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Nicaragua's Failed Revolution

One Degree Removed

MLR Forestal's Ties to Indigenous and Afro-descendant Rights Violations

MLR Forestal's Ties to Indigenous and Afro-descendant Rights Violations

Over the last two decades, three men have exerted control over a set of massive mining concessions in a region of northeastern Nicaragua known as the Mining Triangle (Triángulo Minero). Despite protections for Indigenous land rights in Nicaraguan and international law, American mining engineer J. Randall Martin and two business partners — Thomas W. Lough of Canada and Sergio Ríos Molina of Nicaragua — have obtained approximately 200,000 hectares of land for mining concessions in the heart of titled Indigenous territories. This allegedly has been done without proper consultation of the Indigenous peoples who own these territories under Nicaraguan law, let alone their consent.

One Degree Removed: Introduction

Martin, Lough, and Ríos own mining companies — in whole or in part — that have left in their wake a laundry list of alleged environmental and social harms in Nicaragua and elsewhere in Latin America. As outlined in the Oakland Institute’s 2020 report Nicaragua’s Failed Revolution: The Indigenous Struggle for Saneamiento, industrial mining activities have led to Indigenous dispossession across the Caribbean coast autonomous regions. Companies owned and, in several instances, operated by Martin, Lough, and Ríos have also allegedly contaminated rivers, attempted to forcibly displace communities, and contributed to severe repression against mining opponents.

In the early 2000s, Martin, Lough, and Ríos began expanding into forestry in Nicaragua through their company Hemco de Nicaragua, S.A. (Hemco), which also owned and operated one of three major gold mines in the country. As they sold off the majority stake in Hemco in 2013, they kept control of its forestry offshoot by spinning it off to a company bearing the initials of their last names: MLR Forestal.

“MLR Forestal has sought to brand itself in terms far removed from the notorious environmental and social destruction engendered by the gold mining industry from which it emerged.”

Since its founding in 2012, MLR Forestal has sought to brand itself in terms far removed from the notorious environmental and social destruction engendered by the gold mining industry from which it emerged. Despite clear continuity in the ownership and management of the forestry business between MLR Forestal and Hemco, MLR Forestal claims to “invest in medium and long–term agroforestry businesses that are environmentally sustainable and socially responsible.” This rebranding has been persuasive enough for MLR Forestal to earn sustainability certifications from the Forest Stewardship Council (FSC) and UTZ for its teak and cacao products and US$10 million in financing from each of FMO and Finnfund, two development funds from the Netherlands and Finland, respectively.

Following the publication of Nicaragua’s Failed Revolution, the Oakland Institute has dug further into the history and impacts of MLR Forestal, its owners, and their other past and present ventures. As described below, this research reveals that MLR Forestal is only one degree removed from a slew of violations of Indigenous and Afro-descendant rights violations and other alleged social and environmental harms.

By financing and certifying MLR Forestal’s work, FMO, Finnfund, the FSC, and UTZ send a signal that they are willing to ignore evidence of harms committed by business owners in other enterprises so long as the financed or certified business itself meets their standards. Doing so makes the funds and certifiers complicit in the greenwashing of any harms associated with the recipient company’s owners.

Based on these findings, investors and certifiers should withdraw their support for MLR Forestal’s work unless and until:

  1. Free, prior, and informed consent is obtained from affected Indigenous and Afro-descendant communities for all projects associated with Martin, Lough, and Ríos in the region;

  2. Reparations are made for past and current damages to Indigenous and Afro-descendant communities from projects associated with Martin, Lough, and Ríos;

  3. The government of Nicaragua makes back payments with interest to Indigenous and Afro-descendant communities for state revenues owed to them from mining concessions in their territories under Law 445; and

  4. Indigenous and Afro-descendant communities’ demand for Saneamiento — healing of the land — is met.

Drying cocoa in MLR Forestal cacoa processing facility.

