HudBay Minerals Meets a Legacy of Guatemalan Violence in Canadian Court – by Joseph Kirschke (Engineering and Mining Journal – November 11, 2013)

Five years ago, officials at Canada’s Skye Resources Inc. had a simple goal: to become a mid-tier nickel producer representing 1% of the global market by 2015 through developing their open-pit Phoenix project in El Estor, Guatemala, with a local subsidiary.

But as with many things in the troubled Central American nation, the focus was doomed from the start. Within two years, the Vancouver-based miner and Compania Guatemalteca de Niquel (GCN) would stand accused of colluding with private security forces and the local military in the gang rape of 11 indigenous women and two other attacks that left one man dead and another paralyzed, while clearing land for operations.

Such incidents are not unique to Guatemala. Indeed, the nation of 13 million heaves equally under drug trafficking violence and the simmering legacy of a brutal 36-year civil war, which claimed more than 250,000 lives and displaced more than 1.5 million. What is novel about this case, however, was its arrival before HudBay Minerals Inc.—which bought Skye in 2008 and abandoned Phoenix in 2011—in three separate lawsuits in a Canadian court this summer.

These will be the first such trials in the world’s top mining nation following three attempts by other foreign plaintiffs to hold Canadian miners accountable to their own court systems since 1997. These include allegations over a Guyanese tailings dam spill, a suit by Ecuadorians against Copper Mesa Mining Corp. over human rights breaches, and 2012 litigation against Anvil Mining over a Democratic Republic of Congo (DRC) massacre.

This case also illustrates the perils miners may increasingly face without knowing the full history of the companies they acquire—and their volatile jurisdictions. As Corporate Social Responsibility (CSR) issues emerge more prominently than ever, that is, the need for such vigilance cannot be underestimated—and HudBay may learn a hard lesson.

Superior Court of Ontario Judge Carole Brown ruled the suits, together seeking $67 million, could proceed to trial on July 22, six months after HudBay abandoned an appeal. More publicity followed in October, however, when the female plaintiffs claimed GCN was threatening them with defamation litigation unless they drop their suit; last month, meanwhile, a film on the subject and the Kekchi Mayan people premiered in Toronto.

The first lawsuit, based on complaints filed by Toronto law firm Klippensteins, centers on a January 17, 2007, incident—a year after a group of Kekchi families moved to the area they considered historically theirs in the hamlet of Lote Ocho. Before burning village huts to the ground, according to the filing, police, military and private security personnel raped 11 women, forcing two miscarriages.

The second suit alleges that, on September 27, 2009, during a protest over another eviction, school teacher and community organizer Adolfo Ich was beaten and hacked to death with a machete by the same men after he sought to intervene peacefully. That day, according to the third suit, German Chub Choc, a young father, was approached by security personnel while watching a soccer match nearby and shot point blank; he is now paralyzed below the waist and missing a lung.

At the time of both events, GCN’s parent was HMI Nickel Inc., later acquired by Toronto-based HudBay; the plaintiffs thus hold the company “vicariously liable” for the acts of its subsidiaries; with operations in northern Manitoba, Ontario, Yukon and Peru, HudBay has since sold its single Guatemala asset to a Russian firm.

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