Canadian company leaves dust and debt after abandoning its gold mine in Panama

Cecilia Rojas, a resident of the small Panamanian village of Coclesito, is angry. She wants her cash, and she wants it now.

It’s been nearly three years since she worked as a seamstress, cook and cleaner at the Molejón Gold Mine near her village, but today, insists she’s still missing several months of pay.

It’s a lump sum that adds up to nearly $US 6,000, she says — a small fortune for a labourer in a Central American country where the average salary is less than $US 700 per month.

The Molejón Gold Mine was a short-lived operation of Petaquilla Gold, a wholly-owned subsidiary of the Vancouver-based Petaquilla Minerals Ltd. It shuttered in 2013 amid dropping gold prices and a rise in fuel costs, and was abandoned altogether in 2015, leaving a pile of gravel and rusting equipment in its wake.

That was the last year of Rojas’ employment there. A stout woman in her 40s, she says her story is not unique.

"When the mine started, everything was good, they would hire anybody,” she explains from her small white house near the Coclesito River. “But the banks also came here to offer us loans. Now, we don't have a job anymore, but we have debt.”

Her concerns add to an onslaught of complaints facing Canadian mining companies with operations around the world, that have prompted calls for a new human rights watchdog in Ottawa with powers to crack down on the extractive sector. The Trudeau government is poised to deliver on a 2015 election promise to create this human rights ombudsperson and has confirmed that it will make an announcement within weeks.

But it is not yet clear whether this watchdog will have full investigatory powers.

M​issing money and unreturned messages

Coclesito, a village of roughly 2,000 people living 200 kilometres east of Panama City, is rife with tales of former mine workers still waiting for their bread and butter. According to the Ministry of Labor and Workforce Development in Panama, Petaquilla Gold has failed to pay US$11 million in wages and employee benefits to more than 600 employees since the mine was closed.

"Some comrades lost their car, their house, even their spouse," Eric de León, general secretary of Panama's mining union (SITMAP), told National Observer in an interview at his office in Panama City. "When somebody faces financial issues, the home is the first thing affected.”

When the Molejón Gold Mine started commercial production in 2010, it brought with it the promise of jobs and prosperity for Coclesito. But it was quickly mired in financial and environmental problems, many of which continue today.

Before the mine started operating, Panama's environmental authority (ANAM) fined Petaquilla Gold nearly $US 2 million for environmental degradation, as roughly 80 per cent of the area's forest cover had been lost. The fine was later annulled by Panama's Supreme Court, but ANAM has also determined that Molejón's tailing vats contained levels of cyanide, mercury and other heavy metals above accepted operating limits.

“When the tailings ponds were spilling, fish were dying,” recalls Rojas, who worked at Molejón for a total of eight years. “But we had to shut up to keep our job.”

Petaquilla Gold has previously denied that it spilled cyanide into any local water systems, but ANAM detected evidence of the mine’s sediments in local waters. The company’s spokesman, Jorge Obón, agreed to an interview for this story over the phone, but failed to return subsequent calls to arrange a meeting in Panama City.

Petaquilla Gold's website is no longer operational, but it keeps a small team of security guards at the shuttered mine to perform basic facility maintenance. In April last year, Panama’s labour ministry found those workers extracting gold illegally without taking proper health and safety precautions — although spokesman Obón has refuted those accusations in local media reports.

ANAM has since been replaced in Panama by a new ministry of environment, but that ministry could not be reached for comment.

Where is the Canadian company?

Meantime, the company's Canadian parent, Petaquilla Minerals Ltd., is seldom seen or heard from. It was delisted on the Toronto Stock Exchange in March 2015 for failure to file financial statements on time, as it faced a $1-million lawsuit from a local law firm over unpaid legal bills.

The Vancouver-based company's website is under construction, and the phone number and email it provided on the SEDAR database are no longer in service.

