Tuesday 22nd September 2020

Resource Clips

Treasure Islands

Miners Face Increasing Danger from Crime, Social Unrest and Violence

By Greg Klein

With 22 years’ experience in the British Special Forces, 10 of them with the Royal Marines and the other 12 with the SAS, Alan Bell is no stranger to conflict. Since founding the Toronto-based security company Globe Risk International in 1996, he’s provided his expertise and active involvement to a number of exploration and mining companies overseas. And he’s seen a few changes over the years.

“I remember when I started out in the 1990s, the old VPs of exploration used to go out into the mountains with their hammers and their boots and their trousers tucked into their socks. The old-school guys would go out there and say, ‘We don’t need any security.’ Well the world has changed dramatically since then.”

Miners Face Increasing Danger from Crime, Social Unrest and Violence

His admonition would apply to all resource companies but especially those of Canada, “the global leader in mineral exploration,” according to the Prospectors and Developers Association of Canada. Rising prices and limited supply push exploration into increasingly dangerous places, in a world that is itself becoming more troubled.

Companies often turn to Globe “when things go wrong,” Bell says. “They’ve got to spend a lot more time researching where they’re going and what they’re going to do. They’re running out of places to go, and the places that are left are where there’s problems.”

Bell’s company will visit the site of a proposed project to assess certain types of risk—not so much political risk, which might involve expropriation or a sudden and onerous tax/royalty regimen, but conflict in the form of crime, social unrest, sectarian violence or terrorism.

“There could be anything from suicide bombers to vehicle-exploding devices. We talk about what’s in the area. Can you get helicopters in there; what type of security do you need; who can assist you? We assess the local population, aviation, flight clearances, landing sites. Basically we develop a report for the client so they can see what their problems and options are before they bid on these contracts.

“We’ve had many clients who have looked at our reports and said, ‘Well this looks like an option, we’re willing to take a certain amount of risk,’ and they go in. Others say, ‘Shit, we’re not going to get involved in this, it’s too dangerous.’”

Bell started out with assignments in Latin America and Africa. In 2004, he began working on Canadian government contracts in Afghanistan. He employs a number of former Canadian military but trains locals to work as onsite security.

“We just finished a major project in northern Afghanistan for a Chinese company looking to start in March or April. What we will do, if they wish, is provide them with security to do their work. We’ll get a camp built for them, train the security team, get the vehicles. When they come over and start carrying out their exploration, we’ll support them from a security perspective as well.”

Precautions notwithstanding, not everything can be predicted, let alone prevented.

Last September, for example, Semafo TSX:SMF shut down its Kiniero Gold Mine in Guinea and evacuated its expatriate employees after protests about foreign workers turned violent. The mine still hasn’t re-opened, although exploration resumed in late October.

In December 2010, Luna Gold TSXV:LGC lost 1,500 ounces of gold, worth over $2 million at the time, to an armed gang at its Aurizona Mine in Maranhao State, Brazil, about 2,000 kilometres north of Rio de Janeiro. Robbers failed in a second attempt last November, however, despite taking hostages. The captives were released unharmed, an outcome which the company attributes to precautions taken after the initial heist.

We knew that this was going to happen based on intelligence-gathering by our security people. We advised the local police. The police were on site at the time the outsiders came. And the police just stood by while they vandalized the place —Donald East

In March 2011 Torex Gold TSX:TXG suspended work at its Morelos Project in Guerrero State, 200 kilometres southwest of Mexico City, after the armed robbery of several of its trucks. No one was hurt, but employees were evacuated nonetheless. Operations have since resumed.

Last June Torex President/CEO Fred Stanford explained, “We’re in a little town that had no police, and it had never needed them. I think we injected enough money into the community that we attracted a criminal element…. There are now police, and we’re back and moving forward. The government’s been very good; the community wants the mine; and we’re negotiating now for land. No doubt there will be issues, but we’ve got a great partnership with the community.”

Other companies work in the thick of cartel country. US Gold’s TSX:UXG El Gallo Silver-Gold Project is slated for mid-2012 production in Sinaloa State on Mexico’s north-central coast. Senior VP Ian Ball said, “We have been very active there for three or four years and have been able to establish a pretty good relationship—and this might sound strange—with the cartel. You have to know who they are and inform them what you’re doing and where you’re moving to…. They don’t want you near their marijuana crops.”

When it comes to Colombia, Sunward Resources TSX:SWD COO David Forest can’t say enough good things about the country. “Geologically, there’s nothing like it,” he told ResourceClips.com last August. “There’s nothing on the planet with that kind of potential that’s so underexplored. Nothing happened there for 50 years. It’s phenomenal terrain, completely underexplored.”

He added that his flagship Titiribi Gold-Copper Project is in Antioquia Department, a region of northwest Colombia “which has very strong rule of law and tradition of order. We don’t have any security at site.” That confidence seems to be borne out by the presence of others. Neighbours include AngloGold Ashanti, Gran Colombia TSX:GCM, Colombian Mines TSX:CMJ, Continental Gold TSX:CNL, Bellhaven Copper and Gold TSX:BHV and Batero Gold TSX:BAT.

But while Forest emphasized, “The security and safety situation is fine in 90% of the country now,” there is that other 10%. It includes Sunward’s former Murindo-Mande Norte Project straddling the border between Antioquia and Choco departments. “There’s a number of issues including FARC [the Revolutionary Armed Forces of Colombia] and indigenous groups,” he said. “If you can name an issue in Colombia, that region’s got it. The prize, if and when we can get in there, is enormous. It’s an anomaly the size of Yaletown [a high-density Vancouver neighbourhood], with copper sticking out of the ground. For 30 years, everybody’s known about this unbelievable anomaly, but it’s remained a place where nothing happened. We’re working on getting in there and, if we can, it’ll be a lot of fun.” By December, however, Sunward had divested itself of the property.

Speaking from Bogotá, Gran Colombia COO Donald East waxes enthusiastic about his company’s Marmato Gold Project, now in prefeasibility and projected for 2015 production. If all goes to plan, it will be the company’s seventh operating mine in northern Colombia. Last October, however, the company shut down its Mazamorras Project in Nariño Department, in the southwest corner of the country, after a mob demolished the buildings.

“We knew that this was going to happen based on intelligence-gathering by our security people,” says East. “We advised the local police. The police were onsite at the time the outsiders came. And the police just stood by while they vandalized the place. We then complained to the government about that. In any country in the world you have to rely on some sort of legal protection for your assets. So I think that created a bit of a wake-up call for the government.”

There’s nothing remarkable about the security company’s presence, East maintains. “Obviously on any mine you have security because you have assets. It’s just a local security company; that happens on every mine.”

East says he still doesn’t know who’s responsible for the attack or what motivated them. But he believes they were from outside the region and the attack was somehow linked to the local and regional elections that were about to take place. The local population, he says, supports the project for the sake of jobs as well as the social work the company performs. “We’re just going to let the thing wait until we feel the risks aren’t too great for any of our people to go back there. So it’s probably going to be next year before we start to re-visit that project. Mazamorras is not really critical to our current planning.”

Read Part II of this story here.

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