Barrick urges the Dominican Republic to honour Pueblo Viejo’s contract
Canadian Barrick Gold (TSX:ABX), (NYSE:ABX) urged the Dominican Republic’s Government to respect a contract authorizing the giant miner to operate the Pueblo Viejo gold mine, reports Latin Pacific Business News (in Spanish).
Local CEO Victor Manuel Rocha’s request comes only a day after a Congress commission announced consultations on the proposed revision of Barrick’s contract to exploit the mine, one of the largest gold deposits in the world.
In late January, the country’s Legislature had said it would review and possibly change the contract with the Toronto-based company, in a bid to make the terms “more favourable” to the country, reported by Diario Libre.
"In November 2009 President Leonel Fernandez declared the contract valid as an agreement between the Dominican Government and Barrick Pueblo Viejo; because of that, we have made a mega-investment in developing the mine,” Rocha told local media.
He also noted that the contract was already “very favourable to the state” and ensured that at least 50% of the economic benefit generated by the project will flow to the government over the life of the operation through taxes and royalties. “This does not take into account substantial spending in the region on goods and services and the taxes paid by employees, contractors and other service providers,” Rocha was quoted as saying.
Pueblo Viejo, which is 60% owned by operator Barrick and 40% by fellow Canadian Goldcorp (TSX: G), (NYSE: GG), was completed at a capital cost of $3.7 billion and created more than 11,000 direct jobs during the construction phase of the project.
The operation, said Barrick when announcing tit had reached commercial production in January, is expected to support about 2,000 direct jobs and nearly 10,000 indirect jobs over the 25-year mine life, with Dominicans accounting for nearly 90% of the full-time workforce.
But the Dominican Government argues the contract with Barrick states the country will only start receiving benefits once the gold giant recovers the investment in the operation and yields a 10% profit.
After this, reports LPBN, Barrick will begin to pay the Dominican State 28.75% interest in its net profits and 25% of its income tax.