Chilean communities struggle after halts at Pascua Lama, other mines – by Marta Lillo (Globe and Mail – December 17, 2013)

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Real estate broker Patricia Cortés began a small corporate events business in the northern Chilean town of Vallenar four years ago, with her eye on a gold mine.

Her hopes for success were pinned on the vast Pascua Lama gold-copper project that had begun taking shape 150 kilometres away in a glacier-covered area of the Andes on the border with Argentina.

Vallenar is the closest commercial centre to Pascua Lama, and the town was set to reap rich benefits from the $8.5-billion (U.S.) project. Once it gets going, Pascua Lama, with 18 million ounces of proved and probable gold reserves, is expected to produce up to 850,000 ounces in its first five years.

But prospects for the Cortés’s business look much bleaker now that Barrick Gold Corp. has shelved construction of the mine, citing lower metal prices and a series of regulatory and legal roadblocks imposed by the Chilean government.

“Commerce is stalled in Vallenar,” Ms. Cortés said in a phone interview. “Like us, many hotels and inns in the region have stopped taking clients. There’s very little activity.”

In May, 2013, after a four-month investigation, Chile’s environmental watchdog ordered Barrick to halt work due to violations of environmental regulations; it imposed a $16-million fine. Two months later, an appeals court ruled that Barrick had to first build a promised water management system of canals, pipelines and drainages, to divert run-off water away from the mine, before resuming construction.

Barrick chief executive Jamie Sokalsky said in October that construction would resume at Pascua Lama when “improvements to its current challenges have been attained.”

The tensions that have roiled Pascua Lama have also played out at Goldcorp Inc.’s neighbouring El Morro gold-copper project. A local appeals court has ordered a temporary halt to construction at El Morro while it weighs a claim by 15 Diaguita indigenous groups that accuse Goldcorp of not conducting adequate consultation with local communities.

Pascua Lama and El Morro are the latest examples of the difficulty and the cost involved in persuading local communities to accept mining projects in what was once one of the world’s most mining friendly countries.

Views differ on how badly the local community will be hit by the suspension of Pascua Lama.

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