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Date: Thu, 7 Dec 1995 18:51:05 GMT
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From: Jonathan Dushoff <jonathan@eno.Princeton.EDU>
Subject: MULTINATIONAL MONITOR -- Courting Disaster in Guyana

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Courting Disaster in Guyana

By Desiree Kissoon Jodah, The Multinational Monitor, South America Issue, November 1995

Georgetown -- Before the big one, three smaller cyanide spills occurred at Guyana's Omai gold mine in 1995, spills that were accompanied by calls for the government to review its mining contract with the company.

On the heels of these unheeded warning signs, disaster struck in August 1995, when a failed tailings dam gushed an estimated 4 million cubic meters of cyanide-laced effluent into the Omai and Essequibo rivers, enough to fill a one- kilometer-high tank with a base as wide as a U.S. football field, sidelines included.

Three days after the accident, Guyanese President Cheddi Jagan declared 80 kilometers of the Essequibo an environmental disaster zone, as the country of 765,000 attracted media scrutiny that it has not seen since 1978, when Reverend Jimmy Jones and his followers committed mass suicide there -- with cyanide-laced punch.

Omai Gold Mines Ltd. (OGM) is a joint venture of Montreal-based Cambior Inc. (65 percent share) and Denver, Colorado-based Golden Star Resources (30 percent) with Guyana's government, which holds a 5 percent stake. The company was set up to exploit one of the two largest gold mines in South America. The mine lies deep in the Guyanese interior, 160 kilometers from Georgetown, the capital. For four days, waste spewed from the dam, into the Omai River, which feeds the Essequibo, the waterway linking coastal Georgetown to the interior.

Since 1992, workers had mined the site for ore that they pulverized and drenched in a cyanide solution to leach out the gold. The failed dam contained cyanide-treated wastes that had been accumulating for two years. When the leak occurred, the tailings pond was near capacity and management, which repeatedly had given reassurances that the dam was secure, was planning a second dam.

Accident prone

With three smaller cyanide spills in the first half of 1995, there was ample cause to doubt company reassurances about the dam. The worst of these earlier spills occurred in May, several weeks after Omai was denounced by environmentalists and an opposition party for its plans to unload some of its cyanide effluent into the Essequibo. In May, however, an accidental spill released an unspecified amount of this hazardous waste into the Omai River, killing hundreds of fish. Although the May spill involved a much smaller volume of effluent than the August disaster, it was a much more concentrated solution that is used in the milling process rather than the more diluted tailings pond solution that spilled later, according to Philip M. Hocker, president of the Mineral Policy Center (MPC) in Washington, D.C. "A completely unusual set of circumstances coupled with human error," caused the May spill, mine manager Rejean Gourde said at the time.

The earlier accidents prompted intense lobbying by the opposition Working Peoples Alliance party and environmental groups, such as the Guyana Environmental Monitoring and Conservation Organization, for a review of the Omai contract. In response, the government appointed a review committee to study Omai's proposal to release cyanide waste into the Essequibo. The committee found that the cyanide concentration of the effluent exceeded allowable standards of the U.S. Environmental Protection Agency as well as similar regulations in Brazil and Canada. The committee recommended that the discharge be barred and that the environmental clauses of Omai's contract be closely monitored.

The August 19 spill was caused by the failure of the dam's compressed saprolite core, company officials say. The structural integrity of this highly weathered bedrock material had been attested to by two Canadian engineering firms. One of the firms, Vancouver-based Night Piesold, had approved the design of the dam's base but argued that the failure occurred in a portion of the dam that the company had not worked on.

Guyanese engineers not affiliated with the company say that the lining of the tailings pond probably failed as a result of explosions in the nearby Fennell Pit, where Omai miners extract the ore. These engineers say that Omai blasting occurred too close to the tailings dam. MPC's Hocker, who was in Guyana in late October advising the government on what steps might be taken to prevent a repeat of the accident, said that either there was a construction error or the engineers fundamentally misunderstood the construction material or the underlying soil. "The failure is dramatic," he says, "it's like standing on top of a glacier and looking down into crevasses extending across almost the entire width of the dam."

According to an Omai worker, the tragedy began around midnight on August 19, when waste was spotted streaming out of the tailings pond into mining operations. Two hours after sealing this breach, mine officials discovered a larger one at the opposite end of the dam that was venting cyanide wastes into the Omai River. Effluent poured out at a rate of 60,000 cubic meters per hour. Hocker, who watched videotapes of the leak, described it as "a torrent of cyanide-bearing water."

