The Toronto-based Barrick Gold Corporation, the world’s largest gold producer, announced on Oct. 31 that it was temporarily halting work on its unfinished Pascua Lama gold and silver mine high in the Andes on the Chilean-Argentine border. The only operations at the mine will be those required for compliance with environmental protection laws, according to the company, which said resumption of work would depend on costs and the outlook for gold prices. The projected cost of the massive mine, which was originally set to open in the second half of 2014, has risen from $3 billion in 2009 to $8.5 billion now. Barrick is short of cash after a dramatic drop in international gold prices in the spring; gold is currently selling for 20% less than it was a year ago. Barrick is cutting 1,850 jobs and is said to be considering the possibility of selling an interest in Pascua Lama, on which it has spent $5.4 billion to date.
The Pascua Lama project was already stalled because of environmental lawsuits in Chile, where the courts suspended construction in April because of problems the work had caused to water supplies in the area of the mine. On Oct. 11 the company faced a new setback when the appeals court in Chile’s northern Antofagasta region agreed to examine another legal action charging that the mine is causing environmental damage and compromising the quality of life for local residents. (Reuters, Oct. 11; Bloomberg, Oct. 31)
Mining companies, which are major consumers of energy, are also facing problems with environmental challenges to hydroelectric projects in Chile. As of late October the appeals court in Coyhaique province, in the southern region of Aysén, had issued a temporary order blocking work at a $733 million hydroelectric dam on the Cuervo river. The government granted an environmental permit for the project in September, but the government’s own environmental prosecutor appealed, saying the permit wasn’t legal. Opponents charge that the dam will harm the environment and will pose a risk because of its location on a fault line. The Supreme Court had temporarily halted work on the dam in May 2012 on the grounds that the owners, Australian-based Origin Energy and the Anglo-Swiss Glencore Xstrata PLC, failed to file a required soil study with the National Geology and Mining Service. (Reuters, Oct. 25)
From Weekly News Update on the Americas, November 3.
Note: Glencore Xstrata is a new company formed by a recent merger that was challenged by the People’s Replic of China as violating anti-trust laws by placing one company in a dominant position over the world’s resources of copper and other strategic minerals.