Drying cocoa in MLR Forestal cacoa processing facility from FMO's Nicaragua webpage. Source: FMO

MLR Forestal: A Brief History

Since its founding in 2012, MLR Forestal has promoted itself as a sustainable forestry company that is involved in the reforestation of areas previously deforested for agricultural activities, primarily focusing on teak and cacao. As of 2018, MLR held 3,785 hectares of land, of which 2,382 hectares had been planted, and sought to purchase an additional 1,900 hectares. Its work has been supported by a range of funds and certification organizations. The Forestry Stewardship Council (FSC) has certified MLR Forestal wood products as having come from “responsibly managed forests that provide environmental, social and economic benefits.” Likewise, UTZ has extended its certification of farming methods, worker safety, and environmental protections to MLR Forestal cacao products. MLR Forestal has also received $10 million loans from both FMO and Finnfund, the latter of which claims that MLR Forestal plantations scored “exceptionally high points in Finnfund’s development impact assessment” due to its capacity for carbon capture, environmental protection, and strengthening of the local economy.

MLR Forestal launched as a company with its acquisition of the Javier Chamorro Mora Forestry Project from Hemco de Nicaragua, S.A., a mining company, in 2013. Hemco had started the project in 2000 as the reforestation component of its environmental mitigation plan, but by 2008, the company transitioned the project to what it hoped would be an independently viable venture. Hemco had consolidated the project and decided to emphasize teak and cacao before MLR Forestal acquired it.

At first glance, MLR Forestal may appear to be a welcome new venture in the municipalities of Siuna and Bonanza, a region scarred by the human and environmental toll of more than a century of mineral extraction. Foreign mining firms have sought gold in the region since the 1880s, and, as detailed in Nicaragua’s Failed Revolution, they have driven the violent dispossession of the region’s Mayangna and Miskitu Indigenous peoples since that time. Colonos, the non-Indigenous settlers in the region, have also faced extreme poverty, especially in the aftermath of the Contra war of the 1980s. Mineral extraction and exploration activities have also led to widespread environmental degradation. MLR Forestal seems to present one kind of sustainable alternative to mineral extraction that the region so desperately needs, and Finnfund and FMO have clearly seen MLR Forestal in that light.

Separate in Name Only: MLR’s Business Entanglements

Unfortunately, the Oakland Institute’s research into the history of MLR Forestal reveals that the company has emerged from — and remains entangled with — the exact companies and individuals who created the harms that MLR Forestal now purports to redress.

“Research into the history of MLR Forestal reveals that the company has emerged from — and remains entangled with — the exact companies and individuals who created the harms that MLR Forestal now purports to redress.”

As previously mentioned, MLR Forestal de Nicaragua, S.A., takes its name from the last names of three central figures in Nicaraguan mining: J. Randall “Randy” Martin, Thomas W. Lough, and Sergio Ríos Molina. At present, it appears that Martin serves as chairman and chief executive officer of MLR, Ríos is president, and Lough is a director. The trio owns the company through the Luxembourg-registered holding company MLR (Agro-Forestry) S.à r.l.

Martin, Lough, and Ríos have been involved in the ownership and management of mining operations in Nicaragua for at least 25 years. As the right-wing government of president Violeta Barrios de Chamorro opened the door to a free-for-all privatization, Hemco — originally the Hunt Exploration and Mining Company — acquired the concession for the Bonanza gold mine in 1994. Hemco was a joint venture of Texas oilman Nelson Bunker Hunt and the McGregor family of Nicaragua.

Since then, Martin, Lough, and Ríos have been involved in the Bonanza mine and surrounding concessions to varying degrees through a web of closely related companies that they control. Concession rights were transferred from Hemco to Greenstone Resources, then back to Hemco, then to RNC Gold, and then divided between Yamana Gold (and later acquired by Calibre Mining) and RNC (Management) Ltd. (and later sold to Colombian mining company Grupo Mineros). The Bonanza mine and forestry operations were excluded from the sale to Yamana Gold, remaining in the possession of Martin, Lough, and Ríos. Martin, Lough, and Ríos rotated through management of Greenstone Resources, RNC Gold, and RNC (Management) Ltd.

In 2013, Martin, Lough, and Ríos sold Hemco — including the Bonanza mine, two mills, and surrounding concessions not held by Calibre Mining — to Grupo Mineros for some US$95 million. Grupo Mineros today holds a 95 percent stake in Hemco. The remaining five percent unowned by Grupo Mineros is held by earlier investors from the United States and Canada — presumably, Martin and Lough, respectively.

