In Chile, Precious Lands Often Go for a Pittance

Rodolfo Villar sold his rights to 20,000 acres in the Andes to a Canadian gold mining company for about $19. He says he thought the price was $1 million.
Rodolfo Villar sold his rights to 20,000 acres in the Andes to a Canadian gold mining company for about $19. He says he thought the price was $1 million. (By Monte Reel -- The Washington Post)
By Monte Reel
Washington Post Foreign Service
Tuesday, December 26, 2006

SANTIAGO, Chile -- The mountainous terrain of northern Chile is studded with precious metals, a natural cache that for years has had investors angling for land rights.

So when the world's largest gold mining company targeted about 20,000 acres owned by Rodolfo Villar, a mineral speculator, he signed a contract. Only later, he said, did he realize how much the company had agreed to pay him:

About $19.

Villar, who regularly grabs local land rights if he thinks they might be worth something, said he thought the deal was worth $1 million, not an amount that proved to be less than the cost of a bus ticket from Santiago back to his house. Additionally, the finer points of the contract stipulated that he would be fined $95,000 if he tried to obtain rights to any other parcels in the surrounding area.

Villar sued the company, Canada's Barrick Gold Corp., arguing that he had been deceived. This year, a Chilean judge ruled in his favor, saying that the company had essentially swindled Villar, and ordered the lands returned to him.

Barrick officials say the ruling, which they have appealed, is unlikely to derail the mining project. But the case has angered some Chileans and others who complain that foreign mining companies are exploiting local landholders.

Much of Latin America has experienced a mineral boom in recent years, with metal prices climbing and governments eager to generate tax revenue and other income from large-scale mining projects. The region is home to more mineral exploration than anywhere else in the world, but a corresponding increase in scrutiny from nongovernmental organizations and public interest groups has heightened tensions. And although many companies have developed "social responsibility" policies to smooth relations with local landowners, such efforts rarely eliminate the problems.

"Disputes like this between mining companies and landholders are quite common," said Keith Slack, senior policy adviser for Oxfam America and director of its "No Dirty Gold" campaign, which opposes mining policies that harm the environment or displace locals. "What happens is a mining company will negotiate with a local landowner, and the landowner will later say he didn't get a fair deal. The company will say it paid a fair market price, but in those remote Andean mountain areas, there's no real land market and it's difficult to say exactly what a fair price would be."

The Andean region has been the site of several high-profile disputes. In Peru, two Canadian mining companies faced a protracted battle in recent years for rights to land at the Antamina copper mine. Peasants who had initially signed their lands over to the mining companies later refused to relocate, forcing evictions.

Marco Arana, a Catholic priest who leads an environmental nongovernmental organization in Cajamarca, Peru, has worked on behalf of local farmers with land and environmental claims against mining companies. Throughout isolated rural communities, he said, more landowners have become aware that they don't have to sign away their lands just because lawyers for mining companies tell them it's prudent.

"There's more consciousness in the communities, and for that reason there are more conflicts, too," Arana said.

The land claimed by Villar sits on the perimeter of Barrick's Pascua-Lama mining project, which straddles the Chile-Argentina border and is expected to yield as much as $18 billion.

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