Uruguay: On The Path Of Mega-Mining

By José Elosegui

Uruguay has historically been a country rooted in agriculture and livestock. Nevertheless, the arrival of mining megaprojects is laying bare the government’s intentions and weaknesses along the winding road toward a new production venture, which was ratified with the reform of the Mining Code in the Lower House of Parliament — the Chamber of Deputies — on Sept. 14.

In 2011 alone, the Uruguayan government granted permission for mining prospects and exploration on 1 million hectares, which is several times the annual average allowed in the last decade. The commitment by the ruling Broad Front party to diversify the domestic productivity model, move forward in industrialization and promote foreign direct investment in the mining sector seems clear.

According to the National Directorate of Mines and Geology, Uruguay has given prospecting and/or exploration concessions in several of the country’s departments for minerals like gold, silver, iron, copper, zinc, nickel, platinum, manganese, palladium, rhyolite, diamonds, tin, titanium, rutile, ilmenite, molybdenum, magnesium, cadmium, antimony, vanadium, lithium, kimberlite, zirconium and lead.

Many minerals are extracted, but the ones that stand out are those used in the cement industry. Nevertheless, it is necessary to highlight also the mining concessions for gold, silver, copper, zinc, and iron, and within this, gold mining. It is the mineral that carries the most weight in the country’s exports, according to information from the government web portal Uruguay XXI.

The country’s president José Mujica, in a speech before Parliament March 1 marking his first year in government, highlighted that foreign investment, particularly in mining, “will in turn boost other economic sectors generating direct and indirect employment.”

But it was the open-pit iron mining project by Aratirí — which belongs to Indian multinational Zamin Ferrous — with an investment of around US$2 billion and the threat of gigantic craters in the middle of the country, that stirred the political, economic and social hornet’s nest.

Clashes over the project
The Aratirí project generated resistance and support in the area where the firm established itself, as well as heavy fighting between ruling and opposition politicians and even the emergence of the Movement for a Sustainable Uruguay.

Environmentalist María Selva Ortiz, of REDES-Friends of the Earth Uruguay, told Latinamerica Press the large-scale mining “threatens the traditional agricultural base of domestic production. In most countries in the region, large-scale mining occurs in areas with poor soil or in deserts, but Uruguay will be one of the first cases on fertile land.”

Last June several Aratirí technicians acknowledged that cattle should be kept for safety reasons at least 3,000 m-4,000 m away from where the company is operating.

Ortiz said that “mega-mining is socially and environmentally unsustainable, and is also incompatible with environmental rights in Uruguay.”

In early August, Aratirí announced that its project in Uruguay was no longer a priority, and the government reacted with concern. Secretary of the Presidency Alberto Breccia urged “not to take it out on investments,” while Labor Minister Eduardo Brenta told the weekly newspaper Voces that “iron will give us a production revolution.”

The political turmoil caused by the company’s decision led to the Uruguayan administration to convene a multipartisan commission, comprised of government officials and members of all political parties in Parliament, to define the country’s mining strategy. The commission met for the first time on Aug. 12 and set a deadline of 60 days to reach a decision.

In parallel, and in reaction to the Aratirí Project, since last year there has been a debate in Parliament over a bill to reform the 1982 Mining Code. The initiative, approved Sept. 14 by the Chamber of Deputies, must now be enacted by the president; it includes several points that, according to the government, look to develop the mining industry, bringing the country more wealth through mining, and that mining integrate harmoniously into domestic production system.

Still, the most important — and contentious — part of the reform is the increased fee that the companies must pay the state. Until now, the fee was 5 percent of the value of the mineral at the time of extraction. With the approved changes, companies would pay 5 percent of the export value of the product, which is significantly higher.

Minister of Industry, Energy and Mining Roberto Kreimerman said that the reforms will facilitate the arrival and work of companies that are willing to take the risk in the prospecting and exploration stages.

Resistance to mining
Uruguayan organizations grouped under the Movement for a Sustainable Uruguay — which emerged in response to the arrival of Aratirí in the country and unites farmers, trade unions, researchers, academics, and neighborhood associations, among other actors — warned that the new Mining Code will concretize Uruguay’s opening to large-scale mining. They recognize though that the reform also includes measures to protect the environment and raise the fees paid to the country from the mining firms.

Although part of the trade union movement, like the National Union of Workers in the Metal and Allied Trades (UNTMRA), believes that Uruguay should develop mining, the union’s Secretary General Marcelo Abdala told newspaper La Diaria that strict care for the environment, greater state ownership of the extracted resources, the development of industrialization process so as to not only export those resources, as well as improved working conditions, should be ensured.

Meanwhile, Mónica Castro, a leader in the Federation of Civil Servants of the National Administration of Fuels, Alcohol, and Portland [Cement] (ANCAP), told Latinamerica Press that it “is not possible to consider the development of mega-mining as something good for the people.” She argued that “the only thing this development guarantees is the return on capital” and that “there is no tax on the revenues of those who take our natural resources.”

Castro warned that Uruguay is signatory to numerous investment protection treaties with other countries, which large mining firms could use against the state. Finally, the unionist lamented that what “is not taken into account are the rights of future generations, which will no longer have what capital is now taking away, and will suffer the environmental consequences of its predatory practices.”