A Canadian mining company intends to sue El Salvador's government for several hundred million dollars if it is not granted permission to open a widely unpopular gold and silver mine that scientists warn would pollute local water supplies. Pacific Rim Mining Corp., through its Nevada-based subsidiary Pac Rim Cayman LLC, filed a Notice of Intent Dec. 9 under provisions of the Central American Free Trade Agreement (CAFTA) that allow corporations to sue governments over laws and decisions that put public interests ahead of corporate profits.

"We reject Pacific Rim's claims. Giving over [exploitation] permission would be a death sentence from the country and the arbitration can't be accepted because it is the mining company that should be sued," the National Table Against Metallic Mining, and umbrella group of social movements and NGO's, responded in a statement.

The company and government have 90 days to settle the dispute before the case goes before an arbitration tribunal, while the 90-day period ends just 5 days before the country's presidential election. The company is looking for permission to begin mining for gold and silver at its El Dorado mine in the department of Cabañas, about 40 miles outside of San Salvador. The lawsuit threat also comes as the government is debating new mining laws.

Timothy McCrum, the company's lawyer in the dispute, in a conference call for investors co-hosted with Pacific Rim President and CEO Tom Shrake, noted a case filed through the North American Free Trade Agreement (which served as a model for CAFTA) he believes serves as a precedent that should work in the company's favor. The dispute, between California-based Metalclad Co. and the Mexican government, ended with the Mexican government forced to pay the company $15.6 million in damages because it refused to grant Metalclad permission to build a toxic waste site in an area designated as an ecological preserve. (Upside Down World, Dec. 19)

See our last posts on El Salvador, Central America, CAFTA and the mineral cartel in Latin America.