Document(s) 8 of 18

Introduction

This study analyzes the history of mining in Almadén and the mining industry’s impacts on the socioeconomic evolution of the region. The Almadén district, which has monopolized the world mercury market for centuries, is currently experiencing a severe economic crisis. Given the region’s historical characteristics, Almadén represents an ideal example to use as a basis for posing several questions:

1. What are the positive impacts of mining activity?
2. What are its negative impacts?
3. What other economic activities could have been promoted as alternatives?
4. Have there been opportunities to promote sustainable development in the region?
5. What measures could have been taken to avoid the present situation?
6. When and how should these measures have been applied?

Clearly, the circumstances in Almadén are very different from those in the other mining areas (Bolivia, Chile and Peru) included in this project, especially with regards to the following issues:

• economic, social and cultural setting;
• historical context: The Almadén region has been mined for more than 2 000 years and the town of Almadén grew up around mining;
• Almadén is the only known deposit to contain 30 percent of the world’s reserves of a mineral;
• its exploitation has always been controlled by the state; and
• for centuries, the region dominated the world mercury market.

Given these differences, Almadén serves as a counterpoint to emerging mining areas, illustrating problems that arise during the terminal phase of a mining project. Identifying the problems that could have been avoided through timely and appropriate measures represents an important contribution to the integral analysis of the relations between a mining company and its surrounding community.

The Almadén mining district

The Almadén mining district, located in Ciudad Real, Spain (see Figure 1), occupies only 30 square kilometers and it is located within an area sparsely populated (population density of less than 25 inhabitants per square kilometer), where the average village has a population of about 2 000. Almadén’s population of 7 000 is an anomaly in the region. The area’s other traditional activities are agriculture and sheep farming. Hunting and incipient rural tourism are the only alternatives to traditional activities.

In order to understand Almadén’s current problems, one must have a working knowledge of the region’s history. Analysis of the current situation is pointless if it does not consider the historical causes of the existing imbalance between the wealth generated by mining and the efforts made toward economic sustainability.

Abundant documentary information exists regarding Almadén’s history over the last five centuries. Since the mine has always belonged to the state — the “Spanish crown” or the Economic Ministry — the existing information is very detailed in comparison to most other contemporary operations.

Almadén may have been mined as much as 6 000 years ago, although the first recorded references date to the year 490 B.C. During the Roman Empire, Almadén was systematically exploited (the mines were the property of the emperor). After the fall of the empire, there is no recorded reference to the Almadén mines until the year 711, when Spain fell under Arab domination and the deposit became the property of the Caliphs.

During the 12th century, the kingdom of Castilla re-conquered the terrain under Arab domination and the deposit came to be controlled by the Spanish State. The deposit’s economic importance increased during the 16th century after the discovery of gold and silver deposits in the Americas. The amalgamation method of recovering those metals changed the market by dramatically increasing the demand for mercury. At the same time, labour requirements increased and the area became populated by Moors, convicts or others attracted by fiscal and social incentives (such as exemption from military service).

Demand outpaced production during the 16th, 17th, and 18th centuries. During the second half of the 18th century, the incorporation of foreign mining technology (from Freiberg, Germany) and the progressive mechanization of the mining process increased productive capacity. During the 19th century, the industrial revolution brought new uses for mercury and caused a further increase in demand. Social and political instability during the second half of the 19th century and the early 20th century impeded the Almadén district from meeting market demands, in spite of constant production increases.

The industrial and military uses of mercury (such as use in explosives) caused demand to increase again during the first half of the 20th century. Later, its gradual replacement by other metals in the chemical industry’s production of such products as chlorine, alkaline batteries, fungicides, and anti-germinants as well as its disuse as a strategic metal for munitions production resulted in a sharp decline in demand. This was accentuated during the 1980s by pressure from environmentalists.

During the last three decades, the Almadén mining industry has suffered a deepening recession and during the 1980s posted losses for the first time in its long history. The consequent decline in the work force has had considerable social and economic effects on the region. MAYASA, the company exploiting the Almadén deposit, attempted to confront the new situation by designing a conversion plan and diversifying its activities. But in general, the plan has had unsatisfactory results.

