Haiti might be “poorest country in the
Americas,” but it is also sitting on a gold mine.
New Prime Minister Laurent
Lamothe says he’s banking on the wealth in Haiti’s northern
mountains to lift the country out of poverty, but if history is
any guide, the mining of gold, silver and copper hidden in the
hills will mostly benefit foreign shareholders as it scars and
pollutes an already denuded and fragile landscape.
While a handful of farmers earn
$5 a day building mining roads, and while journalists talk up
one or two drilling sites, quietly and carefully a Canadian
company, Eurasian Minerals, has been buying up licenses – 53, to
be exact – and cutting backroom deals, perhaps with the
assistance of a high-ranking former minister now on the payroll.
The deals are so good for the
mining companies, and so bad for Haiti, that the head of Haiti’s
state mining agency recently denounced them in an exclusive
interview with Haiti Grassroots Watch (HGW), calling on his
government to either right the wrongs or “leave the minerals
underground and let future generations exploit them.”
“Mines are part of the public
property of the state; they are for the population,” said
geologist Dieuseul Anglade, who was then head of the Bureau of
Mines and Energy (BME). “They aren’t the property of the people
in power, or even the landowner.”
Eurasian and Newmont Mining,
its partner and the world’s Number 2 gold producer, are also
drilling illegally in one area – La Miel, in the northeast – in
collusion with certain government officials.
Haitian law differs from many
other countries. It is more bureaucratic, but it also insures a
modicum of protection up front. In order to drill – even for
exploration – companies must get a mining convention signed by
the prime minister and all the ministers. This convention sets
the terms for any eventual mine.
Eurasian and Newmont are
currently waiting for final approval of a new convention that
covers a huge amount of territory – about 1,350 square
kilometers of land. But the convention has not yet been signed,
partly because for most of the past 12 months, Haiti has been
without a prime minister.
“We are ready to drill,” Newmont’s Daven Mashburn said about the La Miel region in late
2011. “Because the government of Haiti doesn’t really care… we
can’t advance our licenses, and that means people can’t get
But the new government does
care. Not long after that interview, the licenses did advance,
although not in a legal manner.
“The government gave them a
kind of ‘waiver’ while they are waiting for the convention to be
signed,” explained Ronald Baudin, Haiti’s former Finance
Minister (2009-2011, prior to that he was Director General of
the ministry), who oversaw negotiations with Eurasian while
serving in the powerful position. “The government is conscious
of what damage they are doing to the company. They have camps
all over the country, with important logistics, and they are
blocked because the convention can’t be signed.”
Baudin, who left office when
the new government of President Michel Martelly took over in
2011, is now a paid consultant to the Eurasian-Newmont
partnership – called “Newmont Ventures.”
But a Memorandum of
Understanding (MOU) cannot trump the law. There’s no such thing
as a “waiver” to legislation.
“There is what is called a
‘hierarchy of law’ and according to the hierarchy, an MOU is
weaker than a law,” Haitian attorney Patrice Florvilus
explained. “An MOU cannot annul a law. It cannot allow something
which a law does not allow.”
The head of the state mining
agency – the BME – did not sign the MOU, nor did his office even
receive a copy, according to a source inside the BME.
“I didn’t agree with it for the
sole and simple reason that if the law says you can’t do
something, you can’t do it!” Anglade explained in an interview
on May 24, 2012.
One of the first official acts
of the new Lamothe government was to remove Anglade from his
post, perhaps in part because he refused to sign the MOU.
Anglade, 62, had worked at the BME for almost 30 years and had
been its director for most of the last 20. He has a reputation
for being honest.
Despite Anglade’s refusal, the
MOU was signed by the then-ministers of Finance and of Public
Works in late March, and Eurasian happily reported to its
shareholders on Apr. 23 that “[t]he joint venture is allowed to
drill on certain selected projects under the MOU, and drilling
is currently underway.”
Eurasian and Newmont know the
law and, according to a May 25 correspondence with HGW, appear
to believe Anglade signed the document. But he didn’t.
Anglade also disagrees with a
mega-mining convention that will likely be signed soon. After
three months of waiting, Haiti finally recently got a new prime
minister, Laurent Lamothe, who has pledged to make the country’s
laws more business-friendly.
According to Anglade, the final
version of the convention – which he rejected in a formal letter
to then-President René Préval and then-Finance Minister Baudin –
is much weaker than Haiti’s two, smaller existing mining
conventions (for 50 square kilometers each) because key
protective clauses have been removed.
