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Mining and the Environment Case Studies from the Americas edited by Alyson Warhurst INTERNATIONAL DEVELOPMENT RESEARCH CENTRE Ottawa • Cairo • Dakar • Johannesburg • Montevideo • Nairobi • New Delhi • Singapore Published by the International Development Research Centre PO Box 8500, Ottawa, ON, Canada K1G 3H9 © International Development Research Centre 1999 Legal deposit: 1st quarter 1999 National Library of Canada ISBN 0-88936-828-7 The views expressed are those of the author(s) and do not necessarily repre- sent those of the International Development Research Centre. Mention of a proprietary name does not constitute endorsement of the product and is given only for information. A microfiche edition is available. The catalogue of IDRC Books may be consulted online at http://www.idrc.ca/index_e.html This book may be consulted online at http://www.idrc.ca/books/focus.html CONTENTS Foreword v Acknowledgments ix Introduction MERN: Toward an Analysis of the Public Policy - Corporate Strategy Interface — Alyson Warhurst 1 Chapter 1 Environmental Regulation, Innovation, and Sustainable Development — Alyson Warhurst 15 Chapter 2 US Environmental Regulations and the Mining Industry: Lessons for Chile — Juanita Gana 49 Chapter 3 Environmental Policies and Practices in Chilean Mining — Gustavo Lagos and Patricia Velasco 101 Chapter 4 Environmental Management in a Heterogeneous Mining Industry: The Case of Peru — Alfredo Núñez-Barriga, assisted by Isabel Castañeda-Hurtado 137 Chapter 5 Formal and Garimpo Mining and the Environment in Brazil — Maria Hanai 181 iii Chapter 6 Environmental Issues in Brazilian Tin Production — Teresinha Andrade 199 Chapter 7 Environmental Management in the Bauxite, Alumina, and Aluminum Industry in Brazil — Liliana Acero 223 Chapter 8 Competitiveness, Environmental Performance, and Technical Change: A Case Study of the Bolivian Mining Industry — Ismael Fernando Loayza 267 Appendix 1 Contributors 313 Appendix 2 Acronyms and Abbreviations 315 Bibliography 319 iv FOREWORD Mining and environment — the two do not seem to go together. Indeed, they seem almost antithetical. Whether one reads about small-scale gold mining in the Amazon or huge coal mines in North America, whether simple sand and gravel pits or complex metallurgical operations, the legacy of the mining industry appears to be destruction of land and pollution of air and water. Actually, of course, the situation is much more complex. True, mining always involves disruption of the environment, either at the surface with open-pit mines or underground with deep mines, and in most cases the mineral being sought makes up only a small part of the material that must be moved, with the result that vast quantities of waste must be handled. True too, for many years and in most parts of the world (the North no less than the South), mining was carried on with little regard for environmental protection — or for the health and safety of miners or for the culture and well- being of local communities. However, the picture of mining firms operating with little regard for nature or native is no longer accurate. Under some conditions, and in some corporations, and in some countries, protection of the environment, of miners, and of nearby communities has become nearly as much a concern as putting a rock in the box. International Development Research Centre (EDRC) funding is based on the principle that solutions to problems in developing countries can only be found through research based in those countries. From this perspective, it is not so much the record of past destruction of the natural environment that is of interest, but the dynamics of a new business environment in which corporate decisions and govern- ment legislation work in tandem to avoid damages that are avoidable and to mitigate those that are not. Of course, there remain as many cases where the old conditions persist, and it is equally of interest to learn where and why this new business environment has not appeared. The early conclusions of the Mining and Environment Research Network (MERN1) were striking: mining firms that are efficient in their main activity of extracting minerals from the Earth are also best at protecting the environment Originally based at the Science Policy Research Unit, University of Sussex, Unite Kingdom; now based at the International Centre for the Environment, University of Bath, United Kingdom. V while doing so, a conclusion that suggests that, under the right conditions, the economics-environment trade-off is not so sharp as once thought. The further conclusion that environmental results are partially independent of the strength of mining legislation suggests the need for governments to take a more sophisticated approach to mining-environment policy. Corporate attitudes are changing; govern- ment policies are changing; civil society is changing: and the business environ- ment that brings them all together is changing. The need for further research is almost self-evident. IDRC's interest in mining in developing countries predates today's recogni- tion of environmental values and its focus on mining-environment policy. During the 1980s, research projects funded by IDRC focused mainly on science and tech- nology policy for mining or on measures to improve efficiency. With the partial exception of a couple of projects that investigated health conditions in Bolivian mines (in particular, the effects of living and working at high altitudes), environ- ment was very much secondary. An explicit environmental project related to min- ing does not appear until 1991, and somewhat ironically the first such project was the Bolivian component in the initial phase of MERN, as described in Chapter 8 in this book. Other projects looked at the effects of mercury from gold mining. Closely related projects also began to be funded, including some that focused less on environmental problems per se than on conflicts that stemmed from the power of the mining industry to usurp what had been common-property resources. A good example was the dispute over water that occurred between Southern Peru Copper Company and the community of Ilo, just north of Peru's border with Chile. (That research project was undertaken by a community group called LABOR, which then argued its case successfully before the International Water Tribunal in The Hague.) Another line of research that was initiated about the same time involved the effects of macroeconomic conditions and policies in various Latin America countries on the linkage between environmental degradation and mineral operations. If the analytical focus of mining research funded by IDRC changed from technical efficiency to environmental protection, the geographic focus did not. With the exception of a collection of projects that focused on artisanal mining (mainly for gems) in Africa and Asia, the projects have almost all involved Latin America. This emphasis is not surprising: IDRC's program in South America focuses on the Andean countries, and this region is, perhaps more than any other in the world, dependent on mining for economic health. This focus is likely to continue. As this book appears, IDRC is conducting an inventory of research and researchers on mining and environment in the continent. From this, it is hoped that a long-term strategy for a coordinated program of research, probably focusing on vi ecosystem health, will emerge. (Ecosystem health is a new approach that links the effects on human health that stem from adverse anthropogenic changes to the natural environment.) The objective would be to determine what changes in government or corporate policies and what forms of community involvement in decision making would do most to protect local and regional ecosystems and, therefore, human health. For the time being, however, what is needed is analytically sound docu- mentation of the extent and the effects of recent changes in the business environ- ment, as reflected in corporate behaviour and government policy. This is done very effectively, and for a wide range of corporations and conditions, in this first book from MERN. David B. Brooks Chief Scientist International Development Research Centre Ottawa, Canada vii This page intentionally left blank ACKNOWLEDGMENTS The editor would like to extend particular thanks to Lisa Eisen, whose tireless and diligent editorial work was vital in preparing these chapters for publication. Special thanks are also due to Yvette Haine and Gavin Bridge for their help with the original manuscript. This book reflects the insight and hard work of many researchers and affiliates of the Mining and Environment Research Network (MERN) whose comments during MERN's annual research meetings contributed to the research contained within these pages. Finally, sincere thanks go to the staff of the International Development Research Centre, particularly to David Brooks, Bill Carman, Brent Herbert Copley, Amitav Rath, and Ann Whyte, for their hard work, from project development to completion. ix This page intentionally left blank INTRODUCTION — MERN: TOWARD AN ANALYSIS OF THE PUBLIC POLICY-CORPORATE STRATEGY INTERFACE This book describes a process of building research capacity in the area of mining and the environment. This process began in the mid-1980s in Latin America, when a number of policy researchers — working together within International Develop- ment Research Centre (EDRC)-supported projects on issues of competitiveness, production efficiency, and technological change — began observing a noticeable association between

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