The true cost of El Salvador’s new gold rush

On the afternoon of 17 May 2023, in the rural El Salvador state of Cabañas, Vidalina Morales’s mobile phone rang. It was her 33-year-old son, Manuel, but his voice sounded strange. “They have me here in the police station,” he said. He’d been arrested while playing football with friends on a local field. Morales tried to breathe. This had long been her worst fear: that her loved ones would be targeted on account of her work.

Morales, 55, is one of the most visible leaders of the Salvadoran environmentalist movement. About 5ft tall and slight, with long black hair wrapped into a sensible bun, she often wears the blouses and long skirts traditional to rural Salvadoran women. As the president of a development organisation in Cabañas called the Association for Social and Economic Development (Ades), she is also familiar with the halls of power. In March 2017, she and her colleagues, after years of activism, won a national ban on metal mining, the first such ban in the world. Mining posed an existential threat to the Salvadoran water supply. Worldwide, the industry often overrides local laws and regulations and leaves violence and environmental destruction in its wake. For Salvadorans, a ban was the only way to protect their resources.

But their victory may be short-lived: since El Salvador’s current president, Nayib Bukele, took office in 2019, there have been signs that the government is considering allowing mining again. In 2021, the administration created a special public entity to oversee extractive operations, and joined an international forum that advises countries on mining. These moves made Salvadorans fear that the administration would sacrifice natural resources in exchange for profit, and pushed Morales and her colleagues back into their old roles as national faces of resistance.

After she learned that the police had taken her son, Morales rushed to the station where Manuel was being interrogated. The officers accused him of being a gang member. “But you know me!” he protested. “You know where I live, you know my family!” It didn’t matter; they had whisked him to a regional police hub, further into the prison system, before Morales arrived. She admonished the inspector on duty for targeting Manuel. She later recounted that the inspector insisted that the police had a photo of him on file, as if that were evidence of some wrongdoing, and that people called him by a nickname, as if it must be a gang pseudonym. She knew many people who had been through similar ordeals of arbitrary detention; more than 70,000 Salvadorans have been arrested under exceptional measures declared by the Bukele administration in March 2022. Many of those behind bars have had no due process and may be in great danger.

Vidalina Morales.

Morales spent the ensuing hours raising the alarm in Santa Marta, the tight-knit rural community where she has spent her adult life. Her son’s detention was the latest in a string of high-profile arrests in the town. Four months earlier, five community leaders had been jailed, all of them environmentalists like Morales. One was her colleague Antonio Pacheco, the director of Ades; another, Saúl Rivas, was Ades’s legal adviser. After they were taken, cars with tinted windows and no number plates – locals later discovered they were driven by police detectives – began passing through the small community at odd hours. “Harassment,” Morales called it.

The five men were charged with participating in the murder of a woman in 1989, during the country’s civil war, when they were guerrilla fighters battling the Salvadoran military. The attorney general, Rodolfo Delgado, presented little evidence, beyond the testimony of an anonymous witness who admitted to having no first-hand knowledge of the three-decades-old murder. The charges were all the stranger because the Salvadoran government has long avoided investigating mass crimes perpetrated during the war, including the massacres and disappearances of thousands upon thousands of civilians in the 1980s. The vast majority of those atrocities, according to the United Nations, were committed by the Salvadoran military and police forces. Why investigate a single murder now? What did the state have to gain from incarcerating the Santa Marta Five, as they came to be known?

Morales and her Ades colleagues held press conferences and rallies declaring that they believed the men had been arrested for defending the environment. Others agreed. On 16 May, the UN condemned the arrests as an apparent “attempt to intimidate” those who campaign “against the negative impacts of mining,” and stated: “They must be freed.” The Bukele administration did not free the Santa Marta Five, as their supporters hoped. Instead, the next day they took a sixth prisoner – Morales’s son.

About 24 hours after he was taken, Manuel was freed without explanation. Morales was relieved, but she knew this made his case exceptional among the many innocent people arrested under the new measures. “The majority aren’t so lucky,” she told me in December, unable to finish the sentence without breaking down. The arrest of her son triggered past traumas – scenes from the hardest parts of the first battle against mining, beginning in the early 2000s when a Canadian firm, Pacific Rim, arrived in Cabañas and tried and failed to establish a goldmine in the region. Now that Bukele has rebuilt bureaucratic scaffolding for mining and locked up leaders who mobilised against it, Morales feels haunted by memories. She and her colleagues sacrificed so much to convince the politicians in the capital that mining was a disease that would consume El Salvador. Now, all their work may come undone, incurring incalculable losses for the land and its people.

