from across the political spectrum, including key allies of both current president Michelle Bachelet and her predecessor Sebastian Piñera. ”It has been a huge blow to the Chilean political system,” says Cuenca.  

What’s more, SQM also has obvious links to the dictatorship, its main shareholder being Julio Ponce Lerou, the billionaire ex-husband of Veronica Pinochet Hiriart, daughter of Augusto Pinochet. Ponce Lerou has form: in 2014 he was fined $70 million by Chile’s securities regulator for illegal share trading, the largest single fine the body has ever imposed. “This is a serious situation,” says Cuenca. “One would hope that those who administer workers’ pension funds would be more careful about what they do with the money, no? Because in this case they obviously opted for the worst company in Chile, in mining, to make money.” The strategy has clearly backfired: TWPF is currently suing SQM in the United States for more than $4.4 million in losses it claims it incurred as a result of SQM’s financial irregularities.

Mining influence

What about Antofagasta? Have they been using their power in a similar manner? “One of their strategies,” says Cuenca, “is to develop high-level political influence in the government and in parliament.” As an example, he relates the case of Jorge Insunza. Appointed as Michelle Bachelet’s chief-of-staff in 2015, he was forced to resign after less than a month in the job following corruption allegations relating to his time at the head of the mining commission in the Chilean congress. “While in this job he voted with the right, despite being of the left, to block tighter water regulations,” says Cuenca. “He blocked a bill which aimed to regulate mining companies’ water use, and now we know that for five, six years, through a company he owns, he received around $4000 a month for non-existent services (…) And that money was paid by Pelambres [Antofagasta].” Insunza remains under investigation in Chile for bribery, conflict of interest and tax fraud.

Sugar coating

I ask about Antofagasta’s corporate social responsibility (CSR) strategies. “They’ve been ‘improving’ their intervention strategy,” Cuenca says, “but we’ve known what they are like since the beginning, when the strategy was just to pay people off. They’ve since added strategies of social support, support for small economic activities. Now they’ve got this approach they call shared value, where they try to somehow involve the community in the project in some way, depending on its needs (…) But consultation, real consultation, doesn’t exist. In other words, what they are doing is a process of induction to the project for the community (…) There’s a process of citizen participation, but it’s just formal, it isn’t binding. The community doesn’t participate in the decision making.” In short, such strategies appear little more than window dressing, sugar coating for a pill which communities will find themselves obliged to swallow whether they like it or not.

And behind the slick façade of CSR campaigns, Antofagasta’s community relations policy has another, more sinister element to it. As Cuenca says, “At the level of the communities, they have a very aggressive strategy to deactivate any situation of conflict. As far as that goes, they have no scruples about using whatever means are necessary.” The emblematic case of this in Chile is that of Caimanes, a small township around 250 km north of Santiago, close to the Pelambres mine. Pelambres is a highly strategic asset, being one of the largest copper deposits in the world. For Cuenca, “The foundation of the mining power of the Luksic group is the Pelambres project.”

A disaster waiting to happen

The 14-year old conflict between the local community in Caimanes and Antofagasta relates primarily to El Mauro, Latin America’s largest tailings dam. The region is highly susceptible to earthquakes and residents argue that the dam is unsafe – a claim upheld by the Chilean Supreme Court in 2014, when it also ordered Antofagasta to return the community’s waters. This decision was then ratified by a court in Los Vilos in 2015 when it ordered El Mauro’s demolition. Antofagasta ignored both rulings, and in 2016 obtained a ruling from the appeals court of La Serena annulling the demolition order. The fact that a regional court in northern Chile is able to overrule a legal decision based on a ruling by the highest court in the land is illustrative of how severely the Chilean legal system has been compromised by powerful interests.

Caimanes residents fear a disaster similar to that which occurred in Brazil in November 2015, when the village of Bento Rodrigues was completely destroyed following the collapse of the Fundão tailings dam. “They’ve spent a lot of money paying people off,” says Cuenca. “But also on applying pressure, so people decide to give up the fight. And they’ve also been able to rely on state repression. A few years ago the community blocked access routes to the mine in 13 places. And of course, the government sent in the police. There were confrontations, use of shotguns, people got hurt…in short, they use any means necessary.”

Diverting the water

Aside from the possibility of a major environmental disaster, the other main point of conflict between Caimanes and Antofagasta relates to access to water. Not only did Antofagasta divert the river which once flowed through the Valle del Choapa – the valley in which Caimanes is located – they also appropriated underground water flows to build the El Mauro dam. As a result, the river in the town is now completely dry and 80% of the water in the valley has been lost, which has all but destroyed local agriculture. “In recent years we’ve had drought,” says Cuenca, “and people began to experience water shortages, there was no water for agriculture – but Minera los Pelambres never had any problems with water, despite being a major consumer.” What’s more, the remaining water has been contaminated, displaying high levels of toxic metals such as molybdenum, nickel and mercury. Those who can afford to get their drinking water from elsewhere – but there are many people in Caimanes who have been drinking water unfit for human consumption.

I was in Caimanes in November, conducting research and interviews for LAB’s Voices of Latin America Project, and was struck by the apparent hopelessness of the situation. The community has been split down the middle. Some residents have prospered, having accepted money from Antofagasta and opened businesses providing goods and services to the mine, while others have raised black flags up outside their houses and persist with the long and complex legal battle against Antofagasta. But after so long, the resistance is increasingly weak and their options appear to be running out. Cuenca agrees. “It’s a wretched situation,” he says. “It’s a traditional community, a peasant community, which has been profoundly damaged (…) In this fight between David and Goliath, Goliath is in fact crushing David. There are some very heroic people, who keep up the fight out of very deeply-held convictions, but the company has destroyed the town socially and culturally, they have broken it into a thousand pieces (…) And today there is no chance of this damage being repaired.” So what will happen to the people who remain in the community, who can’t afford to move away? “There are people who’ll carry on living there,” he replies. “They will adapt to the conditions that the company has imposed, the so-called security measures, the supply of water by lorries (…), but at the end of the day it’s a community, and as a community, it’s been destroyed, totally destroyed, with all the pain which that signifies.” LAB will publish Voices of Latin America in 2017, including a chapter on mining, and interviews from Caimanes. Together with War on Want and the London Mining Network, LAB is beginning work on another major publication: Overburden – Community Resistance to Mining in Latin America, by Tom Gatehouse, to be published in 2019.