OPPORTUNIST SILVER LINING

How a corrupt Dominican senator is blocking a Canadian gold mine

Story by Tom Blackwell • National Post

The Canadian mining company Goldquest had just enough money left in 2012 to sink two more boreholes in the southwestern hills of the Dominican Republic. If they turned up nothing, exhaustive exploration efforts would be for naught, similar to the vast majority of such searches worldwide.


Felix Bautista official photo.

Then, on number 14 of 15 holes, the team hit paydirt, literally. The core removed by the drilling pointed to a rich deposit of gold and copper, the estimate later being that it could deliver up to three million ounces of gold alone — about $5 billion worth.

By late 2015, the company had completed its feasibility study, including a plan Goldquest thought would temper any potential environmental concerns, and applied for an operational permit. That would allow it to move to the next stage — an environmental and social-impact assessment that was still no guarantee the mine could actually be built.

Decisions for or against such permits typically come within a few months in Canada.

But seven years and $44 million in investment later, the firm is still waiting for an answer. Two consecutive Dominican presidents have let the application languish on their desks as a vocal protest movement led by environmentalists and politicians turn the mine into a partisan hot potato — before a shovelful of dirt is excavated.

The most prominent face of that protest is the senator for San Juan province, Felix Bautista, once named among the most corrupt individuals in the world and sanctioned under the U.S. Magnitsky law for, among other things, allegedly ripping off Haiti’s earthquake recovery efforts.

He led a protest march against the proposed mine just last month, with another local leader telling the crowd “that Canadian company, Goldquest … is an enemy of this society .”

There’s certainly no shortage of horror stories about Canadian mining corporations in developing countries. But Goldquest argues that its opposition is built on lies — primarily that the company will use cyanide to process the extracted minerals and draw water from a local river, both of which it has stressed repeatedly will not happen.

“In my experience, this is totally unprecedented,” Toronto-based chairman Bill Fisher, a veteran of the mining industry in the Dominican Republic and elsewhere, said of the delay. “In terms of this political hold-up … I’ve never seen it before.”

A local supporter of the “Romero” mine, who asked not to be named because of sensitivities around the project, was more blunt.

“It’s a freaking nightmare,” the person said.

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But an environmentalist fighting the project suggests the alleged misinformation about cyanide and taking water from the San Juan River are in essence red herrings.

The chief issue is situating a mine on top of a mountain range, sucking up rainwater that is crucial to sustaining farms and homes in the much-drier valley below — just as climate change makes that precipitation a rarer commodity, says Ariel Zoquier, president of the ecological society of San Juan province.

“Mining activity would reduce agriculture, which has been the province’s economic engine for more than 150 years, generating more than 28,000 jobs and some 1.7 billion pesos a year,” he said in an interview by text. “The Romero project contemplates about 800 jobs and a durability of 7 years.”

As for Bautista and Manuel Matos — another mine critic and the senator’s rival candidate in the last election — they are just two among countless opponents, said Zoquier.

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The National Post asked the Dominican embassy in Ottawa about the delay repeatedly, starting 10 days ago, but the mission had not offered comment by deadline.

There’s no question that environmental concerns about mining — gold mining specifically — can be very real, including in the Dominican Republic.

The country is home to Latin America’s largest gold mine, Pueblo Viejo , which leached acid into local waterways during an environmentally disastrous period under local ownership from 1975 to 1999. Photographs show rivers tinted an unnatural reddish colour with the pollution.

Canada’s Barrick bought it in 2006 and has spent millions on remediation, boasting that water quality in the area has improved dramatically. But opponents still blast its stewardship of the site, and a $1.3-billion plan to expand the open-pit mine has faced stiff resistance, including from a group of 44 i nternational NGOs who wrote to Dominican officials recently.

For its Romero project in the Central Cordillera geological region, Goldquest developed a plan that seemed to anticipate at least some of the environmental fears.

Cyanide diluted with huge amounts of water is often used to separate gold from the ore extracted from mines, creating potential hazards to drinking water, ecology and farming. Goldquest opted instead for a physical method of isolating the gold that is more costly, but less risky.

The need for water was massively reduced and it plans to rely on rain that would be funnelled into two ponds, the water recycled over the course of the project, needing to be replenished only because of evaporation. The mine would not touch the nearby San Juan River, Goldquest says.

Lastly, it would be underground, not the type of open pit mine that can scar a landscape and feed opposition.

“The design was a good design, it was the right one,” insists engineer Robert Crowley, who was Goldquest’s social and corporate responsibility lead but now heads the RWC Technologies consulting company. “They made a decision to make less money for a better environment.”

The company has also promised to pay for reforestation of local hillsides stripped largely bare by agriculture — and says tax revenue and salaries would effectively double San Juan province’s GDP. The Dominican Republic’s per-capita wealth is one-sixth of Canada’s.

The Dominican mines ministry recommended it receive an exploitation permit that would pave the way for the environmental and social impact assessment. But the president must also sign off, and that’s where the roadblocks have built up.

The previous holder of the top post, Danilo Medina, refused to make a decision before the 2020 election, despite entreaties from Canadian, U.S. and Swiss ambassadors, representing investors from each country, says Fisher.

When he took power in 2020, current President Luis Abinader started the process all over again, with the mines ministry once more recommending he issue Goldquest a permit. But still, nothing has happened.

Meanwhile, the opposition seems to have built up steam, spearheaded now by Bautista, who alleges that cyanide will, in fact, be used.

The merits of the cause aside, the senator does not exactly give the opposition a blemish-free face.

Transparency International named him as one of the world’s 15 most corrupt individuals or groups in a 2014 report. Dominican prosecutors accused Bautista of using a previous position as head of the country’s public works department to award contracts to 35 of his own companies, only for the case to be thrown out by a judge from the same party. Then in 2018, the U.S. imposed sanctions against him under its Magnitsky law, designed to penalize foreign figures guilty of corruption or human-rights abuses. It cited allegations Bautista used connections and bribes to win reconstruction contracts in neighbouring Haiti, receiving $10 million for one project that was never finished.

Goldquest and its supporters are skeptical of Bautista’s motives around their protest. Crowley, who has lived in the Dominican Republic for 40 years, believes he and other local politicians see the proposed mine as a hot-button issue they can exploit to win votes, vowing to fight off the “big, bad” Canadians.

“Mining is unfortunately around globe the lowest-hanging pinata that a person running for office can have,” he said. “A five-year-old can hit it and get the candy out of it.”

Bautista could not be reached for comment.

Zoquier said it doesn’t matter what’s driving the politicians. Located 1,300 metres above sea level, he says, the mine would consume runoff from the rains that are crucial to agricultural land below, as climate change makes precipitation less plentiful.

Luis Carvajal, a biology professor at the Autonomous University of Santo Domingo, conceded to a Dominican news outlet recently that the Goldquest plan would make it relatively safe as such projects go. But he still opposes it, saying previously that green-lighting Romero and other proposed mines in the region would be “opening doors to disaster .”

With another election two years away, it all means Abinader may be hesitant to further stir the pot in San Juan by giving the mine a permit, said Crowley.

Goldquest says it would just like a decision — thumbs up or down. Ten years after that penultimate bore hole came back golden, Fisher is getting inpatient, but isn’t ready to give up.

“The problem is this deposit is so sweet — it’s a beautiful deposit,” he says. “So we’re sticking with it because we’re very proud of it, of our geologists — Dominican geologists — who found it. It’s something the country should be proud of, too.”