Chile’s Supreme Court won't hear Barrick appeal on Pascua Lama fine

Chile’s Supreme Court won't hear Barrick appeal on Pascua Lama fine

Work at Pascua Lama. Image from archives.

Chile's Supreme Court has declined to hear Barrick Gold’s (TSX, NYSE:ABX) appeal of a lower court's decision involving fines imposed on its now shelved $8.5 billion Pascua Lama gold-silver project by the country's environmental regulator, the company said.

The appeal, filed by Barrick's local subsidiary, Minera Nevada, followed a confusing ruling in March last year that revoked the $16 million penalty — the largest ever imposed in the country— over alleged mishandling of the process by the regulator, the Superintendence for the Environment (SMA).

That resolution not only ordered the Toronto-based miner to keep Pascua Lama’s operations halted, but also instructed the SMA to re-write the resolution containing the fine, as it said it contained a number of "errors and illegalities."

Barrick took the case to the Supreme Court, arguing the fines were calculated based on applicable law and commonly accepted legal principles.

However, Barrick says Chile’s top court refused to consider the appeal on procedural grounds, ruling that the company is not a party to the case because the original action was brought against the government watchdog.

As a result of the ruling, the SMA will now re-evaluate the administrative fines it imposed on the Pascua Lama project, Barrick said in the statement.

What to expect in 2015

The drafting of new sanctions could take at least three months, an SMA spokesperson told BNamericas. After the new amount is determined and the company notified, Barrick has the legal rights to file a new appeal with the environmental court and, depending on that ruling, also a fresh plea with the Supreme Court.

Construction at the project site, which straddles the Chile-Argentina border, was indefinitely postponed because of the ongoing legal issues and the company's own decision to halt work in October 2013, after investing $5 billion in a project also hit by cost-overruns and a falling gold price.

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.

Here's Pascua Lama long and troubled history that dates back to the mid-1990s: