European Mining Versus The People

By Charles McPhedran

Most of Europe’s state-owned resource companies were privatised in the 1990s to prevent corruption. It didn’t work – the corruption was privatised too, writes Charles McPhedran

In post-World War II Europe, resources and energy were affairs of state. Companies such as France’s ELF and Italy’s ENI were more than petrol companies. They became arms of the state.

ELF, for example, was a key player in Françafrique, the network of bribery, favours and political patronage through which Paris preserved its influence in its ex-colonies after they gained independence.

The French national assembly heard testimony in the late 1990s suggesting ELF may have assisted combatants in Congo Brazzaville’s civil war buy weapons. The victor in that civil war, Denis Sassou N’Guess, suited French interests.

The company has since been privatised, and was later folded into French oil company Total. Many other companies were sold in the 1990s. Today in Europe, few of the resource and energy giants are state-owned.

Only Gazprom, a half state-owned Russian gas company, resembles the old political corporations of post-war Europe – both in terms of scale, and in terms of influence.

It’s estimated a quarter of Europe’s energy supply comes from Siberia, via Gazprom. Russian diplomats in Eastern Europe have repeatedly threatened to cut off that supply if governments make decisions that displease Moscow, according to German author Jürgen Roth.

But Gazprom remains an exception on the primary industry markets. Today, resources and energy are a private concern.

Investigations by Swiss NGO the Déclaration de Berne suggest that the resources and energy sector is increasingly dominated by Swiss-based multinationals.

Sector number one Glencore Xstrata is a good example of this tendency. Headquartered in the Swiss canton of Zug, outside of Zurich, the company’s operations range from minerals to agriculture.

On its own account, Glencore is present across all of the developing world and much of the developed, too. It extracts and drills in Cameroon, Peru and Australia, without discrimination.

It has repeatedly been accused of paying little or no tax; its domicile, Zug, boasts Switzerland’s lowest tax rates and – reportedly – its highest number of sports cars.

Corporate biographies like those of Glencore, as well as huge profits stemming from turbo-charged commodity prices, have fuelled anger among governments and citizens and attempts to onshore profits.

Australia’s mining super tax was just one prominent example of this trend. Bolivia nationalised a Glencore tin and zinc mine in 2012. Argentina did the same in relation to petrol company YPF last year; the company was majority-owned by Spanish energy multinational Repsol.

Indeed such “resource nationalism” represented the political answer on the part of governments to the dominant role played by resource multinationals in mining and energy.

Studies show that resource nationalism is an increasing threat for mining firms. One study, prepared by consultants Ernst&Young, rates it as the chief “risk” to companies in mining and minerals.

In response, the report’s authors advise companies to buddy up with the World Bank and other multilateral agencies and achieve a “prominent victim” status.

Ernst&Young also councils mining firms to lobby host governments more strongly “to foster a greater understanding of the project” concerned. Moreover, it advocates alignment with the “host government” and possible partial state involvement in mining projects.

In parts of Europe, proposed mining operations face another threat to the operations: mounting anger from environmentalists and locals.

For months now, Canadian mining company Eldorado has been embroiled in a row with residents on Northern Greece’s Chalkidiki Peninsula concerning its Skouries gold mine.

Despite especially high unemployment in the area, locals object to the mine because they feel its environmental impact has never been adequately tested. They fear arsenic discharges in local waterways.

Although the project is still under development, Greek daily Eleftherotypia reports that the Greek opposition has accused the mine’s owner, Eldorado, of illegal transportation and storage of toxic waste. Eldorado recently bought Australian gold miner Glory Resources, which also owns mines in Northern Greece.

Furthermore, opponents argue that there is no economic benefit to the area, either. Under junta-era laws, Greece does not tax profits from mining exports.

Even the original sale of the mine to Eldorado has come under challenge. The European Commission deemed the government undervalued the real price of the region’s mines when it sold them in 2004. It ordered the mining company to pay Greece 15 million euros. European courts upheld that verdict.

Skouries has long lay idle, but then the mining boom created an opportunity for moneymaking and its owners move to open it. Since that decision was taken, there have been repeated violent clashes between protestors and police at the Skouries site. As a result, Greek prosecutors are investigating activist opponents of the mine.

According to Greek paper Kathimineri, the environmentalists could be charged with forming a criminal organisation – the same accusation levelled against members of far-right party Golden Dawn. As part of the probe, investigators have reportedly seized journalists’ notes.

While opponents continue their fight against the Skouries mine in Greece, another anti-mining campaign has found even greater popular support further north in Romania.

There, the largest protests since the fall of communism two decades ago have broken out. At issue is a gold mining project in Rosia Montana, a picturesque Transylvanian village with a long mining history.

Canadian company Gabriel Resources has announced plans to extract gold from the hills near Rosia. But many, many Romanians – particularly the young and educated – want them to halt the project. They disagree with Gabriel’s proposed extraction method, cyanide leaching, because they fear it will contaminate the environment in the area.

Their fears are grounded in recent Romanian history. Back in 2000, a partially Australian-owned gold company caused the then-greatest environmental incident since Chernobyl when a poorly designed dam burst in Baia Mare, Northern Romania.

Romania’s parliament has yet to rule on the more recent project at Rosia Montana. Still, NGOs have accused Romanian agencies of underestimating the environmental impact of the mine.[Read more]