The Risks We Run: Mining, Communities and Political Risk Insurance.

The Risks We Run: Mining, Communities and Political Risk Insurance

Roger Moody. 2005. International Books, Utrecht. ISBN 905727 006 4, $30.00 (paper) pp. 322.

The risks of a mining development can be great: for people, communities, public and private sector organizations and the desired ecosystems on which we all depend. Who assumes the preponderance of risks and liabilities? Not the proponents nor those who underwrite a mineral development project through political risk insurance (such as Export Development Canada or the World Bank's Multilateral Investment Guarantee Agency among others) as one might assume at first blush. At least, such is the argument of environmental activist, Roger Moody, the founder of Minewatch International and the Managing editor of the Mines and Communities Network. In his book, Moody offers example after example of the way in which primarily 'northern'--based companies have developed mines in vulnerable communities in the southern hemisphere--often with devastating local environmental consequences. Examples offered include a litany of serious mining disasters, the dumping of mine tailings into important river systems and watersheds, involuntary resettlement of communities, human rights abuses and the 'blighting' of indigenous lands.

The book consists of two parts. The first part is a 'primer' on the world of political risk insurance (PRI). Companies buy PRI to protect themselves against a number of potential risks including asset expropriation, currency inconvertibility, political violence, contract repudiation, licence cancellation, wrongful calling of guarantees and non-delivery by foreign suppliers (pp. 40-43). Without such insurance, many large international mining ventures and other enterprises would not take place in less developed economies, particularly those with unstable political systems; the economic risks would be too high. Yet, as Part two of the book illustrates, those who pay the costs most dearly are the communities where the actual mining activities take place. Moody presents a series of highly publicized cases of mining developments that have had a devastating impact on local communities and the ecosystems on which they depend. Cases include, among others, Freeport's Grasberg gold and copper mine in West Papua, Cambior and Golden Star Resources Omai Gold Mines disastrous tailing pond spill in Guyana, and the CAMECO/ Kyrgyzaltyn joint venture, the Kumtor Gold mine in Kyrgyzstan. Through the use of these cases, Moody and his co-authors offer a highly critical account of the way in which the mineral industry and its backers conduct themselves in poor and remote areas of the world.

Propaganda? Representatives of the mineral industry might certainly suggest this was the case. Industry representatives would point to the millions of dollars, accompanied by personal risk, that are invested in exploration and development in the search for economic ore reserves. The more enlightened in the industry would acknowledge much of the historically poor record of the industry and the serious mining disasters outlined in Moody's book. They would also suggest, however, that they are bringing much needed revenues to countries thereby helping them to develop and participate in the global economy through the spread of a freer trade regime while promoting democracy in their wake. Moreover, industry representatives would also note that, at the local level, they have undertaken many initiatives to improve environmental practices, community infrastructure and local education and participation.

Well to some, particularly those who have witnessed the adverse consequences of the sector's activities, those arguments could also be construed as propaganda. Such debates are not resolved in a book such as this one, nor is this a perspective that Moody has any interest in addressing. He recognizes that all worldviews come with a specific perceptual lens and he makes no apologies about his which is unabashedly hard hitting--against the industry, the World Bank and the vast array of institutions ready to support a politically and economically influential global industry.

Just as corporations, companies, and governments may wish to promote mining through company reports, government documents, regulations, and export credit, Moody advances his own argument that political risk insurance does not protect the most vulnerable. He is quite persuasive. Particularly notable is Moody's scathing analysis of the World Bank which he suggests has inexcusably "contributed to the very impoverishment it pledges to annul" (p. 95). Consistent with the argument outlined in the previous paragraph, the Bank had determined that by supporting extractive industrial developments in less developed economies, it could help to abolish global poverty. The World Bank's own Extractive Industries Review, however, suggested that the status quo should not prevail and that the Bank would need to immediately redirect its "resources to making good the damages already done" (p. 75). The failure of the Bank to address adequately the concerns outlined in the Review, as well as those of members of the outraged international community including indigenous communities, ENGOs, Nobel Peace Prize winners and others, makes for very interesting reading.

From an academic perspective, however, one can't help but feel a little frustrated that Moody did not credibly offer the industry's, World Bank's or the other credit agency's justification or 'take' on the subject--if only for the purpose of critiquing those perspectives thereby strengthening his own argument. Moreover, the examples offered in this book would be excellent case studies for a political ecology analysis. It would also have been helpful to have seen the arguments framed by such a theoretical perspective. If Moody had done so, and had examined the industry's perspective, the book would have been very useful as a university text in a political geography, global political ecology, or environmental policy course. As it is, it serves as a very useful alternative reference to information offered by government or industry publications. It also does a nice job of summarizing the collective and somewhat scattered arguments of the global environmental non-government organizations who are serving as watchdogs over the international mineral industry.

Reviewed by Mary Louise McAllister, Associate Professor, Environment end Resource Studies, University of Waterloo