Despite his human rights record, Bukele is overwhelmingly popular among Salvadorans. In February, he ran for a second term in office, in violation of the Salvadoran constitution, and retained the presidency with more than 80% of the vote. But Bukele’s hold on the country has a lurking vulnerability: the economy. The Covid-19 pandemic, which hit just nine months after Bukele assumed office, brought massive, unplanned expenditures – and also millions of dollars allegedly siphoned off by high-level officials. Beginning in late 2021, the administration spent hundreds of millions more state dollars buying bitcoin. It was behind on payments owed internally and externally. To get by, it has taken loans from a regional development bank called Cabei and raided Salvadorans’ pension savings, among other measures. But the government still has a dire need for cash. Around one in three Salvadorans are living in poverty.

A group of inmates, some of the 70,000 Salvadorans arrested since March 2022. Photograph: Anadolu Agency/Getty Images

Shortly after Bukele became president, multiple people who lived near the failed mining project in Cabañas claimed that outsiders, usually foreigners, were cajoling them to rent or sell their land, sometimes at inflated values. Two mayors in Cabañas reported in private meetings that they had been informed by the national export and foreign investment office, Proesa, that Bukele was bringing mining back.

In May 2021, Bukele joined the Intergovernmental Forum on Mining, which advises governments on industry best practices. “We are seeking to take advantage of the benefits that the IGF makes available to member countries for training and capacity building,” the Salvadoran minister of the economy, María Luisa Hayem Brevé, said in a press release. Five months later, congress, run by Bukele’s party, created a new public office for hydrocarbons, energy and mines, and subsequently allocated enough funding to support 140 staff. In its 2023 budget, the Bukele administration set aside $4.5m to “revise and modernise” the legislation on mining.

It’s not clear how much money the administration believes it would gain from metals including gold. But, according to past estimates, there are nearly 1.4m ounces of gold below Salvadoran ground. At the current value of more than $2,200 per ounce, this represents a hypothetical revenue of more than $3bn for whichever mining companies extract that material. Such firms leave a small percentage of their profits, typically 1% or 2%, to the host country as royalty payments. In cold financial terms, the enrichment for El Salvador would be nowhere near $3bn. And, as the environmentalists point out, the costs of mining are potentially catastrophic.

Neither the Bukele administration, Proesa nor the ministry of the economy responded to requests for comment.

In the early 2000s, Pacific Rim began searching for gold in Cabañas. Morales, Pacheco and the Ades team learned of the company’s presence after they heard whispers about outsiders showing up in remote villages. At first, it seemed to them that mining might be a good thing: the natural wealth of their country could be alchemised into better living for their people.

But the potential environmental problems with Pacific Rim’s plan quickly became apparent. Mines require high volumes of water to function, and El Salvador does not have enough potable water for its population’s needs, according to Andrés McKinley, a specialist in water and mining at the University of Central America in San Salvador. “Gold mining competes with the human being for an essential resource,” he said. There was also the matter of the cyanide that Pacific Rim would use to strip gold from rock. Even a minor spill would be disastrous. A common effect of gold mining is acid drainage, which occurs after split rock liberates dangerous substances that leach into the surrounding area, McKinley explained. The process is basically impossible to stop, and it renders the affected bodies of water unusable: no human consumption, no fishing, no raising animals, no watering crops.

In 2004, Pacific Rim submitted a report to the government outlining the impact of its proposed mine. To analyse the report, Ades hired an independent US geologist, Dr Robert Moran, with more than 40 years of experience. He found it inadequate and not transparent about real risks the project posed. Pacific Rim’s then-CEO, Tom Shrake, later said in a press release that the company would create “the single most progressive mine ever built in the Americas when considering environmental protections”. He promised that “any waters flowing out of the proposed mine will be cleaner than the waters flowing into” it. The company estimated that Cabañas had more than $1bn worth of gold, and, although Salvadoran law mandated that the company would only leave 2% of the profit to the government as royalty, a report that Pacific Rim commissioned from a former Salvadoran finance minister projected the mine would raise the GDP of Cabañas by 8.4% and drop extreme poverty by 23%.

Protest against mining at Santa Ana, El Salvador, on the border with Guatemala, in April 2023. Photograph: Anadolu/Anadolu Agency/Getty Images

In the meantime, Ades staff and other local leaders had alerted their neighbours, mostly subsistence farmers, to Pacific Rim’s plans. They began a nationwide education campaign that lobbied to protect El Salvador’s water. By 2007, a national poll found that 62.4% of the population opposed mining. In Cabañas, the growing support “gave us more strength,” Morales said.

Then the violence began. The first to disappear was Marcelo Rivera, who, together with his brother Miguel Angel, had founded a community organisation that often collaborated with Morales and Pacheco at Ades. On the evening of 17 June 2009, Miguel Angel and Marcelo sat at home strategising how to test local water before any mine was built to establish a baseline quality that the company would have to uphold. The next morning, they set out for separate meetings with plans to see each other later. Marcelo never arrived.

