Barrick to face fresh legal challenges on Pascua Lama

An indigenous group that has led the legal battle against Barrick Gold’s (TSX:ABX) (NYSE:ABX)$8.5 billion Pascua Lama project in Chile, is planning to request the country’s Supreme Court to review Monday’s lower court decision, as they claim it is insufficient to prevent further environment pollution.

The Diaguita community, which claims Pascua Lama threatens its water supply and it is polluting glaciers, said the Canadian company should submit a new environmental impact assessment study, reports Mapu Express (in Spanish).

They added the local appeals court ruling to formally suspend the controversial gold and silver only requested the Canadian company to build infrastructure that prevent water contamination, which they think it is not good enough.

Juan Carlos Guajardo, head of mining think tank CESCO, told Reuters that having to produce a new environmental impact study would be “the most serious” scenario for Barrick.

"The fact that the Diaguitas won their case unanimously in the Copiapo court sets a complicated precedent (for the project) should the case land in the Supreme Court," he was quoted as saying.

In April, the Copiapo Court of Appeals temporarily and preventively froze construction of the project, which straddles the Chile-Argentine border high in the Andes, rejecting Barrick’s plea to revert the order days later.

Barrick's Co-Chairman John Thornton said last month he was working quickly to address the concerns of the Chilean authorities, but the company also stated that it "will continue to evaluate all alternatives, in light of the uncertainties associated with the legal and regulatory actions, and the current commodity price environment.”

Pascua Lama, which would produce about 800,000 to 850,000 ounces of gold a year in the first full five years of its 25 year life, was scheduled to start production in the second half of 2014. The mine is set to become one of the top gold and silver mines in Chile, the world's top copper producer.

Image of demonstration against Barrick, courtesy of Sergio Campusano, President of the Diaguita Huascoaltinos.