Socioeconomic legacy of the Almadén mining district

Almadén’s historical legacy has given rise to certain attitudes and socioeconomic relations that appreciably affect on its current situation, and which must be kept in mind for an appropriate analysis of the region. These include:

1. A significant percentage of the active population “has worked for the state” over the centuries, in conditions of geographic isolation and without an alternative source of economic development. A close relationship has developed between the company and the social setting, producing distortions in labour relations. A prevalent attitude in the region is that “the mine has the obligation to provide jobs to local residents,” regardless of market conditions and the industry’s economic parameters. The ongoing labour relation with the state (which pays little but which provides stable employment) has fomented “functionary” labour habits (such as low productivity and a low innovative capacity). In addition, the state is frequently accused of deliberately inhibiting alternative development in Almadén, in order to ensure cheap labour and obtain greater profits.

Such attitudes are still present and local miners often express the view that “the company can trick them when it comes to a salary, but not when it comes to a job.” In other words, a distorted labour climate has existed latently.

2. The population has followed a trajectory similar to that of Almadén’s mining industry, experiencing nearly uninterrupted growth from the 16th to the mid-20th century. The 1960 census recorded Almadén’s highest population (13 443 inhabitants) and in 1956, Almadén Mines had 2 400 workers on the payroll. Since then, in just 30 years the mine work force has shrunk to its lowest levels in history, while the area’s population has decreased to late 19th century levels, largely due to migration away from the area. Figure 2 illustrates this decline.

Currently, while Spain is generally enjoying a period of development, Almadén is one of the most economically depressed areas in the country, having the lowest population density and per capita income. In 1997, the region registered 34.6 percent unemployment, far above the national average of 20.3 percent. Moreover, the population is aged, with some 56.3 percent inactive compared to a national average of 49.6 percent.

3. Compared to other deposits, Almadén has never needed to develop productive efficiency or competitiveness since it has always benefited from captive markets, due either to state monopolies or because it was very rich compared to other deposits. Figures 3 and 4 represent the benefits obtained, the average grades exploited, and Almadén’s production levels over time. As an example, during the early 1980s, the average grade of mercury worldwide was 0.5 percent, while Almadén was producing grades six times higher. The centuries-old imbalance of demand outpacing supply created a management attitude directed to simply producing greater quantities, thus inhibiting the need to produce mercury at competitive prices. Meanwhile, the prices were always “under control.”

4. The economic value of the mercury extracted from Almadén is impressive, especially considering its scarce dimensions. Adjusting for current values, the deposit has produced US $30 billion worth of mercury since the 16th century. Its strategic value has been even more important. During the 16th through 18th centuries, gold and silver mining in the Americas became the Spanish Empire’s economic base, and their extraction was highly dependent on mercury production. The Almadén deposit alone was a sufficient guarantee to underwrite credit requests by the Spanish state to lenders such as the Fuggers of Germany during the 16th and 17th centuries, as well as the Rothschilds during the 19th and 20th centuries.

Balance of mining activity in Almadén

Positive impacts

Thanks to the Almadén deposit’s dominant role and economic importance during the 17th and 18th centuries, the majority of positive impacts occurred during this period. As a result of mining activity, Almadén achieved higher growth than the surrounding areas, as well as facilities and infrastructure advanced for the time. Among the most important positive impacts of this period are:

• tax exemptions and other social advantages in place to attract labour and increase productive capacity;
• construction of a hexagonal bullring during the 17th century, which might seem anecdotal from a modern perspective but which had significant impact in the social context of the era;
• construction of the Miners’ Hospital in 1752, offering the most advanced health care in that time period; and
• founding of the Academy of Mine Overseers in 1777, a precursor to the Advanced School for Mining Engineers, which was established later in Madrid.

The aforementioned examples demonstrate that Almadén inhabitants of this era had access to a privileged social life, technology and health care, as well as advantageous fiscal exemptions. By comparing Almadén to the surrounding area, there is no doubt that these privileges were directly related to the mining industry.