Article 26.5 – in previous
conventions – set a cap on the expenses a company can claim at
60% of revenues. Now it is gone, according to the former BME
chief. “That means, the company can claim expenses up to 90% !”
A second clause was also
removed, he said. Article 26.4 assured profits are split 50-50
between the mining company and the government.
“During two years of
negotiations, my position was clear,” said the 62-year-old, who
has been a public servant his entire life and who also teaches
math at Haiti’s State University. “The BME did not agree to
taking those two things out. That happened at the cabinet level,
at the Finance Ministry… They had meetings and they took them
out, but we didn’t agree. It was a minister who took them out:
Asked about the convention, Baudin said he could not speak about the details. But, he
claimed, “today we have a text that has received the consensus
of the company, the BME, and the ministers of Public Works and
Not according to Anglade.
“There is nothing in the world that would make me take those
articles out,” he said.
Public Works Minister Jacques
Rousseau was Anglade’s superior. His ministry oversees the BME
and has the pending convention. Rousseau has refused five
requests for an interview; therefore the absence of the
protective articles in the document cannot be confirmed. Still,
Anglade swears that the measures are missing. Meanwhile, the
illegal MOU is public, and Baudin is openly on Newmont’s
“I want the nation to be
clear,” Anglade explained when still in his post. “We here at
the BME are not responsible for all the things that give the
company an advantage.”
When Baudin was asked about the
potential conflict of interest of having served as Finance
Minister and then immediately afterward becoming a consultant to
Newmont, he did not flinch.
“I know that in other countries
when you finish in public service, there is a period of time
during which you do not have the right to work in the private
sector, but in that case, you get compensation,” Baudin said.
“We don’t have that legislation. I have not received one gourde
[about 2 US pennies] since I left, and I have to eat, right? I
have to clothe myself.”
What’s in Haiti’s hills?
Why would Newmont, Eurasian, and others
wait for years to get a convention signed and break Haitian law
with an 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 mined and another 141.8
million to go.
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 one-tenth of
Haiti's territory, more than any other company.
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 three
northern departments, 15% of the country’s territory.
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.”
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
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$5.4
billion at today’s prices) and 2.3 billion 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 spread out as tiny specks in the
dirt and rock – what is sometimes called “invisible gold” –
expensive and destructive 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
the 251-square kilometer Yanacocha open pit mine, one of the
world’s largest. 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 U.S. State Department
employee ended up on the Newmont payroll. The company was also
accused of mercury and cyanide spills.
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 29, Newmont had yet
not decided on its course of action, but an Apr. 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% of whom were
subsistence farmers, according to the Environmental News
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 use 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 exposed.
“Mines can cause big problems
for the environment,” Haiti’s former Environment Minister
Yves-Andre Wainwright noted in a recent interview.
While serving in the
mid-nineties, Wainwright signed both of the existing mining
conventions. An agronomist by training, he 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
prospecting phase.” The hills are also home to tens of thousands
of farming families. But no Environment Ministry personnel has
been seen at mine sites, according to Haitian community radio
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 Finance
Ministry. 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. 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% 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
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.”
Haiti coming in last in the “royalties
How much money will come in, and when?
Recent articles have cited all kinds of promising figures, but
they leave out the fine print regarding the existing
conventions, and do not even mention the pending convention.
Also, no matter how good
the convention, aside from the up-front fees, any eventual mine
would likely not start paying revenues – taxes and royalties –
until five or even ten years down the road, because that’s how
long it takes to build a pit mine, and because companies are
allowed to depreciate their equipment first, delaying the move
from being “in the red” to “in the black.”
Newmont’s Daven Mashburn
confirmed that “it could easily be a decade. It usually takes a
decade to get these things going.”
“It’s likely that a big mining
company may declare losses year on year, even for ten years, if
cost deductions are too generous and there is little control,”
mining tax and royalties expert Claire Kumar confirmed in a
recent interview with HGW. “We see this happen all the time.”
A Christian Aid researcher who
authored the 38-page report Undermining the Poor – Mineral
Taxation Reforms in Latin America in 2009, Kumar said
Haiti’s two small existing (and about to be supplanted)
conventions sound good, since they promise a 50-50 split of
profits and put a cap on expenses.
