Pacific Rim Mining Take El Salvador Government to Court

26 April 2009 (Last Updated April 26th, 2009 18:30)

Canadian mining company Pacific Rim will take the Salvadoran Government to international arbitration court over losses caused by government inaction that has lead to damaging permit delays. Pacific Rim has waited four years for final permits for the underground gold mine, which faces stau

Canadian mining company Pacific Rim will take the Salvadoran Government to international arbitration court over losses caused by government inaction that has lead to damaging permit delays.

Pacific Rim has waited four years for final permits for the underground gold mine, which faces staunch opposition from Salvadoran environmentalists and church leaders as the first large-scale mine in 70 years in Central America's smallest country.

The case is among the first international investment disputes under the Central American Free-Trade Agreement (CAFTA), which eliminated barriers to trade and laid ground rules for such disputes. The Vancouver-based company invested $77m in exploration after it received initial permits in 2005.

The Catholic Church is backing a proposed ban on the mining of precious metals, which they say set the wrong precedent for more than two dozen other proposed mining projects.

Officials from Pacific Rim say that the underground mine would create hundreds of new jobs in a depressed region amid an economic crisis and would leave a minimal environmental footprint.

The company would detoxify all cyanide, a toxic chemical used to extract gold from ore, using a process known as INCO. The company's water cleaning process would contribute to surrounding communities by leaving water so clean that it's potable and then rerouting it back into a river that runs dry during the dry season.