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Unfair Shares

Did opposition to a Canadian mine in Mexico drive divestment?

by Tim McSorley & Dawn Paley

Landowners from Ejido La Sierrita, Durango, protest at Excellon's Annual General Meeting in Toronto in April. Photo courtesy of ProDESC
Landowners from Ejido La Sierrita, Durango, protest at Excellon's Annual General Meeting in Toronto in April. Photo courtesy of ProDESC

MONTREAL—Communal landholders fighting against Canadian mining operations in the northern Mexican state of Durango received an unlikely boost this summer with the news that the Canada Pension Plan had divested from Toronto-based Excellon Resources.

This appears to be an unprecedented ethical move by Canada’s national pension fund. But the exact reason why the Canada Pension Plan dumped their Excellon stock in July remains unclear.

Excellon has been in a drawn-out conflict with locals that included a three-and-a-half-month roadside blockade of the mine in 2012. The blockade was erected by communal landholders from Ejido la Sierrita over accusations that Excellon had reneged on agreements signed by both parties in 2008.

Juan Daniel Pascual Alvarez was President of the Ejido from 2009 to 2012. “It was up to me, for three years, to go around in circles, first asking and later demanding that [the company] honour the agreements, which it didn’t,” he told The Dominion in a phone interview.

According to a report prepared by Canada’s United Steelworkers union, Excellon failed to fulfill promises related to, among other things, job creation for Ejido members, improved waste water treatment and the project’s proposed expansion. In addition, union activists say Excellon obstructed an organizing drive following the workplace death of a miner in 2010.

Without warning, the Canada Pension Plan Investment Board (CPPIB) sold all of its nearly three million shares in Excellon Resources in July.

Shortly after, the United Steelworkers (USW) issued a press release applauding the divestment, highlighting union and community campaigning against the company.

Joe Drexler, director of strategic campaigns at USW, told The Dominion he sees the Excellon divestment as a clear victory. Drexler helped coordinate the divestment campaign—the union’s first ever—along with the Canadian Labour Congress and Mexico's Los Mineros union. Metalworkers unions from Canada, the US and Mexico have been working together against neoliberal policies since before the North America Free Trade Agreement was signed in 1994. Last year, Drexler and other union advocates sat down with the CPPIB and argued that the pension fund, which has net assets worth $200 billion and investments all over the world, should sell off its Excellon stocks for ethical reasons.

At the time the CPPIB remained tight-lipped. They still are.

A CPPIB spokeswoman contacted by The Dominion said that the shares in Excellon were part of a passive fund that is managed based on how stocks are performing. While she could not provide more information than that, the insinuation was that the stocks were sold because of market fluctuations.

Indeed, Excellon's stock has dropped more than 35 per cent in the past year. Aside from the conflict with the community, the declining price of silver has added to the company’s financial woes. It registered significant losses in the first half of 2013.

“If Excellon’s financial characteristics declined because of human rights and community relations problems and this triggered its removal from an index used by CPPIB or any other investor, then it would be fair to say that that the events are linked,” wrote Peter Chapman, executive director of Vancouver's Shareholder Association for Research and Education, in an email to The Dominion. “But this is only if you can establish a causal connection between the social situation and the financial performance.”

After years of conflict on the ground in Mexico, and with an ongoing court case over the 1,100 hectares leased by the Ejido to the company, opponents of the mine are certain that the strife has taken a toll on investor confidence.

But there is a long way to go before major investment funds in Canada prioritize ethics over their bottom lines. In fact, the founding legislation of the CPPIB obliges it, legally, to prioritize profit. “The CPPIB staff implements its responsible investment program within the framework of its governing legislation, which means its application of social and environmental criteria is based on legal and financial considerations,” wrote Chapman. At the end of the day, profit is still king for Canada’s pension investments.

Back in Mexico, Pascual describes the current climate in his community as one of “tense calm,” while he and others work to shut down the mining operation.

“This is our land, it’s our home, and we can’t stop struggling for what’s ours,” said Pascual, who is working with others to achieve a ruling against the company by state agrarian authorities and to build resistance to Canadian mining in impacted communities throughout Mexico. At the end of the interview, Pascual spells out his position in no uncertain terms: “You can’t let someone arrive from outside and run you out of your own house.”

Dawn Paley is a freelance journalist and researcher who is currently working on her first book, about capitalism and the drug war in Mexico. Tim McSorley is an editor with the Media Co-op and a freelance journalist living in Montreal.

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