MAC: Mines and Communities

Argentina's Glacier Protection Bill could shut mines

Published by MAC on 2010-08-22
Source: PlanetArk

A draft bill to protect Argentina's glaciers edges closer to being passed, thus jeopardising Barrick's proposed Pascua Lama gold mine and other projects. See: Argentine Glacier Bill On Ice As Debate Fails

However, one of the country's constitutional experts points out that Barrick "could demand hundreds of millions of dollars in compensation from the Argentine government because these mining activities were not banned when they made these investments."

A fortnight ago, an international court backed Canada's Pacific Rim in a multi-million dollar suit for compensation from the government of El Salvador. See: PacRim wins first stage of compensation battle against El Salvador

Menawhile, mining provinces (notably San Juan, where Pascua Lama is located) will try to sidestep the proposed federal glacier bill by passing less restrictive provincial glacier legislation; while the conflict between federal and provincial laws may trigger domestic litigation.


Argentine Glacier Protection Bill Could Shut Mines

Luis Andres Henao


18 August 2010

An Argentine bill to protect glaciers by banning mining in ice zones could hinder a new multibillion-dollar gold mine, shutter some projects and slow investment, although some mining provinces seeking to circumvent the measure are passing their own laws.

The Senate is weighing the politically popular bill, backed by the opposition, after the lower house of Congress passed it last week. Proponents say it is crucial to ensuring Argentina's water supplies into the future.

President Cristina Fernandez has said she would sign the bill, even though she vetoed a similar law two years ago, citing economic grounds.

The proposed law could make it more expensive -- or even impossible -- for Barrick Gold Corp to develop Pascua Lama, one of the world's last known mega-gold finds being built along the mountainous Argentina-Chile border.

"The law's passage could have a deep impact on Pascua Lama and could limit the development of other mining projects, many of them high in the Andes, by banning them outright," said Damian Altgelt, general manager of the CAEM mining chamber.

Barrick says it has already committed over 25 percent of the capital for Pascua Lama, with the project's pre-production capital budget estimated at $2.8 billion to $3.0 billion.

The bill, which also bans oil drilling on the country's glaciers, is aimed at safeguarding Argentina's freshwater reserves. It sets standards for protecting glaciers and surrounding areas and creates penalties for companies that pollute or damage ice fields.

"Up to now, mining projects just had to prove they would not harm the environment," Altgelt said. "Now, if the project is located on a glacier or in this ambiguous concept of being near one, it's simply banned."

Mining-friendly provincial governments are already passing laws that are more flexible than the national bill, arguing they have a constitutional right to manage their natural resources.

Three provinces -- La Rioja, Jujuy and San Juan, site of Barrick's Veladero and Pascua Lama mines -- have passed their own laws. These say mining projects in glacial areas should be banned only if an environmental impact assessment, commissioned by the local government, shows they have an adverse effect.

Four other provinces have agreed to take similar action.

"Provincial laws are trying to block this law. But environmental bills like the one we're trying to pass are national and set the standard." said Miguel Bonasso, the national glaciar protection bill's sponsor in the lower house.

A long court battle could result if the laws continue on a collision course, constitutional expert Gregorio Badeni said, adding that ultimately Congress trumps the provinces in regulating mining activity.

"If the law is passed, Barrick and other miners will not be able to continue their projects," he said. "But Barrick could demand hundreds of millions of dollars in compensation from the Argentine government because these mining activities were not banned when they made these investments."

He said Barrick, the world's largest gold miner, could also argue the law does not apply to the areas where it operates.

Impact Unclear

In San Juan province, Barrick's Veladero mine produced 611,000 ounces of gold last year. The company is also developing Pascua Lama there, which straddles the Chile border at some 5,000 meters (16,440 feet) above sea level.

Pascua Lama has proven and probable reserves of 17.8 million ounces of gold. Average annual output is expected to be between 750,000 and 800,000 ounces of gold in the first five years of operation.

Environmentalists say studies and satellite images show Pascua Lama is located in a glacial area. Barrick disputes this, saying the ore body it was authorized to mine in Pascua Lama and its Veladero mine are not under ice fields or glaciers, so would not be restricted by the new law.

"Barrick operations should not affect any glacier," company spokesman Rodrigo Jimenez said. "Our project will not affect the community's water source or the environment."

"We are extremely confident that the Argentine federal and provincial legislative framework will continue to support and encourage responsible mineral development," Jimenez said.

However, the lawmaker Bonasso warned Veladero could be closed down if the glacier bill passed.

"If the law were enacted today Barrick would be infringing it because Veladero is located in a periglacial area," Bonasso said. "Barrick could be asked to move its development or even cease operations."

No Veto

When President Fernandez vetoed a previous glacier-protection law in 2008, she said it jeopardized economic development in mineral-rich provinces like San Juan.

Environmentalists and political opponents accused her of being in cahoots with big mining companies, and she appears eager to shed that image ahead of an October 2011 election.

Fernandez's husband and predecessor, former President Nestor Kirchner, is expected to run for president next year and he would need the support of progressive, middle-class voters.

"The bill will most likely pass in the Senate to become law," said Rosendo Fraga, a political analyst. "The president has decided not to veto it because she knows the high political cost that it would entail."

Fraga said lawmakers could still delay the bill's passage in the Senate and even send it back to the lower house for changes to keep it in a bureaucratic limbo while provincial governments advance with their own laws.

The law's passage would be crucial to protecting glaciers as the country's main source of freshwater, according to Ricardo Villalba, director of the IANIGLA government institute for snow and glacial research.

"Glaciers regulate water in the Andes when it doesn't snow or rain. That's why they're key," Villalba said.

"The spirit of the law is to preserve this resource that has a vital significance to the Andes. I hope it passes."

(Editing by Hilary Burke and David Gregorio)

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