Source: Globe and Mail

Saturday, December 29, 2018

GEOFFREY YORK
ASMARA — The road from Eritrea’s mountain capital to the Red Sea is narrow and dangerous. It descends steeply in switchbacks and hairpin turns, dotted with stone crosses that mark the deaths of drivers who failed to navigate the hazards: rock falls, steep cliffs, wandering goats, herds of camels, troops of baboons.

Now, the mountain road has a new menace: Hundreds of massive, Chinese-made trucks are thundering in a steady procession to the sea, carrying thousands of tonnes of zinc and copper concentrate from a Canadian-owned mine and roaring perilously close to shepherds and village children along the route.

The mine’s majority owner, Vancouver-based Nevsun Resources Ltd., has been warned by its own human-rights auditor – and by the United Nations children’s agency – about the potentially lethal risks of the truck traffic on the mountain road, especially to local children.

Four people have been killed and almost a dozen injured in at least 19 accidents involving the mining trucks in the past five years, according to the auditor. But the trucks are not accountable to Nevsun – they are operated by state-owned Transhorn Trucking, a branch of an authoritarian government with one of the world’s worst human-rights records.

It’s an example of the state partnerships Nevsun has been obliged to accept in Eritrea as part of its profitable mining operation. Those partnerships – especially one with a state-owned construction company that often uses conscript labour – are now coming under increasing scrutiny in Canadian courts.

On Jan. 23, the Supreme Court of Canada will hear arguments from lawyers for Eritrean refugees and from Nevsun itself in a historic test case to determine whether a Canadian company can be sued in Canada over the alleged use of slave labour and other human-rights abuses at an overseas operation. Nevsun and its critics agree on one point: The case will have huge ramifications for Canadian businesses, establishing the extent of their accountability for their overseas investments.

The Bisha mine in Eritrea, originally a gold mine and now producing zinc and copper, is 60-per-cent owned by Nevsun and 40-per-cent owned by the Eritrean government, a brutal dictatorship that has locked up thousands of political prisoners without trial in its 25 years of oneparty rule. Bisha has become the single biggest source of revenue for the government, providing more than $1-billion in taxes and other payments since it started production in 2011. When Bisha was under development from 2008 to 2011, Nevsun’s main partner was a state-controlled company, Segen Construction.

Like many Eritrean state companies, Segen routinely uses conscript labour: workers who are drafted into indefinite service at 18 and forced to toil for the military or the government for as many as 25 years for menial wages. An inquiry by the United Nations has described the system as “enslavement.”

Nevsun acknowledged in 2013 that conscript workers may have been used during the construction of the mine. It said it has since established a screening system to prevent the use of such workers at the mine. And it said the mine is now operating “according to international standards of governance, workplace conditions, health, safety and human rights.”

But outside the mine site, those standards are more difficult to enforce. The trucking contract shows how Nevsun uses a state company for its export operations. In response to questions from The Globe and Mail this month, Nevsun declined to say whether it conducts any detailed monitoring of the trucking company’s daily operations, the fatalities and injuries on its route to the sea port or the compensation paid to its victims.

In interviews with The Globe, several drivers said the trucking company does not use conscripts. But they confirmed that they routinely drive on the hazardous mountain road at night, in shifts as long as 10 hours. They said they are paid about $130 a month, plus a travel allowance.

A 2015 human-rights audit, commissioned by Nevsun and conducted by LKL International Consulting Inc., reported that the Bisha trucks had already been involved in a number of accidents along the road to the Red Sea, including a fatal one. Road safety was an emerging human-rights issue at the mine because of the “significant increase” in the volume of trucks to the sea port and the “ramp-up to round-the-clock hauling of copper concentrate,” the audit said.

“The road safety issue is the area where the Bisha Mine’s operations have the most likely and potentially severe impacts on children,” the audit found. UNICEF had confirmed the risks for children on the truck route, the audit said.

“Heavy truck traffic will likely increase when the mine transitions into the zinc phase,” it said.

