SANTIAGO, April 15 (Reuters) – Barrick Gold Corp faces some tough legal obstacles to complete its up to $8.5 billion Pascua-Lama gold mine after a recent court decision, and even the possibility that its Chilean environmental permit might
be canceled.
In the latest of several recent blows to the country’s mining and power industries, a Chilean court last week suspended
construction of the mine, which straddles the border of Chile and Argentina, while it weighs claims by indigenous communities that the mine destroys pristine glaciers and harms their water supply.
The ruling is one of several challenges facing Pascua-Lama, which was originally touted as one of the world’s largest and
lowest-cost gold mines. Experts say there is a risk that the unpopular project faces months, or even years, of legal limbo, damaging Chile’s investor-friendly reputation.
Moreover, politicians are unlikely to intervene during an election year on behalf of the project, a hot potato in Chile. “Pascua-Lama’s legal path looks difficult,” said Luis Cordero, law professor at the Universidad de Chile. “If the company isn’t able to adequately negotiate a plan to meet (demands), its permit could be revoked.”
A government source told Reuters that President Sebastian Pinera’s administration will not “persecute” Barrick. But the company could see its permit revoked if it fails to deal with dust, drainage and water issues at Pascua-Lama.
“The ball is in their camp,” the source said. A spokesman for Barrick said the company remains absolutely
committed to meeting environmental and regulatory requirements at Pascua-Lama and it is working diligently to address the
concerns of Chilean authorities.
MANAGEMENT ISSUES
Whether Barrick can turn its operation around and meet environmental requirements hinges on whether fresh management
will be up to the task, mining sources say. Poor management has been a major problem for the mine; one Santiago-based source described it as “chaos”.
Barrick shook up the management team at Pascua-Lama last year as the project’s costs mounted. The company told Reuters it
continues “to take steps to further strengthen and improve that structure, with additional changes to come.”
Several big mining and power projects have faced setbacks in recent months in Chile, the world’s No. 1 copper producer, where around 60 percent of export revenue comes from the metal.
Last year, the Supreme Court suspended a key permit for Canadian miner Goldcorp Inc’s El Morro copper-gold project, and rejected the planned $5 billion Central Castilla thermo-electric power plant.
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