Unfortunately, the government’s favourable attitude toward the wealth-producing region of Almadén was not maintained during the entire 19th century and most of the 20th century, in spite of the fact that the mercury mines continued to provide important resources for the state. During the last 175 years — with the exception of the PRECA plan, which will be described later — Almadén has not benefited from a single specific initiative that could be considered different from those in any other locality of a similar size in Spain.

Negative impacts

In contrast to the positive benefits mentioned above, the high levels of mercury production required the adoption of a series of measures. From the modern perspective, these had negative consequences, such as:

• significant deforestation of a considerable part of the surrounding area, because underground stabilization of the mine and the metallurgical processes of cinnabar processing require enormous quantities of wood;
• arrival of marginalized peoples such as prisoners or others who were subjected to forced labour, and who negatively influenced the social fabric of the area; and
• the industrial activity related to mercury production and processing over several centuries gave Almadén the reputation of being a highly contaminated area.

In practical terms, the negative consequences derived from mining are affecting the region’s future. During the last two decades, there have been attempts to promote agricultural activities in the region. But although the region produced quality products that complied with all health requirements, because they were produced in Almadén, it created either enormous marketing difficulties or else outright rejection. At the same time, attempts to retrain mining personnel for agricultural projects ran up against numerous problems of adaptation and resistance against new jobs.

The current situation

Over the centuries, mining activity has been incapable of acting as a motor for economic development or sustainable growth, in spite of its hegemonic position throughout the world. Almadén is currently situated in one of the most economically depressed regions in Spain. All social and economic indicators point to the fact that the region — which was born and grew up around mining — is declining as inexorably as its mining industry.

In spite of the existence of a strong industrial tradition and trained personnel from the School of Technical Engineers, the region’s organizational and infrastructure deficiencies have impeded the introduction of alternative industrial activities. The most glaring deficiency is the lack of adequate transportation infrastructure (railway or roadway) that would allow the development of other economic activities.

During the period 1985–1995, considerable efforts were made to improve the road network, which is currently on par with the national average. This implies an important qualitative advance with respect to previous years. But improvement has been slow in coming. The region would have greatly benefited from completed infrastructure during the mid-20th century, when industrializing processes were first introduced.

Finally, it is worth mentioning that an industrial park outside Almadén — a recent local government project — has attracted small businesses, mostly from the service industry. Likewise, recent years’ increase in the demand for rural tourism, as well as the region’s excellent resources for hunting activities, are beginning to provide alternative sources of income. However, these activities are still insufficient to maintain the population levels of recent decades.

Environmental assessment

One of Almadén’s most surprising aspects is its environmental situation. At first, one would suppose that a region that has been the world’s principal producer of a highly contaminating substance such as mercury would be profoundly polluted. Nevertheless, mercury mining has had negligible environmental effects in the region, which has no degraded or unproductive lands as a result of mercury content.

Although the region is not at the level of a “natural reserve”, Almadén’s flora and fauna are well preserved (or even extremely well preserved, considering the European average) and tourism dedicated to boar and deer hunting is one of the region’s principal economic activities. Deforestation caused by the use of wood as fuel for mercury metallurgy is the only appreciable environmental effect, and even this is concentrated in a few specific areas. Moreover, deforestation is not directly attributable to the contaminating effects of mercury, since any other type of mining or metallurgy would have had the same consequences.

Almadén’s geological history indicates that the deposits (formed by submarine volcanic eruptions more than 350 million years ago) have been close to the surface and in direct contact with subterranean aquifers during the last 250 million years. Most of the mineral ore is present as mercuric sulfide (cinnabar), but a significant percentage (5-10 percent) is present as metallic mercury distributed in droplets throughout the porous rock. Although inorganic mercury has a low solubility, it is surprising that such high quantities of mercury over such a prolonged time period have caused insignificant environmental effects.

