Mining decision is a black eye for making investments here

The Wednesday court decision on the Crucitas open pit gold mine is another black eye for Costa Rica and a clear warning to international investors to take their business elsewhere. The country already is in the cellar on an index of the ease of doing business.

The developers of the gold mine have been trying to get the project started since at least 1996. The current operator is Infinito Gold Ltd. of Calgary, Canada. The company’s shares took a 50 percent hit Thursday when news of the court decision reached investors.

Now open pit mines are controversial, and maybe they should be forbidden. But Infinito’s subsidiary here, Industrias Infinito S.A, has all the permits and a concession.

The company could hardly expect a controversial and obviously activist lower court decision to ashcan the project, particularly after the Sala IV constitutional court said the concession was in order and the permits valid.

The three-judge panel of the Tribunal Contencioso Administrativo took two days to render its summary verdict. The Sala IV took weeks to analyze the case.

Infinito said it is awaiting the release of the written decision expected Dec. 14 before taking any action. The company said on its Web site that it “is considering all legal options including submitting an appeal to the relevant chamber of the Supreme Court of Costa Rica (Sala IV).”

The lower judicial panel stressed the environmental damage. That also is a factor in protests against the Hotel Riu on the Pacific coast. University students get very
emotional about cutting down 1,200 mountain ash trees at the Crucitas site in Cutris de San Carlos or Pacific mangroves, but they are blind to the tons of untreated raw sewage that pour into Central Valley streams each day en route to the Gulf of Nicoya.

The protests seem to be directed at local branches of foreign firms. At stake in Crucitas is $1.2 billion in gold. The Canadian firm would make a profit over the millions already invested, but the nation will get a cut, as will the men and women employed by the mine firm. At the end of the project, the land will be reclaimed.

Someone needs to explain to the university opponents that trees get old and fall down. A forest needs to be managed, which includes some lumbering as well as temporary clear cutting for open pit gold mines.

Infinito is well positioned now to have some smart international lawyers build a successful case against Costa Rica. The possible price tag is $700 million.

Meanwhile the judiciary should begin an investigation to determine if the three-judge tribunal exceeded its authority in contradicting the Sala IV and if there were other forces at work. The panel urged a criminal investigation of former president Óscar Arias Sánchez, and he was not even party to the case. Does not a sitting president have the flexibility to issue a decree advancing the work of a large business that will be of economic benefit to the country?

When the dust clears, the gold still will be there for someone.

The case is similar to Costa Rica’s refusal to allow an offshore exploratory petroleum well with the obvious effect on gasoline prices.

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