The acquisition of Hemco by Grupo Mineros coincided with MLR Forestal’s acquisition of the Javier Chamorro Mora Forestry Project from Hemco. Though documentation of how exactly MLR Forestal acquired the project is not publicly available, a prior attempted sale of Hemco may shed light. In 2010, Martin, Lough, and Ríos sought to sell Hemco to the Universal Gold Mining Corporation through a share purchase agreement. Though the option to purchase Hemco was not ultimately exercised, the agreement provides for the sale of Hemco’s “forestry operations and certain other real estate and vehicles” to a company owned by Martin, Lough, and Ríos prior to completing the sale of Hemco. A similar provision may have been included in the agreement for the Grupo Mineros purchase of Hemco in 2013, leading to the formation of MLR Forestal as Martin, Lough, and Ríos’s vehicle for maintaining full ownership of the forestry project. Despite these deep entanglements with Martin, Lough, and Ríos’s gold mining work, MLR Forestal has seemingly convinced funders that it is a freestanding company bringing sustainable development to the Mining Triangle, free from the owners’ baggage — baggage that is discussed further in the following sections.

Aside from the Bonanza mine, Martin, Lough, and Ríos have been involved in a number of mining companies with operations across the country and the region. Through Hemco, they also previously owned two mills in the Mining Triangle that process ore from artisanal miners within Hemco’s concessions. Through RNC Gold, they owned the La Libertad mine in Nicaragua, the San Andrés mine in Honduras, the Cerro Quema project in Panama, and the Picachos properties in Mexico. Martin and Ríos own Nicaragua Milling Company Ltd., which controls a similar mill in a region bordering Indigenous and Afro-descendant territories in Nicaragua’s southeast, and Ríos serves as its CEO. Nicaragua Milling also owns 8.6 percent of shares of Condor Gold, an investment aimed at bolstering Condor’s La India gold project. Martin owns 5.5 percent of shares of Soma Gold (formerly Para Resources); Martin and Ríos have both served on the company’s board, and Martin previously served as its chief operating officer. Martin had previously owned and served as president of Colombia Milling Ltd., which owned the El Limón mine in Colombia, before selling it to Para Resources. Martin and Lough also jointly held 23.7 percent of shares of Colombia Goldfields Ltd. and served as CEO and president, respectively, before selling it in 2009 to Medoro Resources, which later merged with Gran Colombia Gold. Martin also served on the boards of Medoro Resources and Gran Colombia Gold. Colombia Goldfields focused on gold exploration in Marmato, Colombia, and acquired mining rights there from RNC (Colombia) Limited, which had been owned by Lough’s company Investcol. Ríos has also served as president of the Nicaraguan Chamber of Mining (CAMINIC), the Nicaraguan mining sector’s industry group.

Overlooking San Andres mine, Honduras.

San Andrés Gold Mine, Honduras. (CC BY 2.0) Image cropped and resized. Credit: Garry Walsh

Allegations of Harms Associated with Owners

Bonanza Gold Mine, Plantel Vesmisa, and Plantel La Curva (Nicaragua)

Chart describing owners control of Bonanza Mine, Plantel Vesmisa, and Plantel La Curva
Figure 1: Martin, Lough, and Ríos’ control of Bonanza Mine, Plantel Vesmisa, and Plantel La Curva

Association With MLR Forestal’s owners

Owned by Greenstone Resources; later acquired by RNC Gold and RNC (Management) Ltd.; most recently sold to Grupo Mineros with possible continued five percent ownership by Martin and/or Lough (see above). The two mills for artisanal miners, Plantel Vesmisa and Plantel La Curva, were opened by Hemco inside its Bonanza-area concessions in 2010 and 2012 respectively, and were included in the Grupo Mineros acquisition.

Allegations

As detailed below and in Nicaragua’s Failed Revolution, concessions once or currently held by Hemco grew massively between 1994 and 2020, allegedly without any of the legally required consultations with the Indigenous peoples in whose territories they are located. By its nature as an open-pit mine, the Bonanza mine has created significant environmental and health harms through the dislodging of huge amounts of earth and the use of hazardous substances that have been discarded into a tailings pond. The mine is alleged to have been involved in the contamination of the Tungky River, which flows into the Mayangna Sauni Arungka territory. Communities in the Mayangna Sauni As territory have had to stop using rivers as sources for bathing and drinking water due to contamination that they blame on Hemco. The two mills located on the Hemco property also contribute to the colonization of Indigenous lands if, as is alleged, they purchase and process gold from artisanal miners who have been violently displacing Indigenous communities in the area to mine in their lands.

