Barrick's Pascua Lama workers drop strike

Unionized workers representing Barrick Gold’s (TSX, NYSE:ABX) suspended Pascua Lama mine, signed Friday a new contract and abandoned threats of a strike scheduled to begin today, which could have seriously risked the project viability.

Union president Alexis Spencer told Diario El Día (in Spanish) the deal includes an average wage increase of 5%, improved benefits, a US$15,500 one-time end-of conflict bonus, and better severance payment conditions. The new collective contract will last for the next 27 months.

The Chilean workers are responsible for building a water treatment system to avoid polluting mountains and groundwater in the country. They are also in charge of monitoring the glaciers that are near the mountaintop mine in the Andes.

“Had we voted to go on strike, we would have affected the construction of the water management system required by the authorities to restart operations,” Spencer explained.

Pascua Lama, which straddles the Chilean and Argentine border, is expected to produce over 800,000 ounces of gold and 35 million ounces of silver in its first five years. Production was scheduled to start in 2014, but has been delayed until 2016 or until new infrastructure is built to avoid water pollution.