The Rivera family began their own investigation. A man told Miguel Angel that his nephew had seen Marcelo on a public bus the morning he disappeared. Finally, some days later, a neighbourhood shopkeeper phoned with a story she’d heard from a customer: that Marcelo had been the victim of a hired hit, and that his body was in a dry well in a village called Agua Zarca. The family reported the tips to the prosecutor in charge of the case, Rodolfo Delgado, who is now the Salvadoran attorney general. In late June 2009, a team of officials went to Agua Zarca with Marcelo’s family. The well was 100ft deep, and at the bottom, they found Marcelo’s body.

The police arrested a handful of local gang members, and before long, Delgado shared his theory that Marcelo was drinking with gang-member friends when a fight broke out, during which Marcelo was killed. The Rivera family roundly rejected that Marcelo would be casually downing beers with a gang. Delgado did not reply to a request for comment.

Pacific Rim said in a statement the company had no involvement in the murder. “Pacific Rim is saddened and outraged by the horrible death of Marcelo Rivera,” the statement read. “We have always respected the rights of Marcelo and all others to participate in the mining debate, which he did in a non-violent manner. Let us be very clear, the company has no knowledge of the crime … but welcome[s] any and all investigations.”

To this day, the state’s explanation is that Rivera’s murder had nothing to do with his activism, and places the blame for his death on gang violence.

In late July, just days after Rivera’s funeral, a journalist working at a community radio station, Radio Victoria, which closely covered the environmentalists’ struggle, received a threat. Isabel Gámez was alone in the office – the rest of the staff had gone to cover a municipal event – when the phone rang. She answered and heard a man’s voice say: “Isabel?”

“Yes, I’m Isabel, what can I do for you?” she asked.

“Ah, you ended up alone, mamita,” he sneered. “I’m here outside,” he said, “and I’m going to kill you.”

Groups of neighbours took turns guarding the Radio Victoria office every night for months thereafter; some would sleep on the floor inside the office, while others patrolled outside. “We come because this radio belongs to us,” one woman said at the time.

Anti-mining protest in San Salvador in 2017. Photograph: Marvin Recinos/AFP/Getty Images

Threats against the frontmen and women of the resistance became so frequent that Radio Victoria journalist Elvis Zavala would board a public bus and find people reluctant to let him sit next to them, lest that be the place and time when he was gunned down.

In late December 2009, in the hamlet of Trinidad, two more activists were killed. The first, Ramiro Rivera, was slain on 20 December, shot in his truck as it crawled along an unpaved road. Six days later, Dora Recinos Sorto, the wife of a local activist spokesman – eight months pregnant and carrying her two-year-old child in her arms – was shot in the back. Her child was hit in the leg but survived. “The message was that any member of our families that they could catch, they would kill,” Radio Victoria journalist Oscar Beltrán told me. Dora had six children, the oldest a teenager and the youngest a toddler. At her funeral they were inconsolable, throwing themselves over her body. For Morales, it was horrifying to absorb the fact that the price for the group’s environmentalism might also be exacted from their loved ones.

Opening a mine involves a series of regulatory steps. First, companies apply for permission to explore the land. If they find minerals, they must then fulfil a slate of requirements, including a rigorous environmental impact assessment, before requesting to begin mining. Pacific Rim had received permission to explore for gold in El Salvador during the administration of rightwing president Francisco Flores, who left office in 2004. The next president, Tony Saca, was from the same conservative party, but he announced that, for reasons of principle, he would not grant a single permit. When the leftwing Mauricio Funes subsequently took the presidency, in 2009, he maintained that policy, prohibiting Pacific Rim from digging for gold.

In 2009, Pacific Rim claimed that the government’s mining ban amounted to a breach of contract, and that El Salvador owed the company $77m to make up for their losses. The arbitration took place at the International Center for Settlement of Investment Disputes (ICSID), a trade tribunal in Washington DC run by the World Bank. After arbitration began, the firm revised the amount it sought to upwards of $300m. In 2013, Pacific Rim foundered, and was acquired by an Australian company called OceanaGold, but the suit against El Salvador continued.

The Salvadoran government chose as its lawyer Luis Parada, a round-faced man with grey hair and a soft voice who had been a captain in the Salvadoran army during the civil war, and still carried himself like a soldier. Based in Washington DC, Parada and his team created strategies for defending the Salvadoran state.

Throughout the arbitration, the environmentalist movement of Cabañas came up repeatedly. In her witness statement, an official from the Salvadoran ombudsman’s office said that she had “read the complaints and actions of resistance by the inhabitants of the area as a desperate cry in the face of the threat” of mining. A Salvadoran anti-mining coalition argued in a court briefing that Pacific Rim’s mining attempt was illegitimate; it did not have the right to Salvadoran land.

