Thursday, 11 April 2013

Chilean court suspends work at the Pascua-Lama Gold Mine over entironmental concerns.

An Appeals Court in the Chilean city of Copiapo has ordered all work to cease at the Pascua-Lama Gold Mine, citing environmental concerns raised by the Diaguita Indigenous Community and Chile's Environmental Evaluation Service, who were concerned that waste from the mine was reaching glaciers which the community depend upon for their water. The company had previously been fined for monitor glaciers in the region. The mine straddles the border between Chile and Argentina, where environmental concerns have also been raised in a campaign co-ordinated by environmental group Greenpeace. At the time of writing mine owners, Toronto-based Barrick Gold, have obtained an injunction against enforcement of a law passed by the Argentinian Congress in 2010, which aimed to curb mining close to glaciers in order to protect the countries water supplies, and excavation work continues on the Argentinian side of the border. However the Argentinian Supreme Court has demanded a national water-resource survey mapping glaciers and peri-glacial areas, and it is unclear what the mine's long term prospects are if the company becomes involved in confrontations with authorities on both sides of the border.

The position of the Pascua-Lama Gold Mine in relation to the Chile/Argentina Border and glaciers in the area. Jeanine Lee/Monteal Gazette.

The Pascua-Lama Mine is planned to be the world's highest open-pit mine, at an altitude of 4500 m, with estimated reserves of 17.9 million ounces of gold, as well as significant amounts of silver and copper. 75% of the reserves are on the Chilean side of the border, and 25% in Argentina. Barrick have predicted that it should be a low cost mine to operate, however despite work having began in 2006 the mine is yet to produce a single ounce of gold, with current operations still concentrating on removing the overburden (layers of rock on top of the desired beds in an open-pit mine). The project originally had a projected cost of US$1.5 billion, but this has now risen to over US$8 billion after a string of setbacks. This latest problem has affected Barrick's share value badly, with the company suffering an 8.4% drop in value on Wednesday.

Gold (and other heavy metal) mines can have significant environmental impacts as the deposits are never very concentrated, requiring the removal and processing of large amounts of rock. This is typically achieved by pulverising the rock and treating it with chemicals in settling pools, which require stringent controls to prevent pollution of the local environment. Historically this has led to a temptation for companies to try to circumnavigate (or ignore) environmental regulations in less developed nations, thereby maximizing profits. That Barrick have managed to run into problems with environmental regulators in both Chile ans Argentina while still at the overburden-removal stage of the Pascua-Lama project suggests that environmental remediation costs may not have been factored into the original projections for the project, which bodes poorly for the long-term prospects of the mine.

Overburden-removal operations at the Pascua-Lama Mine. Reuters/Barrick Gold.

Chile is one of South America's most prosperous nations, but there is still widespread poverty and the economy is heavily dependent on the export of raw materials, i.e. mining, fishing, farming and forestry. This has led successive Chilean governments to welcome investment in these sectors, sometimes to the detriment of environmental and human-rights concerns. This has led to a rising awareness of these issues in the country, with rising public demands for better protection of the environment and better pay and protection for the workforce.


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