A law banning mining around glaciers in Argentina will not derail development of one of the world’s largest new gold projects, Barrick Gold Corp. said.
The Pascua-Lama project is on track to go into production in 2013 after years of fighting over its environmental impact.
Argentina’s Congress passed the law – which also bans drilling on oil rigs – about two years ago in an effort to protect water reserves, but opponents held it off with an injunction that was overthrown by the Supreme Court on Tuesday, driving Barrick Gold stock lower amid concerns Pascua-Lama may be halted.
“The impact of the law on Barrick is nil,” said Barrick spokesman Andy Lloyd, pointing out that there are no glaciers near the mine on the Argentine side of the cross-border project with Chile, where 70 per cent of the mine is being built.
Barrick stock stumbled on news of the ruling earlier this week because it raised alarm bells that Pascua-Lama might be thwarted by the same environmental concerns it already faced down nearly a decade ago, when a media storm echoed from Andean capitals in Buenos Aires and Santiago to Barrick headquarters in Toronto.
The project, nestled between Andean peaks along the ridge of mountains separating Chile and Argentina, is due to start production in the middle of next year, about 20 years after Barrick acquired the property. Barrick is counting on the new mine to drive much of its growth in the next five years, contributing as much as 850,000 ounces of gold to production.
“The potential impact on glaciers has already been evaluated and those have been approved by the provincial government with the participation of federal agencies,”Mr. Lloyd said. “And those EIAs (Environmental Impact Assessments) determined that the mine would not have an adverse impact on glaciers.”
Barrick spent millions of dollars and years of effort just to get the Pascua-Lama project approved for construction in 2009, fulfilling hundreds of environmental requirements in Argentina and Chile that included promises not to touch the ice near the open pit operation. Those pledges meant it had to leave about a billion dollars worth of resources in the ground.
The glacier protection law requires a national inventory of all glaciers in the country and a ban on mining and oil and gas activity in those areas.
The review could take years and has faced opposition from key mining provinces that say it is unconstitutional because natural resources are under provincial jurisdiction in Argentina.
Once built, Pascua-Lama will be one of the world’s largest producers of gold and silver.
A special prosecutor in San Juan province, where Barrick’s operations are located, was quoted in local media on Tuesday saying it would not affect mining in the province.
“There is no fear that this ruling will affect mining, industry or public works,” state prosecutor Guillermo De Sanctis told the Tiempo de San Juan publication. “Because the court has not said, ‘stop the presses, stop producing,’ what it has said is that you cannot suspend the law if the inventory of glaciers has not even begun to be taken.”
Thanks to revenue from silver sales, the mine will have negative average cash costs of production for gold in the first five years of operation.
Pascua-Lama and two other developments are Barrick’s three main pillars of growth at a time when large ore deposits are becoming increasingly difficult to find in safe and accessible jurisdictions. The mine has proven and probable reserves of 17.9-million ounces of gold, with 676-million ounces of contained silver, according to the most recent data.