MAC: Mines and Communities

Chile blocks its most ambitious mining project

Published by MAC on 2013-05-28
Source: AP, Forbes, Mining.com (2013-05-30)

The world's biggest gold mining corporation, Barrick Gold, has been served a US$16.4 million fine and told to halt operations at its Pascua Lama project until it takes measures to prevent water contamination.

While welcoming the move, eleven Chilean organizations, representing groups living downstream of the project, point out that the fine pales in significance beside the damage the project has already caused.

Calling for permanent closure of the mine, they declare:

"Barrick is an irresponsible mining company that ... has regularly and intentionally damaged the environment, and ... represents a threat to the life and health of thousands of people who live in the Chilean Huasco Valley and in the province of San Juan, Argentina."

Barrick's Pascua-Lama gold project frozen for at least 1-2 years: Chile regulator

Alexandra Ulmer and Fabian Cambero

Reuters

30 May 2013

Barrick's suspended Pascua-Lama gold project will likely be reactivated in one to two years at the earliest, given the infrastructure that needs to be built to avoid water pollution, Chile's environmental regulator told Reuters on Thursday.

Barrick's shares initially pared back their 6.14 percent rally after the news to trade 4.77 percent stronger. They then recovered to gain 6.28 percent.

On Friday, the new regulator ordered the $8.5 billion project be halted and fined the company $16 million, citing serious environmental violations.

A Chilean court in April had already temporarily halted the unpopular project, which straddles the border of Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.

The water management canals and drainage systems that were only partially implemented cannot be built "from one day to the next," environmental regulator Juan Carlos Monckeberg said in an interview.

"It could be one year, two years," he noted, underlining that the potential reactivation hinges on how diligent the world's largest gold producer is.

Monckeberg also stressed that predicting time frames is tricky given that the regulator, which started operating in December, is navigating in uncharted territory.

Once Barrick completes the required works, the regulator will take a "reasonable time" to assess whether the mine is upholding environmental standards, "given the seriousness of the issue," Monckeberg added.

"As long as the project meets all the requirements, it shouldn't face a permanent paralyzation," he said. He declined to comment on whether the regulator was looking into other potential environmental harm at Pascua-Lama, perched 3,800 meters to 5,200 meters (12,500-17,000 feet) above sea level in the Andes.

Barrick has said it is fully committed to complying with all aspects of the regulator's order. But it has also said it could suspend Pascua-Lama if the timetable for resolving regulatory issues at the project remains unclear.

Chilean President Sebastian Pinera said on Thursday he hoped the project would proceed as long as the company complied with the requirements.

Environmental Breaches

The fine imposed by the regulator - the highest ever in Chile for environmental harm - stems from one "very serious breach" and four "serious breaches." Given the infractions, Greenpeace said the fine was "laughable" for a company that posted $847 million in net profit in the first quarter of 2013.

As per its environmental license, Pascua-Lama had to build infrastructure to manage and treat water before launching its pre-stripping operations. But the company had only partially implemented this mitigation system before it started pre-stripping, according to the regulator.

The regulator underlined that defective water canals led to a massive rockslide in January, which affected 1,500 square meters (16,145 square ft) of meadows -- causing "irreparable harm".

The company has to implement transitory measures to capture, transport and discharge water to a sediment tank at the north of the mine before ice melts around November.

It can start building the long-term water drainage systems immediately, Monckeberg added. Barrick likely will not need additional permits for the infrastructure, he said.

Barrick has estimated it must invest about $29 million to meet environmental standards at the mine.

The company has poured about $4.8 billion into Pascua-Lama, which was forecast to produce 800,000 to 850,000 ounces of gold per year in its first five years of full production.

Opposition to Mining Projects

Opposition by environmental, indigenous and community groups to mega mining and power projects has led to a series of setbacks to billion dollar investments in Chile, the world's No. 1 copper producer.

Despite being one of Latin America's most stable, prosperous countries, Chile suffers from high levels of income inequality, and many in the Andean nation feel a mining boom has bypassed them and harmed the environment.

Pascua-Lama is one of the most unpopular mining endeavors in Chile. Many opponents are incensed that it has produced environmental harm and are particularly worried about the project's effects on glaciers.