There are discrepancies over the concentration of the cyanide inside the dam. The company had reported concentrations of 6 parts per million (ppm), Hocker says. But the liquid that leaked had a 28 ppm cyanide concentration, he says. The effluent that the company had proposed to purposefully dump in the river was to have been diluted to 0.2 ppm, which is the maximum permitted by World Health Organization and Canadian government drinking water standards. Canadian standards call for a tougher 0.005 ppm maximum for aquatic life protection, since cyanide is highly toxic to fish.

Mining expert Roger Moody, who visited the area in 1994 to do a report for the Amerindian Peoples Association (though he was denied permission to visit the mine), called the accident "predictable." The company's plans to purposefully release effluent into the Essequibo last spring was a warning sign, he says. "The main reason that the company was proposing this dangerous step was because it could not, for much longer, safely contain the tailings building up behind the tailings dam -- especially if it accelerated the rate of milling ore," Moody says. "That is exactly what happened: the company did not build another tailings dam, it increased its throughput of ore, and the dam collapsed."

In an October 10, 1995 letter to Cambior Senior Vice President Henry Roy, Hocker criticized the mine for relying on "natural cyanide breakdown to avoid the relatively small cost of actively breaking down the cyanide in the tailing discharge" through chemical treatment. The MPC advocates active reduction of cyanide before tailings solutions are discharged into tailings ponds. "This reduces the risk to the public and to the environment from spills such as occurred at Omai," the letter says. "It also reduces the risk to groundwater in unlined impoundments like the Omai pond."

Moody says that Omai's poor environmental track record is consistent with that of Robert Friedland, a major investor in Golden Star, which was instrumental in setting up the Omai mine. Friedland's Galactic Resources Corporation was the mining firm responsible for the worst U.S. gold mine tailings disaster, at the Summitville Mine in Colorado. The mine was closed in 1991, following the discovery of a massive cyanide leak from its tailings pit. Galactic filed for bankruptcy in 1992, with Friedland dodging liability by resigning from the company (see "The Ugly Canadian: Robert Friedland and the Poisoning of the Americas," Multinational Monitor, November 1994). "The same cut-price, cut-corner measures used at the Galactic mine were also being employed at Omai," says Moody.

Down river Experts hired by the company after the spill argued that Essequibo water was safe to drink. But a United Nations report issued days after the spill indicated that "aquatic life in the Omai River and parts of the Essequibo River has been seriously impacted." The United Nations reported that the cyanide concentration in the rivers near the mining site the day after the spill was 15 ppm, declining to 3 ppm by August 22. A Pan-American Health Association report indicated that the spill killed all aquatic life in the Omai and at the junction where the Omai and Essequibo meet. Observers described carcasses of fish and hogs floating down the Essequibo.

Omai officials had a different spin. "Omai has suffered from a major industrial accident," said Omai general manager, Rejean Gourde. "We are, however, convinced that this accident has not resulted in an environmental disaster." Asked if Omai will discontinue its use of cyanide, Gourde said, "I don't think so." He added that "there is absolutely no actual evidence of loss of aquatic life in the Essequibo and certainly no danger to human life."

A statement from Guyana's Ministry of Health warned, however, that "Cyanide is known to be toxic to all forms of life, even small concentrations are lethal to aquatic life and are certainly harmful to human beings." Riverside residents were warned by the Ministry of Health not to use the water or to consume fish from the rivers. A ministry statement warned that the dilution of the contaminated water may not occur in a uniform fashion and that long-term exposure at lower dosages could cause mental retardation, while concentrated doses could be lethal.

Despite warnings delivered by helicopters and the media, residents continued to depend on the river. Potable water was distributed to some of the affected areas. But, even then, people depend on the rivers for more than drinking water. An Amerindian man asked, "What are we going to eat? They say they will bring water, but I depend on the fish from the river to feed my children."

Three people down river were hospitalized four days after the spill with suspected cyanide poisoning. The victims had not received potable water and had cooked with river water and eaten local shrimp and fish.

"We were very lucky that there was no known fatality from the spill," Hocker says. We shouldn't count on that again -- and insurance costs money." Hocker says there are ways to restart the mine with "substantially reduced environmental risks, but they are not free and will take more money than Omai has been willing to spend in the last two years."

Responding to the crisia

In a post-spill address to the nation, President Jagan said, "Omai has the responsibility to take certain measures to ensure the safety of workers and others and to protect the environment." Jagan pledged to speed passage of Guyana's Environmental Protection Bill, which was drafted in 1993. The bill would create an Environmental Protection Agency that would be charged with:

In addition, those convicted of violating the bill's provisions, would be subject to remedies and damage penalties and the court could order that the activity in question be discontinued. This would be a major change from the status quo. "There is clearly a pattern of problems at this site and fundamentally there is no policing," Hocker says. "It's Cambior policing itself."

