By Fernando Cabrera Diaz
2 September 2009
El Salvador’s ruling FMLN party is considering a ban on precious metal mining in response to public opposition to perceived environmental degradation. The government of El Salvador has not issued mining permits for two years, and as a result is now facing two arbitration claims before the International Centre for Settlement of Investment Disputes (ICSID).
In August ICSID registered a claim by Commerce Group Corp., a company based in Milwaukee, Wisconsin, and its affiliate San Sebastian Gold Mines. The Claimants contend that El Salvador revoked its mining permits without justification, and in violation of the Dominican Republic-Central American Free Trade Agreement (CAFTA-DR).
A similar claim by the Vancouver-based Pacific Rim was registered by ICSID in June. Pacific Rim claims that Ecuador violated CAFTA-DR by refusing to grant exploitation concessions and environmental permits after it had met the necessary requirements.
Pacific Rim is seeking in excess of the US$77 million it claims to have invested in El Salvador since 2002, mostly in its El Dorado Gold Mine project located in the north-central department of Cabañas. In a press release, the company charges: “Despite strong local support and the inclusion of carefully engineered and reliable environmental protections for the proposed El Dorado Mine, the Government has not met its responsibility to issue the Enterprises the permits necessary to advance the project to the final step of full production.”
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