1. Mining and Human Rights in Guatemala Concordia University Montreal June 1, 2005

2. Table of Contents I. IFC and the World Bank Group II. Background on the Marlin Gold Project III. Why IFC Supported the Marlin Project IV. What the Company Has Done V. Government’s Approach to Mining VI. World Bank Group Action Plan

3. International Bank for Reconstruction and Development International Development Association Lending and support for Governments International Finance Corporation Lending and investments for private sector projects Multilateral Guarantee Insurance Association Political risk guarantees for private sector projects International Center for the Settlement of Investment Disputes The World Bank Group – Four Institutions

4. International Finance Corporation  Part of the World Bank Group. Set up in 1956: 50 years old next year.  Net Worth of over $6 Billion  Mission: Promote Sustainable Private Sector Investment in Developing Countries to Reduce Poverty and Improve People ’ s Lives  Operates commercially - profitable every year since 1956  AAA Rating allows IFC to offer competitive financing to its clients  Syndicates finance (B loans) and mobilises co-finance from commercial banks, other financial institutions  Provides loans, equity, quasi-equity and technical assistance  Strong focus on poverty reduction and sustainability on all projects

5. Joint World Bank-IFC Global Mining Group World Bank Mining Policy Division Works with Governments to facilitate  Investor-friendly economy  Reformation and modernization of mining Sector  Privatization of state-owned assets  Community relations & equitable rent sharing IFC Mining Investment Division Works with Private Companies to ensure  Sound economic fundamentals  Sufficient funding and financial strength  Environmental rigor  Sensitivity to the community World Bank Global Mining Group

6. Some IFC mining deals in Frontier Countries SADIOLAAuMALI US$ 39.8 million 1995 MARLINAuGUATEMALA US$ 45 million 2004KOLWEZI Cu & Co DRC Board Approval 2005KOMIAlRUSSIA US$ 75 million 2004 MOZAL I & II AlMOZAMBIQUE US$ 145 Million 1997 & 2001 ZERAVSHANAuTAJIKISTAN US$ 7.5 million 1997

7. The Land

8. Background Background 11954-1996:Protracted, bitter civil war. 11996:-- Peace Accords. Government program to encourage investment: including reduction of mining royalty on gross revenues from 6% to 1% (on low side but reasonable compared to other countries; must look at entire tax package including income tax). -- ILO 169 ratified by Guatemala (effective in 1997). 11998:Marlin deposit discovered. 11999:Previous owner initiated discussions with communities and local governments. Land acquisition started. 22000:Initial exploratory drilling started. 22002:Glamis Gold acquires Montana. 22003: Extensive consultations.

9. Background (continued)  Aug 2003:Local disclosure of ESIA by Company.  Sept 2003:IFC starts appraisal.  Jan. 2004:President Berger elected.  March 24, 2004:IFC discloses ESIA.  June 3, 2004:IFC Board approval. IFC loan for $45 million.  December 3- 4, 2004: Government holds Mining Conference to promote stakeholder dialogue. Sponsored by WBG, Canadian government and local NGOs.  2004-2005:Various Bank / IFC missions meet with government, Catholic Church and local communities.

10. Why IFC Supported the Marlin Project  Mining with sustainable development can be a key to poverty reduction, but all risks and issues must be evaluated.  Glamis and Montana had demonstrated their commitment to sustainable development (including social and environmental issues).  Impressive consultation and community development work already had been done.  Employment generation, including opportunities for local suppliers in one of poorest regions of Guatemala.  Opportunities for additional community development programs.  Revenues to Government and benefit sharing with local municipality.

11. What Company Has Done  Up to 1,500 construction jobs (870 local indigenous; $2.4 million in salaries in 2004).  400 operational jobs; estimated 80% local indigenous people.  Company spent $1.5 million on non-project related local improvements.  Company has established community development foundation (contribution of $400,000 per year) to benefit municipalities.  Provision of health services to local communities.  Trained 250 people in vocational skills.  Local reforestation program (with support from IFC trust funds).  Company voluntarily will pay “royalty” of 0.1% (about $100K per year) to Sipacapa.  Company renews their community engagement and communications strategies.

12. Consultations  IFC reviewed and was satisfied with extensive local consultation and that there was local community support in the communities affected.  Land acquisition used willing buyer / seller process, i.e., free, prior and informed consent of all local land owners.  ILO 169 provides flexibility as to mechanisms for consultation.  IFC confirmed with new Berger government its support of project and its satisfaction with consultation process supervised by prior administration.

13. Government’s Approach to Mining  Policy  Promote mining investments that are technically and financially viable and socially and environmentally responsible  Link mining operations to local development  Strengthen the rule of law  Modernize the legal framework:  More specific environmental regulations and procedures  Consultation processes and ILO Convention 169  Streamline cadastral procedures  Distribution of fiscal revenues: royalties  Strengthen the institutions  Mining Cadastre  Information and transparency

14. Government’s Approach to Mining (cont.)  Develop its capacity as a facilitator of Civil Society – Private Sector – Government Partnerships  Promote dialogue and information (“foros mineros”)  Build capacity of local governments to manage revenues  Build capacity of communities to participate in local development planning  Independent and participatory monitoring Government MEM and other Ministries Civil Society NGOs, Local Communities Private Sector

15. Government’s Approach to Mining (cont.)  Government is more sensitive to mining concerns, taking a more proactive approach:  Government has formed high level commission to address mining issues at the national level (participants include government, Catholic church, local universities and an NGO).  Government is undertaking national and regional forums to discuss responsible mining with stakeholders.  Positive response to working with Bank on mining regulatory and institutional reform.  Government is trying to set up a national and local mediation mechanism for mining.

16. WBG Action Plan  Help the Company and Glamis to address key stakeholder concerns.  Assist the Company with its plans to establish an independent community-based monitoring of project’s impacts.  Work with the Company to :  Bolster the Sierra Madre Foundation  Target investments in communities  Building partnerships and relationships

17. WBG Action Plan (cont.)  Provide SME linkages support.  Provide technical assistance to municipalities if requested.  Support the government’s mediation and conflict resolution process.  Provide technical assistance to improve mining code and regualtions.

18. Profitable long run investment The Mining Company The Government The Community Employment, income, improved social services, infrastructure, spin-off businesses Income and economic growth Desired outcome: Sustainable Mining Providing Benefits to all Stakeholders Sharing of Benefits

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