Mexican nightmare (Blackfire Exploration Inc.)

Mexican nightmare

Ken Gooding, Fifth Column, Mining Journal
(subscription) -
 

14 May 2010

This is a tale that involves murder, alleged intimidation, extortion, corruption and mining in Mexico. It all adds up to a nightmare for
Blackfire Exploration Ltd.

It started as another of those disputes between a company and local activists about a mine's location and the environmental impact of its operations. However, the situation gained global attention when Mariano Abarca Roblero, an anti-mining activist who had been campaigning for  the closure of Blackfire's barite mine at Grecia ejido, Chicomuselo, Mexico, was shot dead on
November 27.

Three men were quickly arrested in connection with the murder. Chiapas state prosecutors said that Jorge Carlos Sepulveda Calvo allegedly shot Mr Abarca four times at point blank range. He was identified by witnesses and tested positive for having recently fired a weapon.

The prosecutors also allege that Caralampio Lopez  Vazquez was waiting for Mr Sepulveda on a motorcycle so they could make a fast getaway. The third man detained is Ricardo Antonio Coutino Velasco. His role in the murder was not specified.

The prosecutors said all three accused had some connection with Blackfire. Mr Calvo worked as a weekend driver for the company. Mr Vazquez was a driver and translator for an official at Blackfire's mine, and Mr Velasco ran a haulage company that occasionally worked for Blackfire. (The company said Mr Velasco owned, or once owned, a water truck and had been contracted to keep dust under control.)

In the past few months, three more people have been arrested in connection with Mr Abarca's death but his family are pressing for the investigation to continue.

REMA protests

The murdered man, Mr Abarca, 51, was a member of a Mexican organisation known as REMA (the Mexican Network of People Affected by Mining) which claims that mining damages the environment and threatens the health of local communities.

Since June last year, Mr Abarca had led regular protests in Chicomuselo against the Blackfire mine. He was arrested after the company accused him of causing damage to its operations, REMA said. But he was released after ten days.

Brent Willis, Blackfire's president, told one interviewer that Mr Abarca was invited to visit the mine to see its operations and to discuss his concerns but did not accept the offer.

A few days before he was murdered, Mr Abarca filed charges against two Blackfire employees for threatening to shoot him if he did not stop organising local farmers who were protesting about the loss of their land and livelihood to the mine.

Mr Willis told Canadian media his company had no involvement in the shooting. He said: "There is no direct link between Blackfire and the fatality that occurred. What people do outside of the workplace is out of our area of responsibility."

Some observers suggest anti-mining activists in Mexico have faced threats of violence from mine employees who feel their jobs are jeopardised by the protests.

Local payments

To move on to a separate issue: Blackfire filed a legal complaint with the Congress of Chiapas in June last year complaining: "We have been extorted by the mayor of Chicomuselo who, since we began operations, has asked us for the amount of MP10,000 (US$800) a month to prevent the Mexican co-operative farm near where we mine from taking up arms."

The document, signed by Artemio Avila Cervera, a director of Blackfire, and acknowledged by the company to be authentic, included a spread sheet recording Blackfire's payments (totalling more than MP200,000 in just over a year) into the mayor's bank account.

According to Canada's Globe and Mail newspaper, which recently obtained the documents containing the allegations, the mayor, Julio Cesar Velazquez Calderon, also wanted Blackfire to provide him with airline tickets to Mexico City for his wife
and family, and a night of sex with a local celebrity.

A translation of the document reads: "Faced with such demands, we decided to grant no more of his requests. As a result, the mayor has begun a smear campaign, allying himself with the local priest against the company."

Blackfire asked the Congress to impeach the mayor. Mr Willis told the Globe and Mail: "This isn't bribery. We were taken advantage of. We are fighting against it."

Nevertheless, a coalition of Canadian non-governmental groups seized on this issue, and in March filed a memo with the Commercial Crime Section of the Royal Canadian Mounted Police (RCMP) in Calgary where Blackfire has its headquarters) asking it to investigate the affair under the Corruption of Foreign Public Officials Act. This is one of the few Canadian laws that applies internationally. Any person found guilty under this Act would face up to five years in jail.

Extortion or bribe?

Rick Arnold, co-ordinator of Common Frontiers, an NGO that opposes economic integration in the Americas, said it would be splitting hairs to debate whether Blackfire was paying extortion money or a bribe.

