Canada dominates energy and mining in the Amazon

Canadian companies have established themselves as the ones that invest the most in energy and mining projects in the Amazon. Leaving behind Chinese companies that control 10% in the hydroelectric and extractive sectors, according to the latest The data published by the American think tank Inter-American Dialogue.

“I don’t think anyone knew exactly how active Canada is in the Amazon,” said Lisa Viscidi, director of the Inter-American Dialogue’s energy, climate change and extractive industries program, who at the same time was surprise by the lower level of Chinese participation in the topic.

The collection of data on hydropower, oil, gas and mining in the Amazon aims to identify companies and banks with projects in a vital ecosystem. The Amazon is a critical carbon sink and is home to several million species of plants and animals, as well as indigenous groups, according to the report. Energy and mining in the Amazon.

Data shows that in South America, 197 Canadian mining companies own or operate projects worth an estimated $ 8 billion. In an area that the report defines as “biogeographical Amazonia” – the cradle of its biodiversity which extends beyond legal and political borders – they control shares of capital equivalent to 47 entire projects.

The Colombian Amazon is the one that has been most affected by Canadian businesses. Across Latin America, Americans control 30 oil blocks, more than any other foreign entity. And 24 of them are in coffee country.

Most publicly traded mining companies with projects in Latin America are listed in Toronto, which has the largest number of listed oil and mining companies in the world.

In addition to the nationalities of the investors, the research collects data on the operational situation of projects in sectors with high endemic social and environmental risk, as well as on their novelty or their participation through a merger or acquisition. It also records whether the owners and operators of the projects are public or private companies.

State-owned companies, domestic and foreign, dominate energy and mining projects in countries of the world’s largest tropical basin, report says investigation. The former invest mainly in oil and gas, and the latter in mining.

China and the Amazon: long-term energy interests

With just under 10%, China is the leading foreign investor in hydroelectric projects in the Amazon.

His main projects include the problematic Coca-Codo Sinclair factory in Ecuador and the controversial prey of Belo Monte from Brazil. However, its main interests in South American oil and gas lie elsewhere.

Much of this, Viscidi said, is because China is concerned about energy security, forcing it to control large, proven oil reserves that are typically found offshore. Oil fields in the Amazon Basin tend to have lower production levels and attract interest from small businesses, he said.

The exception is the Ishpingo-Tambococha-Tiputini (ITT) field, in the Ecuadorian Yasuní National Park, of great biodiversity.

The Yasuní was the subject of a controversial and unsuccessful attempt by former President Rafael Correa to attract international donations in exchange for keeping its oil on the ground. The park is also home to isolated tribal people.

Andes Petroleum, a joint venture of China Petrochemical Corporation (SINOPEC) and China National Petroleum Corporation, has invested in three blocks of the Amazon park, according to the database. Among the blocks operated by the affiliated company PetroOriental SA is block number 14 (called Nantu).

The native Waorani recently sued PetroOriental SA, claiming that the impact of high-emission practices of gaseous by-product combustion, known as combustion and ventilation, during oil extraction in Block 14 violated their human rights. The process also violated the rights of nature, enshrined in the 2008 amendments to the Ecuadorian Constitution, they argued.

Pressure on environmental standards

Disputes with Ecuadorian Amazonian communities have contributed to the perception that Chinese companies have lower environmental standards than other international entities operating abroad.

However, a 2017 study by Boston University found no evidence that Chinese companies are doing better or worse than other nationalities with projects in Latin America. Although, according to the Inter-American Dialogue report, the track record of Chinese companies varies according to the “own requirements of host countries,” and the agreements in which these companies participate are more opaque.

“When there is a Chinese project, a lot more attention is paid,” said Viscidi, explaining that this may be due to the perception that Chinese companies apply fewer socio-environmental guarantees and are less averse to environmental risks, social or governance.

Large international companies stay on the sidelines

With few exceptions, international energy and mining companies have stayed away from operations in the Amazon. In addition to difficulties in accessing resources in remote locations, they may face pressure from shareholders to demonstrate that they meet the highest environmental, social and governance (ESG) standards.

Project lenders have also come under scrutiny. In the past, multilateral banks such as the World Bank, CAF (Latin American Development Bank) and the Inter-American Development Bank have provided long-term finance for hydroelectric and mining development in Amazon countries. However, they have only granted two loans since 2015, according to the Diálogo survey.

In addition to the long payback period, hydroelectric projects in the Amazon are associated with serious social and environmental impacts, such as the resettlement of indigenous peoples, alteration of the course of rivers, their species and the populations that depend on them.

Large-scale deforestation often results from the creation of reservoirs, releasing the carbon stored in trees into the atmosphere.

However, the withdrawal of state and multilateral banks and companies could reduce their ability to oversee projects and open the door to lenders with lower standards, according to the report.

For Viscidi, there needs to be greater public awareness and greater pressure on public companies on environmental issues in general. He noted that utilities and oil companies are responsible for a significant share of countries’ carbon emissions and will play a key role in the energy transition.

“The citizens are the most important shareholders. Pressure from society in general is necessary and it will only come if there is good information and good awareness,” he said.