Plantel Los Ángeles (Nicaragua)

Los Angeles Plantel inauguration ceremony ribbon cutting.
2016 Plantel Los Angeles inauguration ceremony with Randy Martin, President. Source: Canal 8

Association With MLR Forestal’s Owners

Owned by Nicaragua Milling Company Limited.

Allegations

Plantel Los Ángeles, opened in 2016 with Martin as its president, is a gold mill for artisanal miners operating between La Libertad and Santo Domingo in Chontales Department, along the route between Managua and the southern region of Nicaragua’s Caribbean coast. The mill’s owners promoted it as an improvement in environmental and social conditions insofar as it would provide artisanal miners with an alternative to mercury use; however, they avoided any reference to the potential repercussions of introducing a mill that purchases gold ore from artisanal miners near Indigenous and Afro-descendant lands and biological reserves. Indeed, forest rangers from the Indigenous and Afro-descendant communities of the Rama-Kriol Territory have reported a sudden expansion of illegal mining activities inside their territory and the Indio Maíz Biological Reserve beginning in 2016, which has contributed to the colonization of Rama-Kriol communal lands and environmental destruction in the threatened region. Artisanal miners working illegally in the area report selling ore for milling in La Libertad. Artisanal miners found in the protected areas in 2020 by a joint commission of the Rama-Kriol Territorial Government and the Nicaraguan Army had come from Santo Domingo. There is no way that Plantel Los Ángeles, a major facility for exclusive use by artisanal miners in southern Nicaragua, prevents the purchasing and processing of gold from the Rama-Kriol Territory and Indio Maíz Biological Reserve. This drives further dispossession and destruction in the southeastern Nicaragua gold rush.

La India Gold Project (Nicaragua)

Protest by the Movimiento Comunal de Santa Cruz de la India. Source: Movimiento Comunal Santa
Protest by the Movimiento Comunal de Santa Cruz de la India. Source: Movimiento Comunal Santa

Association With MLR Forestal’s Owners

Owned by Condor Gold.

Allegations

There have been years of opposition to the mining project in the community of Santa Cruz de la India due to anticipated environmental effects and the possible displacement of the community. Opponents of the project have been met with riot police and death threats, amid other forms of pressure to drop their opposition. Amid community members’ complaints to the Inter-American Commission on Human Rights and the compliance mechanism of the World Bank's International Finance Corporation (IFC), the IFC divested from the project in June 2019. Nicaragua Milling Company invested in Condor Gold in order to finance the La India project in September 2019 — after the IFC had already divested.

San Andrés Gold Mine (Honduras)

Chart describing owners control of San Andres Gold Mine (Honduras).
Figure 2: Martin, Lough, and Ríos’ control of San Andrés Gold Mine (Honduras)

Association With MLR Forestal’s Owners

Optioned by Greenstone Resources in 1994; defaulted to Honduran-owned Minosa in 2000; RNC Gold operated the mine from 2000 to 2005 and purchased it in 2005; RNC Gold was acquired by Yamana Gold in 2006; the mine was acquired by Aura Minerals in 2009. Aside from Martin’s ownership stakes in the companies that owned the mine, he also served as its general manager under Minosa.

Allegations

In 2003, while Martin served as general manager of Minosa, he was accused of being responsible for the spilling of 300–500 gallons of cyanide solution from the San Andrés gold mine into the Lara River, threatening the lives of downriver communities like Azacualpa, and causing major environmental damage, including the death of 18,000 fish.

Marmato Gold Project (Colombia)

Chart showing owners control of the Marmato Gold project (Colombia).
Figure 3: Martin, Lough, and Ríos’ control of the Marmato Gold project (Colombia)

Association With MLR Forestal’s Owners

Owned by Colombia Goldfields Ltd. before its sale to Medoro in 2009 and Medoro’s subsequent acquisition by Gran Colombia Gold.

Allegations

As recognized by Colombia Goldfields in a filing with the SEC, the Marmato gold project was dependent upon the relocation of the Marmato community, which is majority Afro-descendant and Indigenous. The 500-year-old town has remained staunchly opposed to this displacement — first when Colombia Goldfields attempted it, and later as Medoro and Gran Colombia have continued pushing the plan. Colombia Goldfields was accused of orchestrating the mass displacement of people from its desired mining area, using coercive practices to force smallholders to sell their lands to the company and possibly coordinating with paramilitaries to force others out. After Medoro acquired the project, Father José Reinel Restrepo, the Marmato parish priest and a vocal opponent of the displacement plan, was assassinated under suspicious circumstances, leading to widespread suspicion that the mining company was involved.