A motion approved by Guyana's National Assembly directs the mine to stay closed during an environmental audit and an investigation of the disaster by a specially created five- member Commission of Inquiry.

Citing the commission's composition, critics fear that the body will produce a white wash. Bernie Grant, a Guyana-born British Member of Parliament, complained that environmentalists were not represented on the commission. The Guyana Human Rights Association (GHRA) issued a statement on October 10, 1995, questioning the impartiality of some commission members. Commission member Yolanda Foo, according to the GHRA, is a senior manager of the National Bank of Industry and Commerce (NBIC), a Royal Bank of Canada affiliate. The NBIC does business with Omai, while the Royal Bank does business with Omai's major shareholders, according to GHRA. The other members of the commission are a colonel in Guyana's military, a retired manager of a local manufacturing company, a retired magistrate and a legal adviser to the Guyana Geology and Mines Commission.

If the Commission proves tougher than activists predicted, the moratorium could keep the mine from reopening until next year. This would be a serious market blow, especially to Cambior, which was counting on Omai for 45 percent of its gold production this year.

Before the spill, Cambior stock sold on the Montreal exchange for $19.13 a share. On August 21, the price of a share fell to $15.01, dropping to $14.63 the day after. On the same day, Golden Star's stock fell $2 to $6.75 a share. Omai Human Resource Officer Norman McClean estimated that the spill will cost the company approximately $30 million. Cambior Senior Vice President Henry Roy said the company has budgeted $5 million for damage claims and to rebuild the tailings pond.

Skewered by the media, Omai gradually shook itself out of denial. Eleven days after the disaster, the company ran advertisements in Guyana newspapers apologizing for the accident. "We are very distressed and embarrassed over what has occurred," the notice said. "Omai fully accepts responsibility for the accident and for any legitimate reparation that is a consequence."

The sincerity of this apology may ultimately hinge on how the company or the courts define a "legitimate reparation." But part of the apology suggested that OGM's owners were more concerned with getting back to the gold than with shoring up their environmental problems. The ad said that the company hoped for a quick environmental audit and a speedy conclusion to the work of the commission to minimize the time before the mine can return to production.

Dependency's legacy

Neville Waldron, Conservation International's Guyana representative, says, "The tragedy is proof of the absolute necessity for thorough environmental assessments, regulations and enforcement of high-risk industries. The government has certainly learned a lesson from this disaster and should therefore take the necessary precautions to ensure the safe extraction and processing of natural resources in the future."

Questions linger, however, about how much Guyana has learned from the disaster and how much freedom the country has to institute serious reforms. Although the Jagan administration has condemned the spill, statements made by the president and his cabinet suggest that they have limited room to maneuver in their dealings with OGM.

The president, for example, expressed concern that production delays at Omai mine could have severe consequences for nation's economy. Omai's production of 252,000 ounces of gold in 1994 accounted for more than 20 percent of the country's gross domestic product (GDP). The Omai lode is estimated at 3.6 million ounces of gold, which are to be extracted over 10 years. If Omai is shut down for the rest of the year, as projected, growth in Guyana's GDP could slide from 6.7 percent to 4.7 percent in 1995, according to Finance Minister Bharrat Jagdeo.

Given its economic muscle, OGM is unlikely to submit to too many environmental conditions on renewed production. Asked what the company would do if the government banned the use of cyanide at the site, General Manager Rejean Gourde said cyanide leaching is "the only economical way" to work the mine.

Earlier, when critics urged the government to block Omai's plans to dump cyanide effluent in the Essequibo, Gourde threatened that such a move might cause the company "to pack up and go home."

This time around, Guyana's government is hearing a similar message. A September 14, 1995 letter from Cambior President Louis Gignac to Guyanese Prime Minister Samuel Hinds suggests that the Commission of Inquiry has limited time. "It would be reasonable for the company to plan a resumption of production under acceptable safety conditions no later than December 1," the letter says. Anyone who overlooked this message got another chance 10 days later, when Omai announced that it would lay off 300 workers until the mine reopens.

"The pressure to get things going again is very strong," says Hocker, who is on the Process Review Subcommittee that is advising the Commission of Inquiry on the technical alternatives available to preventing another spill. "The [Omai] project has tremendous momentum," he says. "Directing it is like turning an ocean liner -- and there aren't many powerful tugs around."

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