“The risk of road accidents will likely increase if roads and bridges along the main route … continue to deteriorate without an increase in maintenance efforts.”

While the mine has safety rules for its vehicles, “it is more difficult to enforce these policies outside the mine site, and there are many variables beyond the company’s control,” the audit said.

It noted that the state company, Transhorn, has installed GPS transmitters on some of its trucks to monitor its drivers. But the Eritrean Police Force “does not appear to do much” to control the speed of the trucks, it said.

Lloyd Lipsett, president of LKL International Consulting, said the number of accidents involving Bisha trucks has increased since the 2015 audit. In an interview with The Globe, he said he will be recommending to Nevsun that the company pay serious attention to the trucking issue. Installing GPS transmitters has failed to solve the problem, he said.

Nevsun also needs to review the issues of fatigue among drivers and their nighttime shifts on the mountain road, Mr. Lipsett said.

He said he has been assured that the victims of accidents or their families are paid compensation. But he acknowledged that he doesn’t know the amount of the payments and recommended a review of compensation practices. “It’s a legitimate question,” he said.

Todd Romaine, vice-president of corporate social responsibility at Nevsun, declined to answer most of The Globe’s questions about his company’s relationship with Transhorn Trucking.

“When off-site, service providers for road haulage have to comply with relevant Eritrean laws and regulations, with any incidents being reported to and investigated by the Eritrean Police Force and dealt with in accordance to Eritrean laws,” Mr.

Romaine said.

In September, Nevsun agreed to a $1.9-billion friendly takeover by a Chinese company, Zijin Mining Group Co. Ltd. The Chinese offer of $6 a share was due to expire on Friday afternoon, paving the way for the takeover to be completed soon. But even with Chinese ownership, the case at the Supreme Court of Canada will continue.

The case was launched by three Eritrean refugees who accuse Nevsun of violating international law against forced labour, slavery and torture. In rulings in 2016 and 2017, the Supreme Court of British Columbia and the B.C. Court of Appeal rejected Nevsun’s argument that the case could only be heard in Eritrea, not in Canada. The company has appealed to the Supreme Court, setting the stage for a crucial ruling on the responsibilities of Canadian mining companies that operate abroad.

In its appeal, Nevsun argues that the legal case by the Eritrean refugees would “magnify the risk” of further claims against Canadian companies. “Canadian courts are seeing growing numbers of claims against local defendants alleging that they are responsible, directly or indirectly, for misconduct alleged to have taken place in other countries, such as human rights abuses,” Nevsun says. “Mining companies, in particular, are increasingly facing such claims.”

The Mining Association of Canada, in an intervention in the case, warned that the case could create so much uncertainty for Canadian mining companies that they would not be able to assess their potential liabilities, forcing some to leave developing countries. The reduced investment would harm the people of those countries, it said.

More than half of the world’s publicly listed mining and exploration companies have their headquarters in Canada, the association noted.

But the B.C. Supreme Court, in its 2016 ruling, found there was a “real risk” of an “unfair trial” if the refugees were told to file their claims in Eritrea. They would face punishment if they tried to return to the country, and any Eritrean judge who ruled in their favour “would place his or her career and personal safety in jeopardy,” the court ruled.

Joe Fiorante, a Vancouverbased lawyer for the Eritrean refugees, said this is the first time a human-rights claim against a Canadian company for its overseas activities has made it this far.

“Every attempt prior to this case to bring a human-rights claim against a Canadian company for conduct at an overseas operation has failed to get past the first stage of the test,” he told The Globe in an interview. “It’s been dismissed either for lack of jurisdiction, or the courts of Canada have said this is better dealt with in the foreign court. This is the real first test case. It’s gotten over both of those hurdles.”

In their B.C. court testimony, the Eritrean refugees said they were conscripted under Eritrea’s national service program to work for Segen and another state-controlled company that built the Bisha mine under a contract from Nevsun or its local subsidiary.

They said they were forced to work 10 hours a day, six days a week. They were housed in huts without beds or electricity, and their only food was bread, soup and tea, they said in their affidavits. Their employers controlled them by using deprivation, physical assault, threats and torture, they said.