On 14 October 2016, the tribunal dismissed the company’s claims. El Salvador had won. It would not be forced to pay a foreign company hundreds of millions of dollars after prioritising its water over their profit. The victory was an important one in the ICSID tribunal, where corporations prevail in more than 50% of cases. Five months later, the bitterly partisan Salvadoran congress unanimously approved a law banning all metal mining in the country. On the streets surrounding the legislature in the capital, people sang out: “No to mining, yes to life!”

Mining has not yet returned, but in Cabañas, the fears that it may loomed large during the February presidential and legislative elections. For months beforehand, polls predicted an easy victory for both Bukele and his party, Nuevas Ideas. Even before the election, Nuevas Ideas held a supermajority in congress, a power it used to push through the administration’s agenda. Given the president’s apparent predilection for mining and the arrests of the Santa Marta Five, the people of Cabañas were worried about what Bukele and his supporters would do when the few remaining democratic constraints were gone.

In his first term, Bukele’s campaign of mass incarceration tackled the control that violent gangs held over many communities. The subsequent fall in the murder rate gave kept Bukele popular, but some were alarmed that the crackdown was achieved by suspending constitutional rights. The administration became increasingly authoritarian, bringing all three branches of government under Bukele’s control and persecuting many who spoke out against abuses. His party also concentrated power by erasing 70% of publicly elected mayoral and congressional seats.

To counter Bukele in the election, a loose opposition coalition chose Luis Parada, the lawyer who had represented El Salvador in the mining arbitration, as their candidate. Parada was forced to conduct an odd kind of presidential run, tailored for an authoritarian climate. Campaign events were low-profile, because people were afraid to be seen as supporting a challenge to Bukele. Companies that might otherwise have donated to his campaign didn’t want their names on a non-Bukele roster. Before entering meetings, Parada nested his phone in a signal-blocking pouch to fend off attacks from spyware, which, since Bukele became president, has allegedly been used against journalists and democracy activists. Parada had no campaign bank account and no campaign headquarters. He had one paid staff person – he paid her salary himself – and one volunteer. Running against Bukele was “like a chained dog fighting a free one”, Parada told me.

On election day, shortly after polls opened, reports of anomalies began pouring in from voting stations around the country, many of which were staffed by volunteers affiliated with Nuevas Ideas. That evening, when the counting began, there were reports of ballots allocated for Nuevas Ideas even though they had been marked incorrectly or spoiled. When the time came to submit results into the national digital system, the software duplicated votes in some stations, and the internet connection dropped out in others. Amid the mess of problems, many teams abandoned the digital system and instead recorded everything on paper.

Nayib Bukele, with his wife, Gabriela Rodriguez, on the balcony of the presidential palace in San Salvador, as he claimed victory in the election in February. Photograph: Moisés Castillo/AP

That night, before the count was finished, Bukele proclaimed himself winner. He appeared on the terrace of the national palace in San Salvador and addressed thousands of supporters gathered below, railing against journalists and the international community, accusing them of wishing for Salvadoran bloodshed.

Parada said in an open letter to international observers that he had participated in the election, despite the certainty that he would lose, because he saw it as perhaps the “last opportunity before the remaining space for democracy shuts down and El Salvador goes full-on authoritarian”.

In January, a group of Central American, US and Canadian experts released a report citing “compelling evidence that President Bukele desires to violate a unanimous 2017 vote in the Salvadoran legislature to prohibit mining, a move that would endanger the country’s water supply and violate the public will”.

The experts cited speculation that, in addition to economic advantages, one factor behind Bukele’s interest in mining might be China. China has invested heavily in mineral extraction worldwide; it has also funded a series of megaprojects in El Salvador, including a library and an ocean-side theme park. El Salvador has joined the Chinese belt and road initiative, and, in November 2022, the two governments announced they were negotiating a free trade agreement.

International pressure on the Salvadoran state over the case of the Santa Marta Five yielded a small victory: the men were given house arrest to await their trial. A preliminary hearing is scheduled this week. In July 2023, six months after the five had been jailed, members of the US Congress sent an open letter to their secretary of state, Antony Blinken, expressing “serious concerns” about the arrests, which they called “politically motivated”.

Morales fears that a next round in the mining battle will be more harrowing than the first. “Before, we were hearing about evidence of activity by transnational companies,” she said. “But now, we’re seeing the threat come from the state itself – the state reaching out to companies and pulling them in, ‘Come to us, come to us,’” she said.

She thinks constantly of the funeral of Dora Recinos Sorto, the mother of six, shot with her child in her arms. In witnessing those children’s grief, Morales had to face a reality so cruel that she sometimes questioned if she could carry on. Her son is keeping a low profile, fearful of further retribution.

This piece was first published in The Dial Issue 14: Money

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