MAC: Mines and Communities

Brazil court revokes license for Canadian gold mine in Amazon

Published by MAC on 2014-06-29
Source: Reuters,, The Globe and Mail

Brazil court revokes license for Canadian gold mine in Amazon


27 June 2014

A federal court has revoked the environmental license for a large gold mine planned by Belo Sun Mining Corp on the Xingu River in the Amazon, ruling that the company had failed to assess the impact on local indigenous communities.

The ruling published on Tuesday can be appealed. Belo Sun's stock fell 7 percent on the Toronto Stock Exchange to 19 Canadian cents.

"This is an important victory for justice. It can still go to an appeals court, but we think it will be difficult to overturn," said Helena Palmquist, a spokeswoman for the federal prosecutors office in the northern state of Para.

The Volta Grande, or Big Bend, open-pit project is slated to start operating in 2016 and become Brazil's largest gold mine. It is next to another controversial project, Belo Monte, which is designed to become the worlds third largest hydroelectric dam and has also been the target of lawsuits by prosecutors.

Belo Sun could not immediately be reached for comment, but the Toronto-based company said in a news release that a federal judge in Para had ruled that the company needed to complete an indigenous study for its preliminary license to be valid.

To this end, Belo Sun said it had engaged a local environmental consultancy in January to carry out the study and is waiting for government approval, which it expects shortly, to be able to access indigenous lands. Belo Sun expects the study will take five months.

Judge Claudio Henrique de Pina said it was "unquestionable" that the mine would have a "negative and irreversible" impact on the quality of life and cultural heritage of the Paquiçamba, Arara da Volta Grande and Ituna/Itatá indigenous communities that straddle the Xingu river.

The licensing process for the mine cannot go ahead without studying the impact on the local communities that are already being affected by the Belo Monte dam, he ruled, agreeing with environmentalists who say the double impact of the two massive projects on the Indians' habitat has not been properly studied.

Brazil's federal Indian affairs agency, Funai, said in December that the biggest impact on the Indian communities that live along a 100-km (60-mile) stretch of the river will be a drop in water flows by 80 percent to 90 percent when the Belo Monte dam starts up.

Belo Sun, a small company with a market value of about C$50 million ($46.07 million), estimates average production of 313,100 ounces of gold per year over a mine life of 10 years, with production starting in early 2016, according to a pre-feasibility study published in May.

The study found that 2.8 million ounces of its estimated 4.7 million ounces of measured and indicated gold resources were economically viable reserves, but it said recent exploration work could boost reserves and extend the life of the mine. ($1 = 1.0853 Canadian Dollars) (Reporting by Anthony Boadle in Brasilia. Additional reporting by Nicole Mordant in Vancouver; Editing by Jonathan Oatis)

Brazil revokes Canadian Belo Sun's license to gold mine in Amazon

Cecilia Jamasmie

26 June 2014

Ruling says Belo Sun Mining Corp. has failed to study the impact on Amazon communities.

A Brazilian federal court has revoked Canadian miner Belo Sun Mining's license for the Volta Grande project, which would have become the country's largest gold mine, in the Amazonic state of Para.

The ruling, which established the miner failed to assess the impact on local indigenous communities, is a major blow to Belo Sun's ambitions, Amazon Watch's Brazil Program Consultant Christian Poirier told

He added the court decision sets a considerably higher legal standard for environmental licenses, but - since it is appealable - could be easily overturned.

In a brief statement, the Toronto-based company only said it had been asked to complete an indigenous study in accordance with the reference terms of FUNAI, the Brazilian indigenous authority.

It added the company expects the study will take five months and that it anticipates receiving the authorization from FUNAI to access the indigenous lands shortly.

The $750 million Volta Grande, or Big Ben, open-pit project is on the Xingu River, a tributary of the Amazon. It is expected to produce more than 300,000 ounces per annum over its 10-year life.

Opponents of the project, suspended since November, fear its vicinity to the controversial Belo Monte dam complex -which is designed to become the world's third largest dam- "may lead to devastating and irreversible consequences ... for the quality of life and cultural heritage of indigenous peoples and their territories."

Volta Grande is supposed to begin operating in 2016. Shares in Belo Sun were down almost 10% to 0.185 at 12:23 pm ET.

Brazil suspends Belo Sun's gold mine licence

Stephanie Nolen

The Globe and Mail

30 June 2014

A Brazilian court has suspended the environmental and provisional licences of Toronto-based gold miner Belo Sun Mining Corp., putting a significant new obstacle in the way of the company's plans to develop Brazil's largest gold mine on a tributary of the Amazon river.

Last November a federal court suspended the company's environmental permit, saying Belo Sun had not taken necessary steps to analyze the mine's potential impact on indigenous peoples who live within a few kilometers of the mine site.

In December, Belo Sun won temporary permission to keep operating while awaiting a final ruling on that case. But when the ruling came last week, the judge said that the mine stood to cause "negative and irreversible damage to the quality of life and cultural heritage" of the Juruna and Arara peoples and that Belo Sun must complete a study of this issue before it can proceed.

Mark Eaton, Belo Sun's CEO, said the indigenous impact study is already under way and that the new ruling does not extend the company's timeline for production. "It's had an impact on market psyche as these things always do," Mr. Eaton said in a telephone interview from Toronto. "But it hasn't come completely out of the blue."

Mr. Eaton said the company needs another five months to finish the study, and will "probably appeal" the federal court suspension. "We will be applying for installation licence by end of year," he said.

However Leonardo Amorim, the lawyer for an environmental organization called the Social Environmental Institute which has been trying to block the mine, said that timeline would be astonishingly fast for such an impact study, which must be co-ordinated with Brazil's indigenous people's agency, FUNAI. "These things are extremely complex," he said.

He said that the ruling "is very big news" and may represent a significant step toward protecting indigenous rights if it is upheld on appeal.

Belo Sun cannot apply for an installation license, and begin work, at the site until it has the environmental license.

In response to the news, some analysts revised the timeline for gold production from Belo Sun from 2016 back as far as 2020.

Belo Sun's stock price has fallen sharply over the past year, closing Monday at 18 cents.

Ubiratan Cazetta, a federal prosecutor who worked on the case, said that is theoretically possible for Belo Sun to obtain approval from FUNAI but that the company will have to show thoughtful and thorough measures to protect the indigenous people, who are already facing significant changes in their way of life due to construction of the mammoth Belo Monte dam 11 km upriver. "They will have to prove that the mine's impact will be extremely superficial and unimportant."

Belo Sun's efforts to build the Volta Grande mine have emerged as a battleground in the power struggle between Brazil's state and federal authorities. The State Secretariat for the Environment in Para, where the future mine is located, had authorized the project to proceed, to the dismay of federal prosecutors, and said in a statement last week that this federal ruling is unfair to the company and may jeopardize the economic well-being of Para.

Brazil's activists view the ruling as a significant push back.

"Belo Sun has already shown they want to do the absolute minimum to receive their license to drill and it's encouraging that the federal courts have shown they are not going to let this slide," said Christian Poirier, an activist with the organization Amazon Watch. "Clarifying that you're going to use this much arsenic or dump that much slag by the Xingu River is not enough. If they say clearly what everyone knows is going to happen, do they get an environmental license in any case?"

Follow Stephanie Nolen on Twitter: @snolen

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