Argentina: gold mine problems spook Barrick investors

Jamie Sokalsky, CEO of the Toronto-based Barrick Gold Corporation, announced on July 26 that major problems were delaying the opening of the company’s controversial Pascua Lama gold and silver mine, located in the Andes on both sides of the border between Argentina and Chile. The project will cost as much as $8 billion, he said, 60% more than previously projected, and gold won’t be produced until mid-2014, a year later than expected. Barrick’s stocks dropped quickly, although they recovered somewhat, ending the day down by about 4.32%. The mining giant’s shares have fallen by almost 33% since the beginning of the year. 
“As the CEO I accept full responsibility for this,” Sokalsky said in a conference call with investors. He attributed problems at the mine, one of the world’s largest, to the project’s complexity, the difficulties of working at high altitudes, a shortage of skilled engineers and “bi-national external factors as well.”

Sokalsky suggested that the “external factors” were labor issues and Argentina’s inflation rate, but he was obviously also referring to opposition by residents and environmentalists in Argentina and Chile and to a July 3 ruling by the Argentine Supreme Court of Justice leaving in effect a law to protect glaciers. “There’s no way Pascua Lama can operate under this law,” Gonzalo Strano, who leads Greenpeace-Argentina’s glaciers protection campaign, told the Associated Press, “because it’s clearly occupying a peri-glacial area, in the presence of glaciers.”

One source of environmental damage from the mine, according to Strano, would be the disposal of toxic wastes in a containment pond covering about 400 hectares on the Argentine side of the border. The mine would also strain the region’s water resources, he said: the gold and silver production method would require the use of 82 gallons (311 liters) of clean water per second for the next 25 years. While Barrick claims that Pascua Lama will be one of the world’s cheapest gold mines, Strano said the main cost savings would come from huge tax breaks and the fact that the company will essentially get the water for free. “If they really had to pay for the water like any other resident of the province, they wouldn’t do this project.” (Miami Herald from AP, July 26; Clarín, July 27)

From Weekly News Update on the Americas, July 30

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