MAC: Mines and Communities

Treaty Authorizing Gold Mine Called Unconstitutional

Published by MAC on 2006-06-05



By Gustavo González

5th June 2006

The Pascua Lama gold-mining project in northern Chile, now awaiting final permits, threatens one of the richest farming valleys in the region of Coquimbo, which is also at risk from desertification.

Critics point out that the project endangers three glaciers, an important source of water for the valley's farmers, thus jeopardizing environmental sustainability.

Ensuring environmental sustainability is one of the eight Millennium Development Goals (MDGs) adopted by the international community at the United Nations General Assembly in 2000. Other targets to be met by 2015 include reducing poverty and hunger and expanding coverage in health and education.

On this year's World Environment Day, celebrated Monday, U.N. Secretary-General Kofi Annan reminded governments of their commitment to guaranteeing environmental sustainability by 2015, in a world where drylands cover more than 40 percent of the land surface and are home to nearly 2 billion people.

These people depend on fragile habitats, where competition for scarce resources, often exacerbated by investments by transnational corporations, leads to conflicts with local communities.

That's what's happening in the case of Pascua Lama, a major gold-mining project that stretches across both sides of the Chilean-Argentine border in the Andes mountains.

Canada's Barrick Gold Corp., the world's largest gold producer, owns the mining concession for Pascua Lama, 75 percent of which lies on the Chilean side of the border. The mining giant's plan is to extract 615,000 ounces of gold, 30 million ounces of silver and 5,000 tons of copper annually over 17 years. However, the deposits lie under three Andean glaciers.

The glaciers, located 4,600 meters above sea level, are a major source of water for the Huasco Valley. Located 660 kilometers north of Santiago, this valley is home to 70,000 people, mainly small farmers who grow grapes, olives and other crops.

In February, the regional office of the government's environment commission (CONAMA) approved the Pascua Lama project, on the condition that it would not destroy the glaciers.

Barrick Gold has been instructed to present a plan to that effect at least three months before starting work on the mine, which was initially projected to begin this year.

But the project was approved under the government of Ricardo Lagos, who on March 11 handed over the reins to President Michelle Bachelet. Bachelet has stated that she will not allow the glaciers to be destroyed.

After conducting an investigation, researcher Diego Luna, César Padilla and Julián Alcayaga stated that a Mining Integration and Complementation Treaty signed in 1997 by then presidents Eduardo Frei of Chile and Carlos Menem of Argentina was "tailor-made" for Barrick Gold.

In the study, "The Exile of the Condor: Transnational Hegemony on the Border," Luna, Padilla and Alcayaga question the constitutionality of the treaty, arguing that Chile has ceded sovereignty to the Canadian firm while infringing on environmental standards.

Barrick Gold lobbied the Chilean and Argentine governments and legislatures hard while the two countries negotiated the mining treaty in the framework of integration agreements reached in 1991.

Environmentalists and others opposed to Pascua Lama have pointed to the track record of Barrick Gold, which was founded in 1983 by Saudi arms dealer Adnan Khashoggi. According to BBC investigative journalist Greg Palast, Khashoggi has ties to Venezuelan media mogul Gustavo Cisneros as well as George H.W. Bush, who served as U.S. president from 1989 to 1993 and is the father of President George W. Bush.

In Chile, Barrick Gold sailed through the hoops, thanks to legislation dating back to the dictatorship of Gen. Augusto Pinochet (1973-1990) that paved the way to ever-increasing levels of private investment, which is steadily eroding the state's presence in the mining industry.

The country is the world's largest producer of copper, accounting for more than one-third of all reserves. In 1989, the state controlled 87 percent of local production, but its grip slipped to 50 percent by 1994. As it stands, more than 70 percent of copper mining is now in the hands of the private sector, Alcayaga told IPS.

The research paper on the bilateral mining treaty signed by Chile and Argentina warns that, for all intents and purposes, the agreement neatly sidesteps environmental issues, a particular concern for an industry infamous for pollution and exhausting already scarce resources, such as water in Chile's extremely dry north.

Chile's environmental standards are considered overly lax, and the country has been criticized internationally for its weak supervisory and oversight mechanisms. The Bachelet administration plans to beef up the latter by creating an environment ministry and superintendence.

The first environmental impact study Barrick Gold submitted to the Chilean authorities after the bilateral treaty was adopted neglected to mention the glaciers. It was the farmers of Huasco Valley who warned CONAMA.

A detailed legal investigation in "The Exile of the Condor" concludes that the mining agreement between Santiago and Buenos Aires, both in terms of content and form, contains provisions that violate Chile's constitution.

"The Constitution clearly states that absolutely no mining concessions shall be granted for any deposit situated in border zones considered important to national security" wrote the researchers.

Referring to a law that complements this constitutional stipulation, Alcayaga, Luna and Padilla emphasized that "no non-Chilean person or company can be granted mining rights within a 10-km buffer zone along the entire Chilean border, and that includes Argentineans, Canadians, U.S. citizens or Australians."

The concession-approval mechanisms, permits for services (road construction and other infrastructure works) and even the very procedure through which the treaty was ratified have all been criticized as unconstitutional.

Congress ratified the treaty as a basic law, which requires no more than a simple majority. But the report says it should have been handled as an organic constitutional law, which requires the approval of two-thirds of both houses of Congress.

It also contravenes the principle of territoriality, as the treaty gives Chilean courts the power to approve services for mining activities in Argentina, according to the study's authors.

The treaty gave Barrick Gold the room it needed to modify its original plans, which had included locating the final gold production stages in Chile. The company moved them to the Argentine side, leaving in Chile the extraction and primary processing of 75 percent of the output -- and all the associated pollution, which threatens the Huasco river and valley.

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