Climate change has shrunk Andean glaciers between 30 and 50 percent since the 1970s and could melt many of them away altogether in coming years, according to a study published in January in the journal The Cryosphere.

Separately, Chile's judiciary is seen taking all of 2013 to weigh the indigenous allegations against the project, setting the stage for a protracted, costly legal battle.

Critics say unclear Chilean regulations have contributed to a legal limbo that has led to the suspension of plans for hydropower projects in Patagonia, thermoelectric plants across the country and major copper mines high in the Andes.

(Reporting by Alexandra Ulmer and Fabian Cambero; Writing by Alexandra Ulmer; Additional reporting by Randall Palmer and David Ljunggren in Ottawa; Editing by David Gregorio, Richard Chang and Marguerita Choy)


Chilean President gives Barrick Gold its Pascua-Lama fix-it orders

Brent Jang, Josh Wingrove

The Globe and Mail

30 May 2013

Chile's President says Barrick Gold Corp. must follow 23 steps to comply with orders from his country's environmental regulator, a message that underscores the tough road ahead for the company to get its crucial Pascua-Lama gold project back on track.

Sebastian Pinera, in Ottawa to discuss Canada-Chile economic relations, admonished Barrick for its handling of the $8.5-billion (U.S.) mine development so far.

Workers walk near the entrance of Barrick Gold Corp.'s Pascua-Lama gold mine in northern Chile, near the border of Argentina, May 23, 2013. Chile's environmental regulator blocked the $8.5-billion project on May 24 and imposed its maximum fine on the world's largest gold miner, citing "very serious" violations of its environmental permit.

"The company didn't comply with all the conditions that were established in that environmental impact assessment," Mr. Pinera said during a joint news conference with Prime Minister Stephen Harper. "We have identified 23 areas where they will have to improve their behaviour with respect to the environment in Chile."

Last Friday, Chile's environmental regulator halted development of the gold and silver mine, citing "very serious violations" by Barrick.

Mr. Pinera said Chile wants Barrick to eventually proceed with its Pascua-Lama mine - as long as it obeys environmental rules.

But lengthy delays are likely for the project, due to the time likely required for Toronto-based Barrick to carry out environmental fixes, including canals to divert run-off water away from the Chilean mine.

The Chilean regulator told Reuters on Thursday that it will take one or two years for Barrick to put the proper water management and drainage systems in place.

TD Securities Inc. analyst Greg Barnes forecasts that first production from Pascua-Lama is still possible in late 2015, or a one-year delay from industry expectations for a targeted start in late 2014. But if Barrick were to voluntarily choose to temporarily stop the project for two years, it would be hugely disruptive to the world's largest gold producer, he said.

"It would be expensive to suspend. It would annoy the regulator and the government, and you would lose the momentum on the project," Mr. Barnes said, adding that Barrick's decision will be influenced by its internal predictions of whether gold prices will slump further or recover.

Mr. Barnes said Barrick management will have tough decisions to make in the months ahead, including whether to slow down spending on the Pascua-Lama venture or even consider cancellation, although he considers the prospect of walking away to be a long shot.

The half-built project is located in the Andes mountains and reaches over the Chilean border into Argentina. While work on the Chilean open-pit mine has been suspended, construction continues on the processing plant on the Argentine side.

Mr. Pinera said he is counting on Barrick to comply with Chile's "environmental legislation and procedures and standards," adding that he hopes "the investment will be able to continue and it will be very important because this is an investment which is done in the high mountains, very close to the frontiers with Chile and Argentina."

Barrick spokesman Andy Lloyd said Thursday that the company continues to evaluate the regulator's order and examine "the work required to achieve compliance. Barrick is fully committed to complying with all aspects of project's environmental permit and to operating at the highest environmental standards."

While Barrick declined to outline the steps required to restart Pascua-Lama's construction on the Chilean side, the company acknowledged that certain components of the project deviated from construction plans and fell short of requirements for environmental approvals.

Industry observers say the 23 items relate to addressing concerns raised by indigenous groups, environmentalists and farmers who are worried about downstream water contamination. But Barrick has stressed that a $16-million fine levied against it by the regulator last Friday was for administrative breaches and not actual pollution.