The environmental impacts of mercury contamination in tropical climates are well known and generally attributed to the inappropriate use of mercury to recover gold by artisanal miners. Many authors maintain that under certain physico-chemical circumstances, metallic mercury can change to organic compounds with greater solubility and contaminating capacity (such as methyl mercury).

The Almadén region has a semi-arid climate where the average annual rainfall is 600 mm. The area has poor soils of scarce organic material and Mediterranean vegetation. Thus, the physico-chemical conditions are very different from those of the tropics. Even so, it is important to note that the region’s abundant mercury — which has been exposed to atmospheric conditions for prolonged time periods — has produced such negligible negative effects that inhabitants can regularly consume fish from local rivers without a single recorded case of poisoning. This situation suggests that the mechanisms of methyl mercury generation and the cause-effect relationships attributed to poisoning linked to small-scale gold mining are more complex than previously thought. Thus, Almadén provides an excellent natural analog for the verification of mercury’s natural cycles.

Analysis of corrective measures taken: Almadén’s conversion plan

At the end of the 1970s, it became apparent there were problems for the future of mercury mining. In Figure 5, we see how the market began to reflect the imminent crisis, due to growing environmental pressure and shifts in demand.

In addition, at that time the Almadén deposit had reserves to guarantee production for an estimated six years. The negative consequences for the Almadén region of an eventual closure of the mine and a recession in the mercury market were evident. For those reasons, a plan was developed that proposed two areas of action:

1. continue investments in mercury production as the only way of avoiding mine closure in the short term, while maintaining the region’s productivity level; and
2. conduct a detailed analysis of the Almadén region and prepare a diversification plan to identify alternatives to the mine’s inevitable closure, directed principally toward the development of the region’s agricultural, livestock and forestry sectors.

This plan was officially called PRECA (Conversion Plan for the Almadén Region), and the required investments — direct government subsidies to the mining company — were included in the general state budget published by order on 10 June 1978. The arguments used to justify these investments were based on the social and economic peculiarities of the region:

• the region is isolated, economically depressed, and far from industrial or consumption centers;
• the region lacks a sufficient communications system;
• the region lacks energy and raw materials; and
• the local economy depends on a single industry (mercury production, the only raw material abundant in the region).

The project’s objective was the development of the region through the promotion of other natural resources. Five priority action-areas were identified for 1979–1984.

1. Develop the exploitation of the mercury deposits, as well as deposits of lead, zinc, and other minerals under exploration.
2. Develop Dehesa de Castilseras, a 9 000-hectare rural estate that is property of MAYASA, in order to implement agricultural and livestock production as well as reforestation programs. This would absorb excess labour capacity and serve as a model for the development of a new local agricultural industry.
3. Promote the commercialization and distribution of local agricultural products.
4. Increase the production and marketing of mercury by-products with greater added value than the raw material.
5. Install a slaughterhouse and feed factory to provide incentives for the development of extensive livestock production.

According to the original plan, 2/3 of PRECA’s budget was to come from government contributions and 1/3 from funds generated by the mining company itself. In order to improve management capacity, the mining company exploiting the Almadén deposit changed its juridical and administrative status. In 1982 it became a limited liability company (MAYASA).

Nevertheless, in spite of good intentions, from the outset the plan had two severe flaws:

1. Lack of participation by the private sector. The plan’s design and implementation were the sole responsibility of the public sector.
2. Lack of community participation in the design and implementation of the plan.

As a result, the plan was unable to fulfill expectations. The new company’s financial situation was problematic from the beginning. As MAYASA’s 100 percent shareholder, the government was forced to make capital contributions through enlargements of social capital to offset losses. Table 1 depicts the evolution of MAYASA’s social capital, indicating those government contributions that had to be made to compensate for the aforementioned losses.

Leaving aside the economic results, from an operational point of view the new company reached a considerable level of diversification and surpassed PRECA’s initial forecasts in some cases. The most relevant areas of action are the following:

Mining sector: New mercury deposits were exploited. In addition, explorations for other substances, such as phosphates, wolfram, lead, and zinc, were conducted in order to decrease dependence on mercury. Several viable deposits were discovered, although the drop in metals prices during the 1980s impeded production.

