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Goldcorp Inc. has halted construction on the potentially massive El Morro gold and copper project in Chile after the Andean country's Supreme Court suspended approval of an environmental permit.

Vancouver-based Goldcorp, Canada's second-largest gold miner, said construction work on the mine would be suspended until environmental authorities address deficiencies identified by an appeals court in Antofagasta, in Chile's rich northern mining region.

Environmental concerns are increasingly gaining traction in Chile, the world's largest copper miner, and major mining and energy projects have come under the scrutiny of local and international groups.

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Canada's own Barrick Gold Corp., the world's largest gold miner, took years to overcome noisy environmental challenges before it could start building the giant Pascua Lama gold project, located some 5,500 meters up steep Andes mountain slopes that separate Chile and Argentina.

"Activities not related to site construction, such as detailed engineering, design work and architectural planning, will remain underway," Goldcorp said in a statement.

Goldcorp had planned to start construction on El Morro in September, spending some $3.9-billion over a five-year period on a mine that will represent the company's re-entry into Chile, one of the world's most mineral-rich countries.

Once built, the mine is projected to produce an average of 210,000 ounces of gold and 200 million pounds of copper per year to Goldcorp's account for 17 years. The project is 70 per cent-owned by Goldcorp and 30 percent-owned by New Gold.

Project managers expect to meet with Chile's environmental permitting authority (SEA) as well as with the local community that requested a review of the project, its potential impacts and measures to mitigate them.

"El Morro will cooperate with the SEA to ensure that deficiencies are fully and appropriately addressed," Goldcorp said in a statement.

Goldcorp is also facing a dispute about its ownership of El Morro, in separate court proceedings in Canada.

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Toronto-based Barrick Gold claims Goldcorp illegally obtained control of the project through violations of agreements among the mine's shareholders, while Goldcorp said it acted fairly.

Final legal arguments were submitted to the Ontario Superior Court of Justice in Toronto in early February, and a ruling is expected soon.

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