Chile blocks world's highest mine project

Chile blocks Pascua-Lama mine, fines Barrick $16 million for serious environmental violations.

Luis Andres Henao

Associated Press (AP)

24 May 2013

VALLENAR, Chile - Chile's environmental regulator has stopped construction and imposed sanctions on Barrick Gold Corp.'s $8.5 billion Pascua-Lama project, citing "serious violations" of its environmental permit.

The $16 million fine is the maximum allowable under Chilean law. It was applied Friday because the world's largest gold mining company acknowledged that it failed to keep its promises to build systems for containing contaminated water.


Barrick Gold Fined $16M For Enviromental Problems At $5B Pascua Lima Project In Chile

Forbes

24 May 2013

More bad news for some embattled gold miners. On Friday, Barrick Gold was halted around noon in New York as reports surfaced indicating the Chilean government had forced the company to "paralyze" its operations in Pascua Lima, one of the largest gold and silver resources in the world into which Barrick has poured nearly $5 billion in. Silver Wheaton , a joint-venture partner in the project, was halted a few minutes later.

According to Chilean daily El Mercurio, Barrick will be fined about 8 billion Chilean pesos, or $16.4 million, given the company's failure to comply with environmental regulation. Beyond the fine, Chile's Superintendent for the Environment, Juan Carlos Monckeberg Fernandez, has established that all construction activity at Pascua Lima must stop immediately.

Shares in Barrick Gold were halted around 12:06 PM in New York, about 20 minutes after the news hit the tape. Silver Wheaton, which is a partner in the project, saw its shares halted two minutes later. Both stocks were in negative territory at the time. Spokespeople for both companies weren't immediately available for comment.

The Pascua Lima project is located in the Andes Mountains, between Chile and Argentina. Barrick had already announced its operations in Chile were halted in its latest earnings release, as the company was assessing environmental and regulatory requirements, while negotiating with a court of appeals. Barrick has invested nearly $5 billion in Pascua Lima, which holds almost 18 million ounces of proven and probable gold reserves and 676 million ounces of silver.

The main problem appears to be the water management systems at Pascua Lima, El Mercurio reported. The open-pit mining project has the potential to contaminate water in the area, and according to the Chilean government, Barrick hasn't taken the proper precautions, precautions it had agreed to previously.

It hasn't been a good year for gold, or anything related to it. Major mining companies have all suffered steep stock price declines. Barrick Gold is among the worst performers, down more than 40% in 2013, but others like Newmont Mining NEM -1.21% and Goldcorp are also well in the red, down more than 20% each. Gold prices have also taken a beating, with bullion currently trading below $1,400 an ounce.


Multimillion fine and temporary suspension: A politically correct, media-friendly and socio-environmentally criminal sentence

Public Declaration

25 May 2014

The sentence by the Chilean Superintendent of the Environment constitutes a dangerous precedent for communities affected by mega-projects, given its disregard for the history of complaints and sanctions against the Pascua Lama project and the voices of organizations that conscious of the inviability of this binational mining project for more than ten years.

For the communities and organizations of the Huasco Valley, which have been complaining about Barrick Gold's irresponsible operations in our headwaters for years, the Superintendent's decision was made to suit the transnational mining company, which during the entire process pressured to ensure that it could keep working.

This does not negate the rigour or serious nature with which the authority carried out its duties in technical terms, but rather demonstrates how the Chilean state  fails to consider options for local development,  manipulates public opinion as it wishes, and  imposes predatory extractivism that preys upon the sources of water and life of our territories.

We are faced with a sentence that recognizes that the title holder "has deliberately failed to comply with a large number of commitments which, it is worth recalling, it took upon itself in order to benefit from the favourable approval of this project" (Free-Standing Resolution No. 024, February 15, 2006).

The four months of investigation, instigated by a complaint filed by the company itself in order to limit the sanctions, revealed that the mining company didn't adequately construct the North Perimeter Channel, which caused two landslides affecting the water supplies and lowlands. Furthermore, following from the inspection into this disaster, it was determined that there were a series of projects that had been the company had committed to in its Environmental Qualifying Resolution (RCA by its initials in Spanish) related to water management that were not constructed, as well as a considerable number that were illegally constructed.

