A ruling from a Chilean court to halt work on the world’s most ambitious gold project marks a growing backlash against the industry in one of the world’s most mining-friendly areas.
The Pascua-Lama gold and silver project straddles the Andes mountain range between Chile and Argentina and is slated to go into production this time next year, if project owner Barrick Gold Corp. can convince an appeals court in the northern town of Copiapo – population 167,000 – that it isn’t polluting the water supplies of indigenous communities.
The ruling represents a rare injunction against a mine that has been more than a decade in the making, having cleared regulatory hurdles including environmental permitting in Chile and Argentina. It’s also the latest instance of a Chilean court hearing a complaint against a project already cleared by environmental authorities.
Chile has long been viewed as a miner’s Utopia, complete with some of the richest mineral reserves on the planet as well as one of its most mining-friendly, stable governments, but some say it has become so saturated with projects that its infrastructure is straining at the seams and communities are becoming alarmed. The shift comes amid a growing wave of resource nationalism, which has touched most of the world’s mining jurisdictions.
Chile hosts operations owned by the world’s largest miners, including the likes of Australia’s BHP Billiton PLC and Rio Tinto PLC, London-listed Anglo American PLC, Switzerland’s Xstrata PLC and Canada’s Teck Resources Ltd.
“For years, the courts had reserved judgment and not heard cases of projects already approved by environmental authorities. I would say that that changed two or three years ago,” Natalia Fernandez, an environmental lawyer for Chile’s Oyarzun Abogados law firm, said in a telephone interview from Santiago.
“These days they are getting involved and they are ruling against the decisions of environmental authorities, leaving environmental authorizations without effect. They are revoking environmental licences where they believe a nearby community is being impacted by a project.”
Almost exactly a year ago Chile’s Supreme Court upheld a ruling by a lower court revoking the environmental permit on El Morro, a $3.9-billion copper-gold project owned by Vancouver-based Goldcorp Inc. and like Pascua-Lama also set in the Atacama desert. The original approval was issued on March 14, 2011.
It’s not clear how long the suspension announced this week will last on Barrick’s $8.5-billion Pascua-Lama project, but experts like Ms. Fernandez say a resolution will likely take at least four months to reach.
“The Appeals Court should take at least a few months to rule (in April or May) but the results can be appealed again by parties to the Supreme Court, which can also take a period of time of no less than two months,” she said.
Critics complain that a regulatory vacuum is emerging in Chile as a growing number of communities use the court system to challenge massive mining and energy projects.
In Chile’s verdant south, a popular destination for global eco-tourism, protests from environmental groups have left a giant, $3.2-billion hydroelectric project known as HydroAysen stalled for years.
Barrick says it’s too early to tell what it will all mean for Pascua-Lama, which is already a year overdue and billions of dollars over budget.
The company says work will continue on the Argentine side, and likely as well on water management jobs deemed necessary for environmental protection in Chile.
“When you get a project of this magnitude interrupted, everyone is going to sit up and take notice how the authorities deal with it,” said Sander Grieve, a partner and head of mining at the Bennett Jones law firm in Toronto.