The Pascua-Lama project, if completed, is set to become the world’s largest gold and silver mine. Straddling the border of Chile and Argentina, the project has been plagued with problems since its inception over seven years ago; the time frame for the project has been pushed back year after year, while costs for the miner, the world’s largest gold producer, Barrick Gold, only continue to grow. And the latest spanner in the works came in April this year, when the Chilean government halted construction on the mine due to the environmental damages it is causing; as a consequence, Barrick was fined US$16m the following month.

Pascua-Lama, between Chile and Argentina (Photo: Desinformemos.org)
The controversy over the Pascua-Lama mine derives from the suspected damages it is causing on the glaciers, land, and rivers in the mountainous area of the Andes, in the southern reaches of the Atacama Desert. More specifically, the mine’s suspension was ordered because it was polluting the local rivers that support local indigenous communities. After the case was presented in the court, Chile’s environmental regulator ordered Canadian-owned Barrick to implement a water management system for the mine in accordance with the required permits before beginning construction once again.
Adding further pressure to Barrick’s efforts is the discontent from its share owners, who this week filed a class action lawsuit regarding their investment into the Pascua-Lama project. The purchasers of Barrick’s common stock have issued complaints claiming that the company has “made false and misleading statements and concealed material information relating to the cost of and time-to-production projections”. Barrick’s shares are dropping by the day; at the close of the Toronto stock exchange this week they had fallen by 1.7%.
Regardless, as Barrick’s problems, and costs, continue to pile up, the company is steaming ahead to finish a project that it can now not afford to lose.
Environmental Mismanagement
If construction on the mine goes ahead without meeting the required regulations, the effects on the Andean glaciers would be disastrous. And the indigenous communities currently filing the complaint against Barrick are in fact arguing that its work has already had lasting damaging effects.

Protests against Pascua-Lama, 2010 (Photo: antitezo)
An appeal filed in April by attorney Lorenzo Soto on behalf of five indigenous communities representing the Diaguita people of Huasco Valley, reported that the mine’s construction has covered three glaciers -the Toro 1, Toro 2, and Esperanza- with dust. This, the report said, will lead to melting and further environmental dangers for the glacier-fed Estrencho River and its water supply – one that local indigenous groups are reliant upon. In addition, the authorities have reported an “unjustified discharge coming from the acid treatment plant to the Estecho river”.
As it stands, Barrick has been ordered to implement transitory measures to capture, transport, and discharge water to a sediment tank at the north of the mine before ice begins to melt in or around November. Chile’s environmental regulator, Juan Carlos Monckeberg has said that Barrick can begin building the long-term water drainage systems immediately, and will not need additional permits for its infrastructure, while Barrick released a statement in May confiming that it “is fully committed” to complying with the regulations.
The environmental damages, potential and actual, are mounting up, and whether this is down to poor management on Barrick’s side, or neglect from the government to protect its country and residents, is unclear. Under its agreed environmental licence, Barrick was required to build the infrastructure to manage and treat the waste water before launching its pre-stripping operations. Although it is now known that the company had only partially implemented the system before beginning its pre-stripping, according to Monckeberg.
“We found that the [environmental procedure] acts [that Barrick] described weren’t correct, truthful, or provable. And there were other failures of Pascua-Lama’s environmental licence as well,” Monckeberg told Chile’s AP News Agency.
Chilean President Sebastian Piñera has also voiced his concerns about Barrick’s approach, while taking the opportunity to undermine former president Michelle Bachelet, who approved the environmental plans at the time, and who is again running for office next year.
“The environmental permit of 2006 was badly done… you look at it and wonder: how didn’t they anticipate all these problems? They’re going to have to meet all requirements and in the meantime works won’t be able to go forth,” President Piñera said.
However, he also added that he hoped Barrick’s Pascua-Lama gold mine “would proceed as long as the company complied with the requirements”.
Another problem looming over Barrick’s endeavours is the enforcement of a glacier protection law on the other side of the border, in Argentina, which was passed in 2010 in response to the Pascua-Lama project. At the time, Barrick found a loop-hole and the company, along with some pro-mining groups, obtained injunctions to block the law on the grounds of it preventing economic development in the province. However, in July last year, the Argentine Supreme Court voted to reverse the injunctions, and is currently making a decision on the constitutionality of the glacier protection law – an act that could potentially stop any further development on Pascua-Lama. Its members have said they could be ready to rule on the bill in September.
Unaddressed Issues
Despite the obstacles put to the completion of the mine, many environmental and indigenous organisations are still unhappy about the way the Chilean authorities – known as SMA – have dealt with drafting the new set of regulations, and believe that many other factors, aside from the water damage, need to be addressed. The director of Greenpeace, Chile Matias Asún said that President Piñera has “endorsed a weak sanction [which is] comfortable for the company, and ignores the enormous and diverse environmental handbook that needs to be followed”.
He believes that Barrick has been given a favourable ruling, which gives them the minimum amount of time to quickly clean up its efforts before beginning its operations again. Regardless of the new imposed regulations, Asún added that once the mine begins operating it will still be permanently damaging the glaciers and the ecosystems in the area, as well as the communities that live there.

Barrick gold mining (Photo: El Cuidadano)
“The superintendent had plenty of tools and background to permanently remove environmental permits and thus send a clear signal of respect for the law and the environment. The signal was weak and insufficient.”
Greenpeace also confirmed that Barrick has only paid 75% of the US$16m fine, which the organisation said was “laughable” for a company that posted US$847m in net profit in the first quarter of 2013. Barrick has estimated it must invest about US$29m to meet environmental standards at the mine.
Barrick has hinted that there is a possibility that it would have to suspend the Pascua-Lama project if the time frame for resolving regulatory problems remains unclear, although it seems like a very unlikely scenario considering it will be one of the company’s key assets once completed. Even though the development costs have risen from US$3bn to more than US$8bn since the start of operations, the show will go on for Barrick’s Pascua-Lama. This lucrative investment is expected to produce 800,000 to 850,000 ounces of gold and 35 million ounces of silver a year in its first five years.
Barrick, which has reportedly already invested US$5bn in the mine, has said it will “work as fast as it can to satisfy the Chilean authorities and regulations”. As it currently stands, the delays will see the project commencing again in the second half of 2014. And whether more environmental issues and obstacles come to light from now until then, it is a sure bet that Barrick will continue to ride the storm until it can cash in on its most prized asset.
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