Agricultural activities: Several projects identified by PRECA were carried out, including the construction of a livestock feed factory, development of irrigation systems, reforestation, and the construction of a cheese factory supplied by the company’s rural estate.

Mercury by-products: Installation of production facilities for mercury by-products (red oxide, yellow oxide, and mercuric chloride) destined for components of greater added value than the mere raw material.

Technical Services: Commercialization of the company’s knowledge, technology, and experience in outside consulting services. These activities had very satisfactory economic results and captured a large share of the domestic market. Nevertheless, relative to the company’s overall economic balance, the sales registered and profits generated never reached significant values. Due to the negligible impact on the region’s economy and the limited ability to create jobs, these activities could never be considered a social and economic alternative to mining.

Mining and public works services: Like the previous point, this entails using the company’s means and capacities to provide external services such as mine excavation and exploitation for other companies and excavation works for new roads. Though it generated a lower profit percentage level than technical services, this activity did register a considerable sales volume within the company’s overall balance and maintained considerable employment levels.

As a result of these activities, MAYASA was transformed from a company dedicated to the single activity of mercury mining to a diversified company in which mercury mining accounted for just 12 percent of sales, as we can appreciate in Table 2 for the years 1994, 1995 and 1996.

Another very different question is how to evaluate PRECA’s effectiveness in terms of the region’s sustainable economic development, as well as its profitability.

Assessment of the conversion plan for the Almadén region

Considering PRECA’s activities as a whole, it would be unfair to say that the government has not tried to find solutions to Almadén’s problems. However, the current situation makes it clear that the results obtained have been insufficient to satisfy both social and economic demands. Although the plan’s technical contents are sound, PRECA lacked consensus regarding both its design and the strategies used for its implementation. In addition, it is impossible to expect homogenous results from such a complex plan. What follows is a brief evaluation of a few of the most relevant activities.

Individualized analysis

Mining activities: This is the company’s specialty, although attempts to produce other minerals have not been successful. However, these results cannot be attributed to poor planning or lack of foresight, because the sharp drop in the prices for raw materials during the 1980s took many mining companies by surprise.

Sheep farming: This activity is perfectly suited to the region’s natural setting and was carried out correctly from a scientific standpoint, as evident by the various prizes won at livestock and commercial cheese fairs. Unfortunately, technical achievements were not accompanied by encouraging economic results. Livestock production never provided satisfactory income levels, nor did it serve as a model to foster the development of a commercial agriculture and livestock industry.

Technical services: This activity included the areas of geology, remote sensing, laboratory analysis and drilling. Although the activity reached a high level of efficiency and an acceptable market share with high profitability, it had little significance in terms of volume of business within the company.

Mining and public works services: This activity “apparently” produced the most favourable results, both economically and socially. But such results were indeed just an appearance: though it registered relatively high sales, it actually suffered low profitability. The comparison between Tables 3 and 4 allows us to see how an increase in sales did not necessarily entail a decrease in losses.

Meanwhile, almost all the services were provided outside of Almadén, sometimes displacing workers to very distant areas. The only economic impact felt directly in the region came from wages derived from a “temporary forced migration.”

Mercury by-products: the production of substances derived from mercury is well suited to the company’s technical knowledge and commercial experience, since the distribution chain for mercury by-products is almost identical to that used for mercury itself. The new industrial plants fit in well with Almadén’s productive capacity and the dimensions of the market. Unfortunately, the same environmental pressures that affected the mercury market also took their toll on demand for mercury by-products, forcing the recently inaugurated factories to close.

Agricultural activities: Agricultural activities in general and other specific projects such as fish farming, honey production, mushroom cultivation, animal feed production, and bio-mass were a resounding failure. These activities did not reach expected production volume or sales, nor did they absorb a significant portion of excess labour.

Overall analysis

Table 4 presents economic data for the entire PRECA period. From this information, we can establish that the state contributed US $150.8 million to sustain the company’s activities, of which US $59.7 million correspond to direct subsidies for mineral exploitation. The remainder corresponds to company losses assumed by the state.

