Chile’s Supreme Court casts shadow over Barrick’s plans to restart Pascua-Lama
Plans by Barrick Gold (TSX, NYSE:ABX) to revive its Pascua Lama gold, silver and copper project straddling the border between Chile and Argentina may once again be postponed after Chile’s Supreme Court revoked this week a temporary closure permit granted by the country’s mining regulator Sernageomin in 2015.
Such decision sought to relax certain requirements for Barrick to obtain a new environmental licence for the project, which the top court qualified as an irresponsible measure.
“It authorizes the temporary closure of Pascua-Lama mining operations, without having the necessary measures in place to ensure the physical and chemical stability of the water sources affected by the project,” the judge said according to local paper Diario Financiero (in Spanish). “[Sernageomin also failed to previously determine] the extent of the damage caused by the project through its innumerable environmental violations,” it added.
The giant gold, silver and copper project has been shut since 2013, when a court ordered Barrick to halt construction over environmental concerns. Later that year, the firm officially shelved the project.
The regulator will have now to issue a new closure plan that includes comments from other government offices including the environmental watchdog (SMA), which is expected to rule on two pending cases against the Canadian miner by mid-year.
The giant project in the Andes has been shuttered since 2013, when a court ordered the company to halt construction over environmental concerns. Later that year, Barrick shelved the project citing massive cost overruns and nose-diving metal prices.
Ahead with the Lama portion
When gold prices began their long-awaited recovery last year, Barrick announced the beginning of a “drastic revision” of Pascua-Lama. A few months later, it agreed to pay $140 million to resolve a US class-action lawsuit that accused the company of distorting facts related to the project.
In September, the world’s No.1 gold producer by market value appointed a new executive, George Bee, to lead the development of the Argentine side of the mothballed project (the Lama portion).
The company said at the time it would develop a “modest, scalable starter project” on that side using underground mining methods. If successful, the miner said it could use cash flow from Lama to fund additional development on both sides of the border over time.
A few months later, it decided to strengthen its position in Latin America by hiring a new director for the region — Pablo Marcet — with decades of mining experience in the geographic area.
Argentina has been an enthusiastic supporter of the project – while only around a fifth of the deposit is located in that country, many of the above-ground facilities will be built on that side of the border.
If it ever comes into production, Pascua-Lama would generate about 800,000 to 850,000 ounces of gold and 35 million ounces of silver per year in the first full five years of its 25-year life.