Miskitu villager shares her testimony

A Miskitu villager shares her testimony of violence at the hands of colonos.

MLR Forestal Benefits from Past and Present Violations of Indigenous Rights

MLR Forestal’s work is unthinkable in the absence of the long thread of Indigenous rights violations that characterize mining operations in the Mining Triangle. Aside from Finnfund and FMO financing and Nicaraguan tax incentives, MLR Forestal’s economic viability depends upon the initial capital of its shareholders and on Hemco’s prior work to purchase, register, and begin developing forestry in large swathes of inexpensive, deforested lands. As shown in previous sections, MLR Forestal shareholders’ initial capital was generated at least in part from profits from the mining sector, which also subsidized the initial work performed by Hemco in the Javier Chamorro Mora Forestry Project.

“MLR Forestal’s work is unthinkable in the absence of the long thread of Indigenous rights violations that characterize mining operations in the Mining Triangle.”

That these profits have been generated through violations of Indigenous rights is a matter of public record. In Nicaragua’s Failed Revolution, the Oakland Institute has shown that massive mining concessions have been granted within Indigenous territories in the Mining Triangle region without the consultation processes or revenue sharing required under Law 445, which governs Indigenous and Afro-descendant communal land titling. Of the more than 20 percent of Nicaraguan national territory that is under issued or pending mining concessions, some 280,000 hectares — 2 percent of national territory — is under concessions to either Hemco or Calibre Mining and its subsidiaries, which purchased many of Hemco’s exploratory concessions. These concessions fall within the titled Indigenous Mayangna territories of Mayangna Sauni As, Mayangna Sauni Arungka, and Mayangna Sauni Tuahka, and the Miskitu territory of Wangki Twi — Tasba Raya, and all of these territories assure that they have not been consulted regarding the concessions.

In violation of Law 445, International Labour Organization (ILO) Convention 169, the jurisprudence of the Inter-American Court of Human Rights, and International Finance Corporation (IFC) performance standards, these concessions have been obtained without consent from, or even consultation with, the affected communities and territories. The Nicaraguan government has issued at least 26 administrative resolutions granting concessions to Hemco or transferring Hemco’s concessions to other mining companies since Law 445 was passed in 2003. That law requires that concessions within Indigenous and Afro-descendant territories be approved by the Regional Council of the North Caribbean Coast Autonomous Region, which in turn must consult with the concerned communities. Though the administrative resolutions cite specific approvals from the Regional Council, the fact that the territorial governments claim they have not been consulted aligns with other actions uncovered in Nicaragua’s Failed Revolution. Specifically, Governor Carlos Alemán Cunningham signed the Regional Council’s approval documents in the cases of mining concessions, and he has been accused of involvement in illegal land sales throughout the autonomous region.

These violations of the duty to consult and lack of free, prior, and informed consent — pillars of Indigenous rights around the world — have engendered violent dispossession. As part of their mineral explorations, concessionaires often purchase privately held lands within their concessions to carry out drilling and associated activities. These purchases are often made at below-market values by pressuring or tricking vulnerable smallholders, who in turn may enter Indigenous territories to seize lands or illegally purchase them from other settlers and clear them for agricultural activities. Such settlers are responsible for the widespread violence against Indigenous peoples associated with the colonization of their lands in the Mining Triangle region in recent years, as has been thoroughly documented in Nicaragua’s Failed Revolution. Hemco also has milling facilities for artisanal miners in its Bonanza properties, and there are concerns that these miners may be conducting their mining within Indigenous territories, as was the case in the forced displacement of the community of Murubila within the Wangki Li Aubra territory.

The harms done by Hemco as a company and Martin, Lough, and Ríos as its developers have provided the basis for MLR Forestal’s viability as a supposedly socially and environmentally responsible forestry enterprise. Hemco has violated Indigenous legal protections in obtaining mining concessions and is alleged to have contaminated waterways that are critical for the lives and livelihoods of Indigenous peoples. Even if, as Finnfund claims, “independent legal due diligence” was conducted for MLR Forestal’s land titles and no legal problems were detected, the track record of Martin, Lough, and Ríos’ companies elsewhere in Nicaragua and Latin America using strongarm tactics to acquire lands (e.g., Colombia Goldfields, as detailed above) should require a thorough investigation, the results of which should be made public. The stakes are enormously high — pressuring smallholders to sell below market value could easily push them to join the wave of dispossessed settlers who are terrorizing Indigenous communities in their search for new lands.

