Despite an unfavorable court ruling, Barrick Gold is confident that its Pascua Lama project will push ahead.
Argentina's Supreme Court ruled that a much debated law aimed at protecting glaciers will in fact stand after it was blocked by challenges from provincial governments and mining companies operating in the high Andes.
The law, which forbids mining on glaciers and some surrounding areas, was passed in 2010 but its execution had been held up by a federal judge in San Juan province who suspended the application of six articles of the law after complaints by mining industry groups. The provincial judge’s injunctions have now been struck down by the Supreme Court.
Barrick was quick to point out that its Pascua Lama, which has weathered its share of criticism from environmentalists, is not on a glacier and its development would not be forbidden by the law.
The construction of the mine, which began in 2009 and is slated for completion in 2013, could however be delayed by an aspect of the law that calls for an inventory of all glaciers and periglacial areas in the country. Periglacial zones are loosely described as areas where ice has recently retreated but water remains below the surface.
The development of Pascua Lama could be delayed because no mine can go into production until that inventory is completed.
But Barrick’s senior manager of communications, Andy Lloyd, says the high court has not yet ruled on the constitutionality of the law, which means its implementation is not yet certain.
And while several mining companies in the region joined Barrick in voicing concern over the law, Barrick’s specific concerns, according to Lloyd, are threefold.
Firstly, the definition of a periglacial area remains unclear at this point.
Secondly, any potential impact on glaciers at Veladero and Pascua-Lama has already been evaluated as part of their respective environmental impact assessments and the company is already in compliance with provincial glacier protection laws.
Thirdly, Barrick believes, as does the provincial government of San Juan, that the law is unconstitutional because it seeks to regulate matters that are under provincial jurisdiction.
The last point is crucial as the law would wrest much of the control that provincial governments have over mining projects and place it in the hands of the national government in Buenos Aires.
The protection of glaciers is a hot button issue in Argentina due to their being a source of large reserves of water for human consumption and agriculture.
A similar law to the one currently being debated was passed in 2008 but was vetoed by president Cristina Kirchner.
Pascua-Lama is not only one of the world's highest altitude gold projects but it is also one of the largest untapped resources in the world with proven and probable reserves of 17.9 million oz of gold and 676 million oz of silver.
Barrick expects average annual gold production to be in the 800,000 to 850,000 oz range in the first five years of operation at negative total cash costs of US$225 to $275 per ounce based on a silver price of US$25 per ounce.
The project spans both sides of the Chile-Argentine border, and while Lloyd points out that there are some small ice fields, sometimes called glacierettes, on the Chilean side of the border, they are not relevant to the Argentine law and have been specifically dealt with by Chilean regulators.
Pascua Lama sits roughly 10 km northwest of its Veladero mine which has been in operation since 2005 and would not be affected by the new law.
The news had little impact on the company’s share price as Barrick stock was off just 1.8% to $38.80 on 980,000 shares traded.
To read more Northern Miner articles, click here
Comments