Additionally, problems were found in the management of water quality studies and hiding and omission of information (Decree 37). Aggravating all of this, the authority ommited provisional measures that the company criminally decided not to fulfill (Resolution 107), demonstrating the company's ongoing disinterest in the life and health of downstream communities.

However, all of the above, serious as it is, only refers to events verified between December and February 2013, ignoring the history of abuses to the RCA under which the company has been operating, something which we formally asked to be considered.

In other words, this sanction does not include the already confirmed impacts on glaciers, road works that have not been built as promised, poor labour conditions, usurpation of waters that was sanctioned in 2007, discharge of waters contaminated with fecal coliforms into the river, which, had they been incorporated, inevitably would have led to the revocation of the Environmental Qualifying Resolution (RCA) and the project's closure.

As such, this sentence, while being a sign to companies that they should operate better from here on in, suffers from amnesia that leaves in impunity all of the damage that has been caused so far; giving the impression that the new environmental authority is nothing more than a renovated version of that which has allowed the accelerated degradation of our common goods to take place.

For us, the fine that the Superintendent has imposed is insignificant when measured up against the irreparable damages produced in our headwaters.

As a result, more than a temporary suspension and fine, what really makes this sentence relevant, is that the state recognizes what we have been saying for ten years: that Barrick is an irresponsible mining company that lies and makes a laughing stock of Chilean institutions, that has regularly and intentionally damaged the environment, and while benefiting from the support of the authorities, represents a threat to glacier and peri-glacier areas and, along with them, to the life and health of thousands of people who live in the Chilean Huasco Valley and in the province of San Juan, Argentina.

The below-signed organizations emphatically defend the right to life and reiterate that we will not rest until we achieve the definitive closure of this destructive Pascua Lama project.

Attentively,

Asamblea por el Agua del Huasco Alto

Comité Ecológico y Cultural Esperanza de Vida

Comunidad Diaguita Patay Co

Consejo de Defensa del Valle del Huasco

Grupo Ecológico Atacama Limpio

Pastoral Salvaguarda de la Creación

Comisión Agua y Vida. Iglesia Evangélica Presbiteriana, Chigüinto

Unidos por el Agua, Conay

Pajareteros Alto del Carmen

Sindicato de la Construcción, Provincia Huasco

Observatorio Latinoamericano de Conflictos Ambientales, OLCA

Translated by MiningWatch Canada from original in Spanish available here.


Chile's Indians take on world's largest gold miner

By Luis Andres Henao and Michael Warren

Associated Press (AP)

25 May 2013

EL CORRAL, Chile - The Diaguita Indians live in the foothills of the Andes, just downstream from the world's highest gold mine, where for as long as anyone can remember they've drunk straight from the glacier-fed river that irrigates their orchards and vineyards with its clear water.

Then thousands of mine workers and their huge machines moved in, building a road alongside the river that reaches all the way up to Pascua-Lama, a gold mine being built along both sides of the Chile-Argentine border at a lung-busting 16,400-feet (5,000 meters) above sea level.

The crews moved mountaintops in preparation for 25 years of gold and silver production, breaking rocks and allowing mineral acids that include arsenic, aluminum and sulfates to flow into the headwaters feeding Atacama desert communities down below.

River levels dropped, the water is murky in places and the Indians now complain of cancerous growths and aching stomachs. There's no way to prove or disprove it, but villagers are convinced Barrick Gold Corp. is to blame for their health problems.

"We don't know how much contamination the fruit and vegetables we eat may have," complained Diaguita leader Yovana Paredes Paez. "They're drying up the river, our farms aren't the same. The animals are dying of hunger. Now there's no cheese or meat. It's changed completely."

Acting independently, Chile's newly empowered environmental regulator on Friday confirmed nearly two dozen violations of Barrick's environmental impact agreement, blocking construction on the $8.5 billion project until the Canadian company keeps its promises to prevent water contamination.

The Environmental Superintendent, Juan Carlos Monckeberg, also fined Barrick $16.4 million, the highest e

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