Richard Fifer, CEO of Petaquilla Minerals, did not respond to a request for comment on Facebook as he faces charges in Panama of withholding Petaquilla Gold's social security contributions to the national government, worth $US 3.1 million. He is also charged with withholding contributions of $3.3 million through a second company, Panama Desarollo Infraestructura, SA.

Fifer is scheduled to stand trial in Panama on April 2 this year, and is not permitted to leave the country.

A former provincial governor in Panama with Panamanian and American heritage, Fifer was arrested in Colombia in February 2016 with help from Interpol. He was wanted as part of an investigation into fraud to the detriment of another Canadian company, Gold Dragon Capital Management​. No allegations have been proven in court.

And while Fifer waits for his day on trial, hundreds of former mine workers like Rojas are still waiting to get paid. Their concerns about the mine are exacerbated by the rainy season, which usually lasts until the end of December, and has brought the levels of seeping and spillage from the mine site to new heights.

Glenn Miller, a professor of natural resources and environmental science at the University of Nevada, classified the ghosted Molejón Gole Mine as "one of the poorest-regulated mines" he's ever seen and a "nightmare, particularly in a tropical country."

"With metres of rain falling on the mine site, the only realistic management option is to treat and discharge the water into a surface stream which flows into the Carribbean," he told National Observer in a phone interview.

"But treatment is very expensive, and I do not know if that option is available. Previously, they have pumped the tailings water to the pit, but now the pit is apparently full. They will ultimately need to discharge these mining-affected waters into the rivers."

Panama's new ministry of environment, whose communication officials did not respond to multiple requests for comment, have recently said that there is no cyanide in the waters near the Molejón Gold Mine. In a December interview to Radio Panamá, Minister Emilio Sempris told reporters that there is no risk in shallow waters:

"We measured the cyanide levels in the ponds until a depth of six metres, and we didn’t find any presence of this compound. The water we pumped to the pit is rainwater.”

The Panamanian government paid US$1.7 million for the rehabilitation of the mine’s tailings ponds walls in July 2015.

"The wildlife is already coming back on the site. This is the best recovery indicator of the area,” said Sempris.

Canada considers crackdown on companies

Despite the ministry's reassurances, accusations of environmental and human rights breaches continue pile up against Petaquilla Minerals, and other Canadian companies operating around the world.

Meantime, Canada's government continues to work on its own plan to create a new watchdog that would crack down on the behaviour of Canadian companies abroad with respect to human rights.

During their 2015 election campaign, Justin Trudeau's Liberals promised to create a human rights ombudsperson for the overseas extractive industry that could potentially bring companies to task for allegations of abuse.

Canada is home to nearly 75 per cent of the world's mining companies. As it stands, two mechanisms exist in Canada for conflict resolution and remediation within the industry — the National Contact Point (NCP) and Extractive Sector Corporate Social Responsibility Counsellor. Both rely on the voluntary participation of companies, however, and over the years have been heavily criticized for overlapping roles and alleged ineffectiveness.

To help address these challenges, civil society groups have called on Trudeau's promised ombudsperson to be independent of government; have the resources and authority to conduct thorough investigations; make public recommendations for remedy and harm prevention; and be able to monitor the implementation of those recommendations. He or she must also have the discretionary ability to summon testimony and documents from mining companies, they say.

International Trade Minister François-Philippe Champagne has yet to make an announcement on the ombudsperson, but his spokesman, Joseph Pickerill, confirmed news will be coming soon. He would not confirm what kind of powers the new office would have, but hinted that it would include a "robust investigative mandate."

"We have been actively engaged with the full range of stakeholders interested in this important file," Pickerill said in an emailed statement to National Observer in December. "That is one of the reasons we have taken the time with them necessary to effectively address our commitment to create an independent ombudsperson's office, one with both an advisory and robust investigative mandate.

In a follow-up statement in January, he said the ombudsperson announcement will be "in the next couple of weeks."

