November 23, 2011

On November 21st, Milwaukee Public Radio Station WUWM invited Matt Hrodey, a journalist with Milwaukee Magazine, and John Machulak, the lawyer for the mining company Commerce Group, to an on air interview about the Commerce Group’s actions in El Salvador and its suit for $100 million against the Salvadoran government.

The suit was the result of the Salvadoran government's 2006 decision to revoke the Commerce Group's mining permits, following evidence that its operations had contaminated local water with toxic heavy metals.  In retaliation, Commerce Group filed this suit before a World Bank trade court (the International Center for Settlementof Investment Disputes, ICSID) demanding not only payment for its investments but also for tens of millions of dollars in what it claims are “lost profits.”  The suit was filed under the foreign investor “protections” included the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA).

On March 14, 2011, the ICSID ruled in favor of the Salvadoran government in the case, stating that Commerce Group had violated ICSID regulations by failing to correctly terminate legal proceedings in local Salvadoran courts before filing their case internationally. However, the ICSID denied theSalvadoran government’s request to deem the case “frivolous” and therefore each party was required to pay $800,000 to cover the tribunal’s costs in addition onto their individual legal fees.

Unsatisfied with the decision, Commerce Group filed for an annulment of the decision in July of 2011and an ad hoc committee has formed to review that request.  This new twist in the decision is disappointing for the community of San Sebastian (the site of the Commerce Group mine), the social movement in El Salvador opposing mining, and the Midwest Coalition against Lethal Mining and other groups in North America.  

To listen to the interview click here


The San Sebastian River 

U.S.-El Salvador Sister Cities was disappointed and surprised to hear the way that Mr. Machulak spoke about the local water contamination, effects of the Commerce Group mine on the community of San Sebastian, and the way in which the company’s permits were revoked

On November 22nd, former Sister Cities staffer, Jan Morrill, sent the following clarifications to the Lake Effect program on WUWM. Unfortunately, there has been no response from the radio station:


Dear Mr. Teich,


I am writing today in response to a piece you did called “Waukesha Company’s MineFaces Uncertain Future” that aired on November 21st.  First I would like to thank you for covering this issue, which I think is important not only for Wisconsin but many communities across the U.S. and the continent. 


My name is Jan Morrill and until recently I was one of the staff people for U.S.-El Salvador Sister Cities (mentioned by Matt Hrodey in his interview).  For the last two years I have been working closely with the community of San Sebastian and organizations like the Centro de Investigacion sobre Inversion y Comercio, CEICOM, (mentioned by Mr. Machulakin his interview).  I would like to take this opportunity to respond to some inaccuracies presented by Mr. Machulak during his interview.


I would like to focus specifically on four points that Mr. Machulak misrepresented:


1.     Mr. Machulak denied the existence of heavy metals in the wells and water sources in San Sebastian by citing a 2010 CEICOM study and said “…these same samples do not show high metal content in the wells, in their water supplies.” Actually, the majority of this study, called Analysis de calidad de agua y su relación con la salud y calidad de vida de los pobladores del Río San Sebastián, en la zona de minas San Sebastián is dedicated to showing the existence of aluminum, zinc, iron, magnesium as well as nickel in the water supply and explaining their effects on human health.  The primary conclusion of that very study was “The heavy metals found in high concentration in the acid drainage current of the San Sebastian Mountain Mine, in the town of San Sebastian, are:


Table 23


Concentration found/ ppm

Concentration allowed by the Salvadoran National Committee of Science and Technology (CONACYT)

Percentage over allowed concentration

























*Samples only taken during rainy season, andthe metal was found in two points ”


The study does in fact reference coliform bacteria as Mr. Machulak says, although at no point does itrefer to e coli (and not all coliform bacteria is not necessarily e coli), but it also clearly states “The problem inherited [by the river] is a permanent current of water known as ‘acid mine drainage’ that in the rainy season discharges in the river a volume of three liters per second.”

2. The moratorium in El Salvador was the result of the Salvadoran government’s response to the expressed opinion of the majority of the Salvadoran population to ban mining. In 2007 a poll by the University of Central America found that 62.5% of the population thought El Salvador is not a country where mining is appropriate.  Mr. Machulak himself referred to the fact that both left and right wing parities decided to not publically favor mining because it was political suicide. That means that the government was responding to the legitimate demands of the population to not allow mining.  However, Commerce Group, with its ICSID suit, is trying to subvert national sovereignty and the expressed will ofthe Salvadoran people.  Mr. Machulak stated that Commerce Group has been saying to the Salvadoran government “[Mining] is a great resource for your country.  Do you want to buy it?”  The Salvadoran government’s answer, respecting the demands of the Salvadoran people, has been “No.” Commerce Group should not try nor be allowed to force them to change their answer.  It is the right of each country to decide its own environmental and public health regulations and how it will protect its natural resources.

3. At one point Mr.Machulak refers to the creation of jobs for the local economy.  There are three things worth noting:  1. If all the mining projectsin the entire country of El Salvador were approved they would only create about 13,800 jobs for a country with a population of 6.1 million.  2. The average life of a gold mine is around 8 years, so the jobs created would be short term at best 3. The potential environmental and public health effects of a larger scale mining projects have the possibility to outlast any short term economic benefits created by the mining industry.  There are documented cases to this dayin Europe of acid mine drainage resulting from mining projects carried outby the Romans.

4. Finally, Mr.Machulak mentions to the San Cristobal site where he claims the ore was processed.  It is important to note that acid mine drainage is not necessarily a result of the ore processing and gold extraction.  Acid mine drainage “refers to the outflow of acidic water from (usually abandoned) metal mines or coal mines. However, other areas where the earth has been disturbed ( sites, subdivisions, transportation corridors, etc.) may also contribute acid rock drainage to the environment.”  Therefore, Commerce Group may very well have caused or at least contributed to the acid mine drainage in the San Sebastian River when they were extracting the ore, or as a result of the way they maintained the mining site. Also, it is worth noting that a 2011 study by CEICOM found high levels of contamination in the community of San Cristobal. 

Mr. Teich, I sincerely hope that you will take this information into account and correct these inaccuracies that were broadcast during your show.  I have copies of the all of the CEICOM studies referenced in this email, and can provide them for you if you would like. I also would be more than happy to answer any further questions youmight have. 

Thank you for your time and consideration.


The San Sebastian River



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