He added: "The regulations here point to the payment of money. If you pay, it doesn't matter if your intent is to bribe or whether somehow this very powerful mayor manages to extort you. It doesn't matter. You're guilty if it can be proven that you make these payments to seek favour."

Blackfire said it is surprised that the NGOs expressed their concerns in public "without contacting us and having a discussion. We
continue to work with Mexican officials and it is not appropriate to discuss this matter publicly." Nevertheless, "if the RCMP decide to investigate, we will be fully co-operative."

Corporal Lloyd Schoepp, at the RCMP Calgary Commercial Crime Section, who is dealing with the NGO's memo, told me: "I guess you could say this is of interest to us - and it certainly comes under our mandate. But, as a matter of policy, we can neither confirm or deny that we are investigating this case."

In the background

Blackfire is controlled by the Willis brothers, Brent and Brad, who between them are believed to own 51% of the company. Emiliano Canales, president of Blackfire's Mexican subsidiary, owns 48.9%. Blackfire will not confirm this - as a private company, it has no need to.

Understandably, Blackfire executives now prefer to keep the media at arm's length. They have hired a Calgary public relations company to take questions and then pass them on so that a considered, written response can be made. The PR company is very insistent that it is not acting as spokesman for Blackfire, but is merely a conduit to pass on media questions and then get responses back.

Brent Willis holds a BSc in petroleum engineering from the University of Wyoming and a petroleum technology diploma in drilling technology from the Southern Alberta Institute of Technology. During more than 20 years of experience in the
mining and drilling-fluid industries, he has been involved in bringing three mines into production.

His brother, Brad, the company's vice president, works "hands on" in Mexico and has played a key role in bringing the two mines in Chiapas into production. He graduated from the South Dakota School of Mines with a mining engineering degree,
and also holds a petroleum technology diploma in drilling technology from the Southern Alberta Institute.

Mr Canales, co-founder of Blackfire and president of the Mexican subsidiary, holds a bachelor's degree in maths and physics, with a major in political science from the Instituto Tecnológico y de Estudios Superiores de Monterrey. He is in charge of all Mexican public relations, human resources and the liaison between Blackfire Mexico and both state and federal governments.

Blackfire has 12 mineral properties in Canada, primarily in British Columbia, but its current focus is on three projects in Chiapas, Mexico, involving titanium and iron ore and barite. The barite open-pit mine started up in November 2008 and had been producing high-grade barite, which it sold to Mexican oil companies - barite, a dense sulphate material, is commonly used to add
weight to drilling fluid.

Brent Willis has said that gaining access to land, which includes negotiating rental payments with local landowners, had been the company's main challenge since Blackfire started working in Mexico in 2007.

Another issue

There is a third issue for Blackfire to cope with. On December 28, about a month after Mr Abarca was killed, the Ministry of Environment for the state of Chiapas ordered that Blackfire's barite mine be closed, citing several alleged infractions by the company.

Blackfire said three environmental issues were raised: improper road permit; inadequate dirt-road dust control; and an absence of CO2 vehicle-emission permits. Blackfire is workingwith the government to review these issues. It said: "Until these reviews are completed, the mine will remain closed, and it is difficult to predict when it will reopen."

Carolina Ochoa, speaking for the ministry, denied the closure was in any way connected with Mr Abarca's murder. She added: "They (Blackfire) have to get certain approvals and permits. There are standards that have to be met."

Brent Willis said: "We've never had any issues with environmental problems before. We have a very clean track record and people need to understand the environmental regulations in Mexico are very strict, if not more strict than in Canada."

The Mexican press reported that Blackfire was threatening to sue the Chiapas government for US$800 million in compensation, under Chapter 11 of the North American Free Trade Agreement, if the mine was not allowed to reopen.

Blackfire told me this is "a bad rumour. Rather, we are looking at every option possible to come to an amicable and friendly conclusion, and getback to work as a mining venture in Mexico".

Brad Willis has said in the past that Blackfire is in Mexico "for the long haul". And the company now tells me: "We are a Canadian company operating around the world to Canadian standards. We will continue to pursue business opportunities in other countries as part of a long-term vision for Blackfire Exploration Ltd. We plan to continue operations at the barite mine and all other Blackfire projects in Mexico."