What’s not so good, Kumar
noted, is Haiti’s royalty rate – 2.5%. According to Kumar and to
a recent news reports, the rate is one of the hemisphere’s
“A 2.5% royalty share is really
low,” Kumar confirmed. “Anything under 5% is just really
ludicrous for a country like Haiti. You shouldn’t even consider
it. For a country with a weak state, the royalty is the safest
place to get your money. There is room for manipulation by the
company, but it’s not as big as you would think.”
Haiti’s royalty rate has yet to
catch up with what mining investors lament as a “royalties race”
and “resource nationalism.” In its annual Business Risks
Facing Mining and Metals report released last August,
accounting and investing firm Ernst & Young put “resource
nationalism” at the “top of the business risk list.” The agency
said that in late 2010 and in 2011, it counted 25 countries that
had or were threatening to hike royalty rates.
Many of those raising gold
rates recently are in Latin America. Ecuador now charges between
5 and 8%, Peru can get up to 12%, and Brazil is threatening to
raise its rate also. Last August, Venezuela went a step further
and nationalized its gold mining industry.
Writing about “resource
nationalism” in March, Reuters concluded “[it] has left mining
companies few options other than to venture into ever more
politically risky territory, including restive parts of
Africa”... or Haiti.
But with a royalty rate of
2.5%, a 10,000-soldier strong UN blue helmet force stationed
throughout the country, and indications that new mining
conventions will be more advantageous to foreign companies, the
risks there are likely lower than in recent decades.
Indeed, Majescor CEO Dan Hachey
applauded the 2011 election of President Martelly, saying,
“Martelly has stated that [Haiti] is open for business. We’ve
seen a lot of change since he’s been elected.”
The revolving door that landed
ex-Finance Minister Ronald Baudin on the Newmont team might be
one reason for the change. While still in power, he agreed to
deals like a cost-free, 50-year lease of land to a French
company in the north.
“We didn’t rent it – we made it
available to them,” Baudin said. “Because, when there is
something that is good for the economy, the government has the
obligation to encourage it.”
Haiti’s new prime minister –
Laurent Lamothe – is also very pro-business. A
telecommunications and real estate entrepreneur with companies
in Africa and Latin America, he has pledged to push through
business-friendly legislation in all sectors, including mining.
“Information on our national
reserves indicate that our land is rich in minerals and that now
is the right time to exploit them,” Lamothe said in his policy
speech before the Senate on May 8.
Lamothe also promised to change
mining law. In a recent interview with the Associated Press,
Lamothe pledged the new law would assure “the right portion
comes to the state” and that it also protects the environment
and local communities. But, he hedged, the new legislation would
do so "[a]s much as possible without hampering also the revenue
of the party, allowing them to do business."
Even before Lamothe took
office, Anglade told HGW he is aware of the move to change the
existing law. “I should tell you that the companies are doing
all kinds of lobbying to get the law changed so that it gives
them more advantages,” he said. “But they have too many
Can a government whose motto is
“Haiti is open for business” and which is staking its bets on
assembly factories and a $5-a-day minimum wage (the lowest in
the hemisphere) be trusted to protect the country’s interests?
Mining giants have consistently
managed to negotiate highly profitable contracts even when going
up against much stronger states. What guarantee do Haitians have
that pro-business Lamothe will negotiate a better deal than
governments in Peru, Ghana, or other poor countries?
The potential for mining
revenue and even some low-paying jobs sounds good to many in
Haiti, where most people have to survive on less than $2 a day
and where un- and under-employment tops 66%. But is mining the
answer to Haiti’s woes?
For Laurent Bonsant, a Canadian
mining contractor working for Newmont Ventures in the north, the
answer is “yes.”
“The one thing this country
needs is something to export,” he said as he supervised a site
where a team was drilling 24 hours a day for core samples 330
meters down. “They got nothing. If mining can do any good, it
will do good here.”
But Haiti has several exports,
and more importantly, in the past, mining has not done much
In recent decades, foreign
companies mined bauxite and copper. Tens of thousands of
families lost their land, thousands of hectares were deforested,
and in some cases, land was poisoned. [See sidebar: Haiti’s
Grim History of Being “Open for Business”.]
Professor Alex Dupuy, Chair of
African American Studies and John E. Andrus Professor of
Sociology at Wesleyan University, is highly skeptical that the
new ventures will produce results much different than their
predecessors. Even though Haiti is no longer controlled by a
dictatorship as ruthless and corrupt as that of the Duvaliers,
there is little transparency, and no apparent means of auditing
or controlling local and foreign investors.