In spite of such contributions, social and economic parameters clearly indicate that the region is suffering economic decline, and accomplishments achieved can only be evaluated negatively. From the social point of view as well as in terms of employment levels, the implementation of alternative activities has not lead to sustainable development. However, although figures indicate MAYASA has posted losses during the last two decades, exploitation of the Almadén deposits has nevertheless — on balance — been a tremendously profitable business for the state.

Relative assessment

Any analysis of such a long-term economic processes as mining cannot obtain correct results if incomplete data is used for short time periods. In such cases, the global perspective of its evolution is lost. The data in Table 4 is incontestable and the only possible interpretation is one of absolute failure. In contrast, Table 5 shows contributions to the public treasury made by mining exploitation in Almadén during the period 1960–1970.

Considering the decade prior to PRECA’s conception, Almadén’s contribution to state funds was more than six times higher than the investments for the maintenance of MAYASA — and also higher than the direct investments entailed by the PRECA project. The existing imbalance between Almadén’s contributions to state funds and the government contributions that were received by the district during the last two decades takes on truly disproportionate dimensions when considering these two factors.

The tremendous value of the mercury extracted from Almadén is equivalent to the current value of a gold deposit with an average grade of 800 grams/tonne and total reserves of 3 581 228 kilos.

Throughout its entire history the mining industry distinguished itself with an almost total lack of reinvestments. This is despite its historical earnings and capital gains generated by mercury mining in the region of Almadén.

Historically, all investments made in Almadén — such as the School of Mining Overseers, Miners’ Hospital, and metallurgical installations — have always been related in some way to attempts to improve mercury production. No diversification toward other potential activities has been undertaken. Meanwhile, recent investments in transportation infrastructure cannot be considered a specific initiative for the Almadén region, since they are part of the highway modernization plan that has affected the entire country. In other words, with the exception of PRECA, the region has not received any other specific assistance.

It is difficult to precisely compare Almadén area investments with those made in other regions. We have made a rough comparison with investments in the conversion of coal producing regions, both in terms of national initiatives and those agreed upon because of the European Union. The total investments made coupled with those pending for the near future for the conversion of coal producing regions, reach US $3.5 billion. These investments are expected to assist 35 508 workers, by which we can establish a ratio of US $99 114 per worker. In the case of mercury mining, keeping in mind the economic information in Table 4, the total amount invested in the Almadén region during the last 14 years is US $59 706 667. This amount has retrained 635 workers, by which we can establish a ratio of US $94 026 per worker.

Although simplistic, this comparison would seem to indicate that Almadén has received government treatment on par with other mining regions. However, the equality suggested by the figures is misleading and in reality there are noticeable practical differences. One should keep in mind that production in Almadén only began to suffer losses during the 1980s, having been very profitable in previous decades. In contrast, coal mining had suffered losses for several decades that were always paid for by the state, such that total subsidies (not just direct subsidies) have been much greater in the case of coal.

Meanwhile, the socioeconomic and political parameters of both cases are very different, which has without doubt favoured a greater injection of funds toward coal-producing regions. Among those parameters the following stand out:

• the coal industry implies several thousands of workers distributed in several regions, while mercury affects a few hundred workers concentrated in just one district;
• the coal industry constitutes a national social, economic and political problem of the first order, while the mercury problem is currently just a regional issue; and
• the mercury problem only affects Spain, while the coal problem affects several European countries.

These factors have given rise to different proposals for solutions to the problems. The magnitude of the coal issue has lent its protagonists a greater political weight at both the national and European levels. This translates into active participation in worker conversion plans by local political classes and, above all, unions. This participation has meant that resources are directed to the desired investments, including the creation of infrastructure, specific training plans and stimuli directed toward attracting private-sector projects that will create jobs.

In contrast, in the case of Almadén, any investments realized have been used to artificially sustain uneconomic activities and subsidize anticipated retirements. The investments have not stimulated private investment that would provide economic alternatives and thus have not created any hope whatsoever of sustainable development.