One of the refugees, Mihretab Yemane Tekle, said he was always very hungry and weak and often sick. With temperatures reaching 47 degrees Celsius and workers fully exposed to the sun, he once saw a co-worker collapse from the heat, he said.

Another man, Gize Yebeyo Araya, said he suffered burns and scars on his face as a result of the intense heat and sun. He said he witnessed co-workers being punished with beatings or left in the hot sun for hours with their hands and feet tied together behind their backs.

The refugees argue that Nevsun was fully aware that Eritrea was a “high-risk zone for humanrights abuses” when it accepted a commercial partnership with the Eritrean government at the Bisha mine. “Eritrea is one of the most repressive states in the world,” they said in their statement to the Supreme Court. “It has no constitution, legislature, elections, political opposition or independent media.”

In the years since the case was first launched, a total of 85 plaintiffs have joined the claim, making similar allegations of humanrights abuses.

Nevsun has denied all of the allegations. In its response to the B.C. legal claim, the mining company said the plaintiffs were never involved in Bisha construction at all. Even if they were, Nevsun said, they were never abused or mistreated, never coerced into labour and never subjected to harsh or dangerous working conditions.

Under the policies of its subsidiary at the mine, Nevsun said, its contractors were required to promise that they weren’t employing any conscripts. It said it took “reasonable steps” to enforce this policy. If any forced labour was occurring, the company said, it was unaware of it and did not condone it.

In 2013, in response to a Human Rights Watch report on evidence of slave labour at the Bisha mine, Nevsun released a statement with a somewhat different version. It said it had first become aware of the forced-labour allegations in early 2009, a few months after the start of construction at the mine, and only then did it obtain a guarantee from Segen that conscripts would not be used at the mine.

“The company expresses regret if certain employees of Segen were conscripts four years ago, in the early part of the Bisha Mine’s construction phase,” Nevsun said in its 2013 statement.

The mine is “required to use Segen for certain construction work at Bisha” and is prohibited from using other subcontractors for such work, it said.

Cliff Davis, president of Nevsun at the time, was asked about the human-rights issues in an interview with The Globe in 2011.

“There are always trade-offs in where you’re working,” he replied. “As a mining company, we shouldn’t be imposing some form of political environment that we’re familiar with.”

In 2014 and 2015, a United Nations inquiry into human rights in Eritrea heard testimony similar to the allegations by the Eritrean refugees in the Nevsun case. Eritrea’s government refused to allow the inquiry to visit the country, but UN investigators talked to 550 witnesses outside the country and found disturbing evidence of forced labour at the Bisha mine.

“Even though Segen tried to conceal their status, the majority of Segen’s ‘workers’ were in fact conscripts performing their national service,” the UN inquiry said in its 2015 report. “The majority of labourers were conscripts whose military units were put at the disposal of Segen by the army.”

Segen even deployed conscripts to build a network of tunnels for future mining operations at the site, the report said, citing testimony by witnesses.

“Compulsory work in underground mines is totally prohibited under international law,” it said.

Working conditions for the conscripts were often “bad and abusive,” the report found. Many were forced to work without safety equipment, and some were subjected to arduous double shifts – long daytime hours of hard manual labour followed by night shifts guarding the camp.

The lack of safety equipment led to fatal accidents, the report said. “Some died, they were not able to breathe,” a former Segen worker told the inquiry. “Others had no uniforms and suffered from chemical burns on the face, hands and body; they did not receive any medical care. A friend was working while oxygen was limited and he died because of it.”

While most of the allegations date back to Bisha’s construction phase, an association of human rights and refugee groups says it found evidence of conscript labour at Bisha as recently as 2016.

A report this year by Eritrea Focus, quoting dozens of former conscripts who escaped to other countries, said the conscripts were often forced to work as many as 12 hours a day at Bisha, 6½ days a week, in hazardous conditions that often caused illness.

“There is rigid enforcement of compulsory labour, and any attempt to escape is punished severely by military-type supervisors,” the report said.