“I think the same thing is
going to happen,” said Dupuy, author of Haiti in the World
Economy – Class, Race and Underdevelopment, in a telephone
interview with HGW. “The mining industry doesn’t employ a lot of
people, and the local ones it will employ will be unskilled
labor. The cadres will come from overseas because usually these
companies come with their own technology.”
“As in the past, they will
expropriate peasants’ land. So, it will be the same thing, all
over again. The contracts being signed will be what the foreign
company wants, not necessarily what is in the best interests of
the country, even if they present it to the public as something
that is good for the country.”
Guatemala – a country socially,
economically and politically similar to Haiti – thought mining
could “do good” there, too, and let Goldcorp open the Marlin
Mine. But in 2010, the Inter-American Commission on Human Rights
called on the government to shut it down temporarily due to
health, environment, and human rights risks. A 2011 report by
mining experts associated with Tufts University recommended that
Guatemala significantly change the rules of the game: demand
higher royalties and other revenues, assure better environmental
protection and cleanup, and guarantee some monies reached host
“Without good governance and
productive investment, the local legacy of the Marlin mine could
well be ecological devastation and impoverishment,” the authors
Anglade is worried something
similar could happen in Haiti, where government control is
virtually nil. For example, although it is illegal to cut down
trees, freshly sawn wood is stacked for sale in marketplaces all
over the country. Today Haiti’s tree cover is just 1.5%.
Up north, many of the farmers
who might have benefitted by leasing their land to mining
companies sold out long ago to savvy land sharks and businessmen
associated with previous mining ventures in Grand Bois, a
Eurasian site. Over a dozen families now farm land they no
Anglade remembers well. “When I
heard that was happening, I went up there myself, to tell people
not to sell, because there was gold in the land,” he said. “But
Today, the poor families who
still farm those lands as tenants, and hundreds of their
neighbors, are worried about pollution and about being kicked
off their plots. Last year, over 200 families were ousted from a
nearby fertile plain to make way for a new free trade zone which
the Martelly government inaugurated.
In one region, Newmont has done
some “social works,” according to Anglade. The company built a
small bridge, a road for its all-terrain vehicles, and paid some
school tuitions. Farmers are still nervous.
“They say the company will need
to use the river water for 20 years, and that all the water will
be polluted,” worried farmer and peasant organizer Elsie Florestan, who lives near the Grand Bois site. “They say we
won’t be able to stay here.”
“The small group of people
who’ve gotten jobs are in favor of mining, but that’s 50
people!” added the 41-year-old, a member of Haiti’s Tèt Kole
Ti Peyizan (“Small Peasants Working Together”) peasant
movement. “If we don’t organize and make some noise, we’ll be
completely pushed aside,” she warned.
Florestan and other farmers
have been watching mining crews take tens of thousands of
samples from every hill and dale for years, all across the
“They don’t even ask you who
owns what land,” noted peasant organizer Arnolt Jean, who lives
in Lakwèv, near the Dominican border. “They come, they take big
chunks and put them in their knapsacks, and they leave. All of
us are just watching. We need a government that controls what is
going on, because we don’t have the capacity to do that.”
In his community, people have
been panning for gold and digging their own tunnels for
generations. A day’s or week’s work might result in nothing, but
it might also bring up to $50 worth of gold, although Dominican
buyers usually pay only about half market price. Still, with
most families too poor to even send all their children to
school, many take to the hillsides with picks and shovels and to
the rivers with pans once they have planted their crops. The
landscape is pitted with holes. The rivers run brown with mud.
“Our country is poor, but what
is underground could make us not poor any more,” Arnolt said.
“But since our wealth remains underground, it’s the rich who
come with their fancy equipment to dig it out. The people who
live on top the land stay poor, while the rich get even richer.”
Produced in partnership with Haïti
This investigation was made possible in
part by a grant from the Pulitzer Center on Crisis Reporting.
Haiti Grassroots Watch –
– is a partnership of AlterPresse, the Society of the Animation
of Social Communication (SAKS), the Network of Women Community
Radio Broadcasters (REFRAKA), community radio stations from the
Association of Haitian Community Media and students from the
Journalism Laboratory at the State University of Haiti.