Big hopes for mining in Haiti fail to pan out amid concerns over regulation

The 50-year-old man from the village scrambled up a grassy hill to ask the onsite manager of a U.S. mining company for work. Joseph Tony had heard VCS Mining Inc. was bringing jobs, along with paved roads and electricity, to this corner of rural northern Haiti. "Everybody is waiting," he said.

But Williamcite Noel, the only VCS employee in Haiti, had nothing to offer. Although the company received one of two gold mining permits in December 2012, the project known by the hill on which is located, Morne Bossa, was frozen two months later when Parliament imposed a moratorium on mining activity amid deep concerns about whether the country has the capacity to adequately regulate such a complex industry.

Mining had been seen as a potential new source of revenue and jobs for impoverished Haiti after the January 2010 earthquake devastated the capital in the south. Companies spent $30 million prospecting, with the encouragement of a government eager to bring development to the countryside, where most people get by on subsistence farming and lack even basic services.

But the new era in mining that some had predicted remains out of reach because the Haiti has been unable to enact a revised mining law establishing such fundamental issues as the environmental regulations and royalty revenues.

Now it's too late for this government. The administration of President Michel Martelly, a musician who had little support in the Senate and Chamber of Deputies when he took office in May 2011, was unable to get the law completed and passed before Parliament was dissolved in January. The prospects when a new government takes over next year are uncertain.

"Everything is being put on hold," said Tucker Barrie, vice president of exploration for Majescor Resources Inc., a Canadian company that received the other production permit, for two concessions north of Morne Bossa.

Majescor once had up to 100 workers in Haiti assisting with its exploration, but went down to a single caretaker. After spending $5 million, the company last month turned over its stake to its Haitian subsidiary in exchange for a share of any future royalties. Barrie said that will require the local firm to find a new partner or outside capital.

"There will be little interest until the mining law issues are resolved," he said.

Mining giant Newmont Mining Corp., which was studying Haiti for potential sites in partnership with Eurasian Minerals Inc., suspended active exploration in the country in 2012, according to spokesman Omar Jabara.

Before the post-quake mining push, the mineral extraction industry had been dormant in Haiti since a copper mine near Gonaives closed in the 1970s. The country is believed to have the same veins of copper and gold found across the border in the Dominican Republic and could yield an estimated $20 billion in gold and other metals.

Angelo Viard, the Haitian-American president of VCS, pledged to hire locals, pave roads and bring electricity to the village near his 31-acre claim on Morne Bossa. The company built a basketball court and sponsored a soccer tournament, and Tony said that generated goodwill. "People have a lot of hope in the company," he said.

Many Haitians are not eager to see the development of mining, skeptical of an industry that could pollute a country with a history of weak regulation and environmental problems. Camille Chalmers, an economics professor and member of an advocacy group called the Mining Justice Collective, said any potential benefits for Haitian workers are vastly overstated.

"All the important jobs, with decent salaries, will go to people from abroad," said Chalmers, who has tracked the industry with lawyers from New York University's Global Justice Clinic. "The paved roads and the electricity are for the mines, not for the people."

Chalmers said the delay is good. "We would need a moratorium of at least 10 years to really create the conditions that would enable rational regulation of the industry in the public's interest," he said.

Critics also fear mining companies will have undue influence in a country long plagued by corruption. VCS fended off charges of buying influence after a press release about an upcoming book by author Peter Schweizer reported that the company had named to its board of directors Tony Rodham, a brother of Hillary Rodham Clinton, and ex-Prime Minister Jean-Max Bellerive, who was co-chairman of a reconstruction commission with former U.S. President Bill Clinton.

Viard said Bellerive and Rodham are advisers, not board members, and they were brought in after he already had the permit. "Mr. Rodham is a person who knows the industry and the financial world and may be able to point us to some party who may be interested in investing."

He said the country's uncertain political climate has scared away potential partners. "Any investors we talk to, they say 'It sounds like a great project but it is Haiti,'" said Viard. "People look at the instability, they look at the history."

Bellerive said he is an unpaid adviser, and Haiti should consider mining only if it can ensure that the environment will be protected, local communities are developed in conjunction with any mining and the government is fairly compensated. "I am not really sure we are prepared to face all those issues right now," he said.

Members of Parliament agreed, passing the resolution in December 2012 that halted mining activity after ruling that the permits already issued weren't legal. The government began working on new regulations with help from the World Bank, but critics say the process was being done without sufficient public input and that the draft was never publicly released.

A standoff between Martelly and the Senate over the legislation needed to schedule elections dragged on until Parliament was dissolved in January, ending prospects not just for the mining law but any other significant legislation. Legislative elections are scheduled for August and a presidential election for October.

The new Parliament won't be seated until next January, followed by a new president, who will then nominate a new prime minister and Cabinet in a process that typically takes several months in Haiti.  No one knows when, or even if, the new government will submit mining legislation.

In the meantime, Tony and others like him say they will be waiting for mining jobs and the infrastructure that would have to come with it. "The mine should be exploited so this area can be developed," he says. "It can't stay like this."