Finally, beyond the strictly economic quantification of the investments made and an evaluation of their results obtained, one question remains unanswered: Should Almadén’s treatment by the state be considered fair and proportional considering the contributions the region has made to the public treasury throughout its entire history?

Conclusions

Achieving “sustainable development” in a region is a complicated task that should integrate technical, environmental, political, legal, economic, financial, and social aspects in a holistic model. The simple injection of technical and economic resources, without considering the problem’s social dimensions, cannot guarantee sustainability. Ideally, a process of integrated management in any mining district whose goal is sustainable development should include:

• modernization, amplification and diversification of existing economic activities to compensate for the mining districts’ inability to attract ongoing alternative industries;
• improvement to regional infrastructure to improve the attraction to business and promote alternative development;
• promotion of professional development to correspond with the introduction of alternative industrial activities; and
• environmental improvement that allows for the development of sustainable recreational or tourist activities.

In addition, the development of a mining district should include mechanisms for reaching consensus regarding the changes being considered. Without consensus, the technical and economic contributions are completely insufficient. To draw conclusions regarding what measures, if applied correctly and opportunely, might have avoided the negative situation in Almadén, we must attempt to respond to questions 3, 5 and 6 as posed in the introduction.

What other economic activities could have been promoted as alternatives?

The Almadén region has excellent mineral resources besides mercury, as well as limited agricultural and forestry resources, and excellent (though also limited) hunting resources. For these reasons, the initiatives were conceived correctly, because they correspond to the region’s real potential. Their lack of success is due the methodology used for their implementation.

What measures could have been taken to avoid the present situation?

The promotion of private-sector participation would have allowed greater realism and dynamism, and would have avoided some of the failures in the implementation of the plan. The lack of private-sector participation and entrepreneurial dynamism can be considered a historic legacy of the mining district, which from its privileged commercial position should have participated in the technological developments of the industrial uses of mercury. This would have allowed an increase in benefits, commercial stability and technological development that would have provided a greater level of sustainability.

When and how should these measures have been applied?

The corrective measures that PRECA attempted came too late to solve the problems that had been brewing for centuries in the face of government passivity. Attempts to solve the problems only began during the terminal phase of the mining cycle, which is precisely when solutions are most complex and difficult to find. It is true that unforeseen factors and the drop in the mineral prices during the 1980s contributed to the failure. Nevertheless, beginning a diversification plan when mineral reserves would only last another six years, after several centuries of mining activity, can hardly be considered far-sighted.

As well, the methodology used to implement the Almadén conversion plan had grave defects.

Lack of social consensus, both in the design and the development of the plan. For centuries, the government unilaterally decided how to exploit the mercury deposits and similarly planned how to convert the region, without incorporating the opinions and efforts of affected social actors. Under these conditions, it is difficult to create a social climate favourable to change, especially in the context of a distorted labour market that generated illogical proposals and no objectivity while evaluating the proposals. For centuries, the community’s climate has been unreceptive to company-sponsored proposals, and in this sense it must assume its own share of responsibility. Meanwhile, for its part, the company never made efforts to improve this situation until it was too late.

Lack of communications policy has exacerbated the negative social climate. Company management has rarely concerned itself with local public opinion regarding its activities or projects. This lack of concern has historic roots in the mine’s connection to the state, which allowed the company to exercise its will indiscriminately under the protection of official power. The existence of an adequate communications policy between the company and its surroundings would have avoided the circulation of rumours, gradually corrected the distorted relations, and facilitated the acceptance of new projects.

Lack of private-sector participation. New investments have depended exclusively on public capital, whether from the central Treasury Department or from the regional government. In addition to weakening social consensus and competitiveness, a direct consequence of no private-sector participation was an excessive politicization, resulting in:

• utilization of the company and its projects as tools for political management, giving priority to political accomplishments over business or economic accomplishments;
• technical decapitalization of the company’s upper level management so that projects were managed by political appointees;
• loss of economic rigour in the business analysis, both in terms of economic feasibility and the design of commercial policies; and
• no continuity in the project’s management team. Instead, management was subject to political whims, which has impeded the implementation of a uniform business strategy.

