MAC: Mines and Communities

Uruguay: Zamin Ferrous project to be submitted to referendum

Published by MAC on 2011-07-04
Source: Merco Press, United Press International (2011-06-24)

Two Latin American governments have said - and in the same week - that big mining projects should now be subject to consulta (community consultations).

The UK-listed Zamin Ferrous will likely face a referendum over its huge iron-project in Uruguay, if a bill to that effect passes parliament. See: Giant open-pit mine raises questions in Uruguay

And Peru's newly-elected president Humala has promised something similar - the right of communities to "free, prior and informed participation in policy and development processes." See: Peru's president-elect vows consultation in bid to end mining conflicts

ESPAÑOL

Zamin Ferrous project in Uruguay to be submitted to referendum, says President Mujica

Merco Press

23 June 2011

President Jose Mujica said that Swiss-based Zamin Ferrous iron-ore project feasibility study for an 18 million mt/year project has not been approved and given the controversy that has surfaced he supports the idea of holding a referendum on the project.

President Mujica: "I won't decide, nor will they, and you will have to vote". President Mujica: "I won't decide, nor will they, and you will have to vote".

Three ministers, Industry and Mining, Environment and Tourism have been summoned to Uruguay's parliament to explain the latest government decisions on the project which has growing resistance from farmers and tourism agents, fearing the impact of open pit mining and a 215 km slurry pipeline to transport the iron ore to a port to be built in prime ocean coast.

Zamin is pursuing the Valentines project through Minera Aratiri and its plans entail mining Uruguay's centrally located deposit with a current JORC resource exceeding 2.1 billion US dollars and shipping the ore through a slurry pipeline to a dedicated port for export. There is potential for resources to reach in excess of 5 billion metric tons, according to a company's statement.

Last Sunday President Mujica questioned the feasibility of the project said that "I won't, nor them (Zamin Ferrous) for that matter will solve the issue; it's the people who will decide, and you'll have to vote".

However if the referendum initiative goes ahead the whole project will be delayed. A bill on a consultation referendum (non existent in Uruguay law) must first be drafted and approved, promulgated, regulated and finally wait to see what people decide once the balloting is organized.

"The multinational corporation must give us full guarantees of environment protection; we won't allow the project to advance if we don't have those guarantees", said Deputy Industry and Mining minister Edgardo Ortuño.

"The corporation still has to present additional information and the government has also to conclude its own studies about the project and potential environmental and social impacts", added Ortuño.

Valentines has become Zamin's main development-flagged asset after a 1 billion USD sale of iron ore resources in Brazil's Bahia state to Eurasian Natural Resources Corp. in two deals, the last completed in September 2010.

"Zamin has potential investors such as Asian and Middle East steel sector off-takers and large global mining groups in talks to take a stake of up to 49% in the project", said Marting Kannengieser head of business development. That may also extend to Zamin Ferrous to gain interests also in Brazil through the company's portfolio of projects, the executive mentioned.

The project's resources have been upgraded from just under 1 billion metric tons in JORC-compliant resources verified as of the end of October based on company data at the time. Project commencement is targeted for end-2013 or 2014, Kannengieser said.

Zamin has signed several non-binding accords with Chinese and Middle Eastern steel mills for the project's 28% magnetite ore expected to produce a concentrate with of 68-70%-Fe and impurities of silica and alumina of less than 2%, the company said. The product would be a pellet feed but there are no plans for a pelletizing plant to be built.


Controversy mars Uruguay iron ore project

United Press International

24 June 2011

MONTEVIDEO, Uruguay - Controversy over a major new iron ore extraction project has advanced to a stage where President Jose Mujica doesn't want to give a green light and instead wants the people to decide the future course of action.

Mujica's surprise move contrasts with sweeping measures taken by governments in Brazil and Chile to go ahead with hugely controversial hydroelectric dam construction projects that are opposed by environmentalists and other groups concerned over their environmental impact.

Objections to the Valentines iron ore project are more wide-ranging and now involve farmers and tourism agencies in addition to the environmental lobby groups. All agree the Anglo-Swiss-financed project could ruin scenic areas on land and by the sea in the absence of adequate safeguards.

A feasibility study that looked into the project appears to have been thrown out of hand and led to intense controversy that shows no sign of subsiding, with more questions raised over the Zamin Ferrous initiative and its potential partners in the $2.1 billion project.

Mujica told Uruguayans, "I won't, nor them (Zamin Ferrous) for that matter will solve the issue; it's the people who will decide, and you'll have to vote," setting the stage but not yet a date for a referendum.

Critics of the referendum idea said the exercise would be expensive and add to the overall costs of the project, even if initially that extra spending is borne by the government. First of all Uruguay's Legislature will have to pass a law allowing for a consultation referendum of this kind. Years of delay are guaranteed, critics said, if the referendum plan is taken forward.

The project involves extensive open pit pining and about 130 miles of a slurry pipeline to transport the ore to a deep water port planned to be built on the Atlantic coast. Early estimates set a target of 18 million tons a year of ore extracted from the site, most of it for export.

Mujica's administration faced tough questioning in the General Assembly, Uruguay's parliament, after vociferous protests from farmers' groups and the tourism industry.

Zamin is pursuing the Valentines project through Minera Aratiri, its Uruguayan subsidiary, and current plans call for the investment going into the target yield, then being boosted to an extraction of up to 5 billion tons in the life of the mine.

In a bid to calm critics, Deputy Industry and Mining Minister Edgardo Ortuno said, "The multinational corporation must give us full guarantees of environment protection. We won't allow the project to advance if we don't have those guarantees."

"The corporation still has to present additional information and the government has also to conclude its own studies about the project and potential environmental and social impacts," he said.

Valentines says it has Asian and Middle Eastern investors interested in the project and has already secured non-binding agreements with Chinese and other Asian steel mills.

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