Chile imposes $16 million in fines to Barrick for environmental violations at Pascua-Lama

Chile’s environmental regulator blocked Barrick Gold Corp.’s (NYSE, TSX: ABX) controversial Pascua-Lama project on Friday and imposed its maximum fine of over $16 million on the company, alluding to “very serious” violations of its environmental permit, as well as a failure by the gold firm to accurately describe what it had done wrong.

Chilean newspaper El Mercurio reports (in Spanish) that, after a four-month investigation, the country’s Superintendent for the Environment, Juan Carlos Monckeberg, ordered all construction activity at Pascua Lima to stop immediately, at least until it until builds the water management systems it promised to put in place for containing contaminated fluids.

Both Barrick and its joint-venture partner in the project, Silver Weathon, were halted on the news.

Monckeberg highlighted that while Barrick itself reported the failures, a independent investigation by the agency’s own supervisors discovered the miner wasn’t telling the full truth.

In a brief statement Barrick said is in the process of reviewing the resolution and that the company “is fully committed to complying with all aspects of the resolution and to operating at the highest environmental standards.”

“We found that the acts described weren’t correct, truthful or provable. And there were other failures of Pascua Lama ‘s environmental permit as well,” Monckeberg was quoted as saying.

The ruling comes after a court accepted an injunction filed by indigenous communities concerned by damage to glaciers in the Andes mountains.

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 gold and silver mine straddling the border with Argentina, was set to become one of the top gold and silver mines in Chile, the world’s top copper producer.

(Image of protests in Santiago, Chile, against Pascua-Lama back in 2007)