Aside from these connections to Hemco’s alleged Indigenous rights violations, MLR Forestal has stated its intention to violate environmental protections in Nicaragua’s forestry law (Law 462). Article 27 of the law designates all areas within 50 meters of rivers and streams as protected areas where forestry activities are prohibited. MLR Forestal states in a recent management plan that this would “make the project financially inviable” and instead proposes to protect only those areas that typically flood in heavy rains or that are within a zone twice the breadth of the river or stream on days without rain. MLR Forestal argues that another law makes compliance voluntary in the absence of government compensation to the company for the protected lands. This demonstrates that MLR Forestal’s plans for water conservation in a river basin with a large number of Indigenous communities are not even in compliance with the minimum legal standards.

Mining Companies and Executives Benefit from MLR Forestal's Profits and Reputation

At the same time that Hemco, Martin, Lough, and Ríos made MLR Forestal’s business possible through their profits from harmful mining activities, Hemco and its former developers may now benefit from MLR Forestal’s work. 

In the most obvious sense, the returns that Martin, Lough, and Ríos make on MLR Forestal’s operations can easily be reinvested in their other mining ventures, including stakes in mines owned by Condor Gold, Soma Gold, and possibly Hemco; mills owned by Nicaragua Milling Company Ltd. and possibly Hemco; any future mining projects; and any other ventures not uncovered in the Oakland Institute’s research. That means that loans from Finnfund and FMO will generate revenues for Martin, Lough, and Ríos, which may in turn fund mining projects that violate Law 445, ILO Convention 169, and IFC performance standards, among other laws and norms.

Within MLR Forestal and Hemco’s region of influence, MLR Forestal’s work may greenwash the harms already caused by the Hemco mine’s operators. The Javier Chamorro Mora Forestry Project was conceived by Hemco as an effort “to mitigate the damages that mining causes to the environment,” and received media attention as an effort to reduce the crisis of deforestation in the region prior to its sale to MLR Forestal. While international funders seem to have ignored the connections between MLR Forestal and Hemco in their social and environmental assessments, the distinctions between the two are likely to be far murkier for residents of Siuna and Bonanza, where much of the forestry project’s management — including forestry manager Róger Román and the late plantation manager Carlos Huete — continued on with MLR Forestal after its purchase of the project. This allowed Hemco to benefit from MLR Forestal’s reputation as a more socially and environmentally responsible business, which itself is made possible by international financing that would never be available to a company like Hemco that is alleged to seriously harm Indigenous peoples and the environment.

MLR Forestal health kits distributed during Covid-19 pandemic.
MLR Forestal health kits distributed in Bonanza during Covid-19 pandemic. Source: URACCAN

MLR Forestal’s provision of jobs, education, and other benefits to Indigenous peoples may also make it difficult for their representative institutions to reject Hemco projects in any future consultation process. Aside from MLR Forestal’s general social spending and role in the local economy, it has sought to distribute material goods to Indigenous Mayangna communities in the Bonanza area in particular — for instance, donating COVID-19 prevention kits to the communities of Mukuswas and Ispayulilna in Mayangna Sauni Arungka territory and Sakalwas in Mayangna Sauni As territory. If the state of Nicaragua were to consult with these territories over mining concessions, community members in those territories might understand MLR Forestal’s clientelistic program as having indebted them to Hemco due to the companies’ connections. Beyond current distributive programs, MLR Forestal’s owners could conceivably use the company as a vessel to effectively buy off opposition to Hemco’s concessions, especially since well-substantiated allegations of bribery have tarnished recent consultation processes in Nicaragua. In effect, MLR Forestal’s work could eliminate the possibility of a consultation process that complies with international standards for any Hemco concession.

Miskitu villagers holding a sign demanding saneamiento.

Miskitu villagers holding a sign demanding Saneamiento.

Hold MLR to Account and Protect Indigenous Lives and Livelihoods

The case of MLR Forestal sets a dangerous precedent for development banks and their lending practices. The owners of an unscrupulous gold mining company that has shown blatant disregard for Indigenous rights can simply form a new company, spin off an ethically palatable portion of their original business to that new company, rebrand the new company as socially and environmentally responsible, and receive financing from Finnfund and FMO. That financing then allows the owners to generate further profits that can be reinvested in harmful mining ventures and greenwash their mining companies’ work.

To avoid this perverse outcome, Finnfund and FMO should condition their financing of MLR Forestal on the following:

1. Free, prior, and informed consent is obtained from affected Indigenous and Afro-descendant communities for all projects associated with Martin, Lough, and Ríos in the region.

MLR Forestal’s shareholders hold a stake in and have earned profits from Hemco. Hemco has benefited from extensive mining concessions from the state for which the required free, prior, and informed consent was never received from the Indigenous peoples whose lands they propose to exploit. Finnfund and FMO should condition their financing of MLR Forestal on Hemco ceasing all activities in their concessions unless and until the government of Nicaragua holds a consultation process in line with international standards and receives free, prior, and informed consent from the affected Indigenous communities. Consultations should also be held with Indigenous and Afro-descendant communities affected by Nicaragua Milling Company Ltd.’s milling plant, which accepts ore from artisanal miners and is located near an Indigenous and Afro-descendant territory affected by illegal artisanal gold mining. These processes must be free of any form of pressure, and the consulted communities must be given access to the independent technical advisors and observers of their choosing.

2. Reparations are made for past and current damages to Indigenous and Afro-descendant communities from projects associated with Martin, Lough, and Ríos.

Mining ventures in Nicaragua under the names of Hemco, Nicaragua Milling Company Ltd., RNC Gold, and Greenstone Resources have generated profits for Martin, Lough, and Ríos while contributing to the illegal theft and destruction of Indigenous and Afro-descendant lands in the Mining Triangle and elsewhere in Nicaragua. Aside from the contamination of land and water in the Bonanza area mentioned previously, mills owned by Martin, Lough, and Ríos in the Mining Triangle and Chontales Department have given artisanal miners illegally working in Indigenous and Afro-descendant territories — often using and dumping mercury — a means to process their mined materials. These practices have resulted in both environmental destruction and the violent dispossession of Indigenous and Afro-descendant people by the miners. There is also concern that mines previously owned by Martin, Lough, and Ríos, such as the La Libertad mine in Chontales, may also have contributed to water contamination in basins that flow into the Rama-Kriol and Bluefields Creole territories. Financing for MLR Forestal should be made contingent on the payment of reparations for these past harms, and independent experts should be involved in determining the value of those harms.

3. The government of Nicaragua makes back payments with interest to Indigenous and Afro-descendant communities for state revenues owed to them from mining concessions in their territories under Law 445.

Under Law 445, 25 percent of state revenues generated in Indigenous and Afro-descendant territories must be transferred to the representative bodies of those territories and their constituent communities. This would include revenues from mining concessions, which generate US$4–12 per hectare and a three percent royalty for the state. Finnfund and FMO should make financing for MLR Forestal contingent on back payments with interest to the communities that have not received these payments since the passage of Law 445 and should insist that the payments continue to be made going forward. 

4. Indigenous and Afro-descendant peoples’ demand for Saneamiento — healing of the land — is met.

Over the past decade, Nicaragua’s Indigenous and Afro-descendant peoples have demanded that the state comply with its obligation under Law 445 and multiple decisions of the Inter-American Court of Human Rights: Saneamiento, or healing of the land. This entails the state removing all settlers and other third parties inside an Indigenous and/or Afro-descendant territory who do not hold legal titles or lease agreements with the appropriate community authorities. Aside from Hemco’s own illegal concessions and use of Indigenous lands, land purchases anywhere near Indigenous territories in Nicaragua are almost necessarily unethical in the absence of Saneamiento. Without removing settlers and halting the wave of violent dispossession, any land purchase along the frontier — and especially large ones like those carried out by MLR Forestal and Hemco — drives up the cost of land and pushes smallholders to colonize communal lands. Finnfund and FMO must listen to the demands of Indigenous and Afro-descendant leaders — individually and as represented in the Alliance of Indigenous and Afro-descendant Peoples of Nicaragua (APIAN) — and condition its financing near Nicaragua’s agricultural frontier on Saneamiento. Indigenous lives and livelihoods depend on it.