These problems could have been avoided through the participation of experienced private companies who had control over marketing channels, as well as having strictly business and economic objectives.

Glossary of “best practices”

From the outset of a mining project, once the “initial impact” — which is the focus of the studies on Bolivia, Chile and Peru — has been overcome, attempts must be made to reach an equilibrium in which the mining operation interacts with other economic and social factors in the region. When mineral resources are depleted, the mining operation will cease and a new impact (or “de-impact”) will be felt within the area. The impact’s intensity can vary widely according to various criteria. Thus, it is not easy to provide general conduct guidelines that will be applicable in all cases. But, it is evident that when a mine closes there will be differing degrees of social and economic impacts. There is no question that these form part of the relationship between the mining company and the local community. Thus it is necessary to propose solutions to this inherent problem. These 8 points illustrate potential solutions.

In cases where the “in situ” transformation of exploited minerals is possible, their implementation should be promoted in the early stages of the mining project, in order to promote parallel industries that can outlast the closure of the mine.

Implementation of administrative measures must be established. These allow a significant part of the mining profits to return to the region in the form of improvements to infrastructure and the socioeconomic situation.

International experiences indicate that the state is not a good mining entrepreneur; moreover, it is incapable of developing profitable and sustainable economic enterprises. It is essential to attract the participation of private-sector companies to create stable employment possibilities in alternative industries.

The implementation of non-traditional economic activities requires a participatory consensus among the social and/or economic actors involved.

Creating a social climate favourable to the implementation of new activities requires a flexible and transparent communications policy, with the following objectives:

• distribution of information about the projects in a clear, reasonable manner;
• circulation of rumours must be avoided; and
• participatory consensus among all levels of players must be facilitated.

Because it is the entity responsible for planning and coordinating economic plans, the state should abstain from playing the role of entrepreneur. It must act only as a regulator with the following functions:

• pass appropriate legislation;
• promote fiscal exemptions that favour the participation of the private sector;
• act as arbitrator and inter-mediator in company-community relations; and
• control and ensure the correct use of public funds.

Each mining project is finite and its final impacts should be evaluated with anticipation. The correct evaluation of these impacts and the foresight to implement appropriate measures during the project’s initial phases are essential so as to minimize negative effects.

The mining company is not solely responsible for planning and promoting alternative activities. The state and the community share these responsibilities and should participate in identifying the mechanisms and incentives sufficient to attract the private sector. The mining company should be a privileged collaborating agent — but its responsibilities must not exceed its commercial and business functions.

References

Matilla Tascón, Antonio. 1958. Historia de las Minas de Almadén. Volumen I (desde la época romana hasta el año 1645). Consejo de Administración de Minas de Almadén y Arrayanes. Gráficas OSCA S.A. Madrid, Spain.

———. 1987. Historia de las Minas de Almadén. Volumen II (desde 1646 a 1799). Almadén y Arrayanes S.A. e Instituto de Estudios Fiscales, Ministerio de Hacienda, Madrid.

Blanco Piña, H.; Fernández Marina, E.; Araus Quilez, M. 1974. Análisis Económico de la Industria del Mercurio. First International Congress for Mercury, (1), 59–64. Barcelona, Spain.

Minas de Almadén y Arrayanes S.A. (Mayasa). 1982–1997. Annual Reports, Official files and archives.

Minerals Handbook. 1994–1995. Roskill. Information Service Ltd.

Martínez, Julio Zarraluqui. 1934. Los almacenes del azogue (minas de cinabrio). La historia frente a la tradición. Tomos 1 y 2. Librería Internacional de Romo. Madrid, Spain.

van Wambeke, Leopoldo. 1974. Production, consommation et demande future de mercure dans le monde et dans la Communauté Européenne. First International Congress for Mercury, (1), 65–92. Barcelona, Spain.

[1] This study was conducted by “International Institutional Consulting, S.L.,” which would like to thank Minas de Almadén y Arrayanes S.A. (MAYASA) for providing access to their archives.

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