Coclesito to face brand new copper mine

Coclesito, meantime, isn't done with mining, even if the Molejón Gold Mine is no longer in operation. Next to the defunct project lies the infrastructure of an upcoming copper mine — made possible by a $60-million sale of Petaquilla's nearby copper deposit rights and a number of its concessions to the Toronto-based First Quantum Minerals Ltd. in May 2014.

Called Cobre Panama — and run by Minera Panamá, SA (in which First Quantum holds an 80 per cent interest) — it's the largest open-pit copper development project in the country. Its concessions add up to 13,600 hectares across four zones. First Quantum estimates the mine will begin commissioning at the end of 2018.

Asked if First Quantum is concerned with the reputation and charges against the mine's nextdoor neighbour, Petaquilla, the country manager for the company in Panama, Todd Clewett, decline to comment.

Complaints have already piled up against the Cobre Panama copper mine, and in March last year, a legal team filed a criminal complaint against First Quantum's Minera Panamá for allegedly preventing the free flow of Panamians around the mine site. A local newspaper reported that the company prevented the entry and exit of residents of more than five nearby communities — including Indigenous ones — all of whom must carry a card certifying their local residency, and only enter and depart between business hours on Thursdays and Sundays.

First Quantum, on behalf of Minera Panamá, rejected that version of events: "We voluntarily offered to our neighbours free transportation services across the site boundaries," said Clewett in emailed comments to National Observer. "For safety reasons, community members require use a badge to enter and travel through the site — just like any employee, visitor or contractor."

"Historically, communities near to Cobre Panama project have had their own path (walking or by boat) to their lands. No person is obligated to use our free services, indeed if they do not want to use our community transport they are free to get to their properties using their traditional paths.”

Minera Panamá has already signed six benefit agreements with communities that will have to be displaced for construction of the mine, El Capital reported. The local La Estrella de Panamá newspaper also reported that some relocations were underway. National Observer was not able to independently verify these reports.

Signs erected by the company on the only road to and from Coclesito praise the company's community involvement: scholarships, support for local businesses, construction of bridges and road paving. The company also plans to sell its excess power, generated at the copper mine, to the Panamanian state.

But residents of Coclesito have their doubts that Cobre Panama will bring them any more benefit that the Molejón Gold Mine.

"After 20 years of mining presence, we neither have paved roads, nor electricity, nor drinking water 24 hours a day,” said Carmelo Yangüez, a leader in the community's anti-mining movement, who lives in a green board house 200 metres away from Rojas.

Five months after he spoke to National Observer, the community received electricity in December 2017. Over the years however, Yangüez said mining companies have failed to deliver on big job promises for his village, since his village lacks most of the training and education they're seeking in their workers. While staff brought in from Chile, Peru and Canada, he explained, his people are relegated to low-paying tasks such as dishwashing, cooking, and cutting down trees.

"It worries me, because we don't have an extractivist culture," he told National Observer. "We don't have professionals that are sufficiently trained to enforce the law. The Ministry of Environment's employees do some adjustments, but the mining companies keep the same behaviour and are never really punished.

"There is no wealth that will prevent the destruction of the environment. We are in a protected area of the Meso-American biologic corridor.”

First Quantum said it complies with an Environmental Social Impact Assessment (ESIA) approved by the Panama government in 2012, and will do its part to ensure both environmental and human rights are respected at Cobre Panama.

"Our project is developed following international and national standards for human rights, labor conditions and environmental controls. In addition, the Cobre Panama project is frequently audited by the Panamanian government institutions like Labor, Commerce, Environmental, Health Departments and others,” he explained.

Meantime, the Environment Minister Sempris confirmed to local media that he's keeping an eye on the company: "One year ago, Miambiente [the ministry] implemented a monitory system including drone surveillance, so we are documenting the development of the mine with a team of young professionals, who have master’s degrees in environmental engineering.

"Petaquilla is a lesson that has been learned by our country, and now we want to send a clear message to the companies: we are supervising their activities. If somebody thinks he can run an old-fashioned project, he is wrong.”