Pacific Rim Mining locked in closely watched fight with El Salvador – by Jeff Gray (Globe and Mail – June 20, 2012)

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Tom Shrake, the American mining industry veteran who heads Vancouver-based Pacific Rim Mining Corp., is nothing if not an optimist.

He’s had no end of troubles: His staff in El Salvador have faced intimidation at gunpoint by local opponents of his proposed mine. Anti-mining groups have accused his company of involvement in the killings of local activists, charges he vehemently denies and for which he says there is no evidence. And the government of the tiny, impoverished country has decided to block all mining within El Salvador’s borders out of fear that a mishap could contaminate the country’s water supply.

But Mr. Shrake says he remains committed to digging for gold and, he argues, digging the local population in northern El Salvador out of poverty. This month, he got a green light to keep fighting for that plan from a World Bank investment tribunal in Washington – a fight being watched closely by the mining industry, international trade lawyers and anti-mining activists.

“We don’t want to go to court. We never wanted to go to court … But they left us no choice,” Mr. Shrake said in an interview from Reno, Nevada, where he is based.

It is in Washington, far from the volatile politics of Central America, that Pacific Rim launched a controversial move to take the government of El Salvador before a panel of arbitrators over the dispute.

It’s a growing practice in a world where foreign investors increasingly seek to resolve conflicts before supposedly neutral arbitration panels instead of rolling the dice in a country’s local courts.

Pacific Rim is challenging the government’s decision not to issue permits for its proposed El Dorado gold mine. This “creeping expropriation,” the company alleges, has left it with nothing to show for the $77-million it has invested. It has demanded hundreds of millions in compensation.

In a much-anticipated preliminary decision dated June 1, the tribunal of the International Centre for the Settlement of Investment Disputes (ICSID) tossed out Pacific Rim’s attempt to use a U.S. subsidiary to claim redress under the Central America Free Trade Agreement (CAFTA). But it ruled that the company’s case against El Salvador could go ahead under the country’s domestic investment law, which allows disputes with foreign investors to be referred to arbitration tribunals.

Since the dispute began, Pacific Rim has cut itself to the bone and seen its stock sink.

Mr. Shrake attributes the local opposition that his mine has faced to “rogue” non-governmental organizations, including Oxfam America, which he accuses of sanctioning local groups that have used threats and intimidation. An Oxfam America spokesman denied that it has supported or encouraged any violence.

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