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Santiago, Chile (UPI) Apr 12, 2013
Protests against environmental risks of copper and gold mining are taking the shine off huge investment projects in Bolivia, Chile, Ecuador and Peru, plus neighboring countries wanting to boost income through mineral resources.
In the latest setback to regional mining, a Chilean court this week ordered Canadian gold mining giant Barrick Gold to halt development of the Pascua-Lama mine on the Argentine border following indigenous community protests.
Although Barrick Gold complied by suspending construction, that's small relief to shareholders as the project costs have soared from about $1.5 billion less than a decade ago to about $8 billion. Barrick Gold shares have been tumbling.
Advocacy groups aren't certain the suspension is the the last they'll hear of the project. Nor is Barrick Gold's compliance with the court the end of troubles for the company, the world's largest gold miner with headquarters in Toronto.
A court in the northern Chilean city of Copiapo ruled on appeal Barrick Gold was guilty of environmental irregularities.
"The company is suspending construction work on the Chilean side of the Pascua-Lama project while working to address environmental and other regulatory requirements to the satisfaction of Chilean authorities," Barrick Gold said in a statement.
"In the interim, activities deemed necessary for environmental protection will continue as authorized."
It said construction in Argentina, where the majority of Pascua-Lama's critical infrastructure is located, including the process plant and tailings storage facility, are not affected.
Protesters encouraged by the Chilean court ban are hoping to have Barrick Gold activities stopped in Argentina.
Chilean President Sebastian Pinera's government backs expansion of Chilean mining, but can't be seen siding with foreign corporate investors.
Interior Minister Andres Chadwick said the government wasn't surprised by the suspension and hoped Barrick Gold would redress grievances cited by the court.
A similar petition by four Diaguita indigenous communities last September targeted Barrick subsidiary Compania Minera Nevada.
In March, Barrick Gold business in the Dominican Republic ran into trouble when customs officials stopped a gold consignment from its Pueblo Viejo mine.
Analysts and campaign groups say foreign mining companies need to engage more effectively with local communities in areas subjected to massive disruption by mining in order to avoid experiences such as those in Pascua-Lama.
Pascua-Lama drew investors because it is aimed to be one of the largest gold-producing plants with low-cost operations. Current targets call for yields of up to 850,000 ounces of gold and 35 million ounces of silver in the first five years of operation -- if it ever takes off.
Chile's copper mines, another major earner, have also faced rising opposition from advocacy groups and indigenous communities. Chile produces a third of the world's copper. Protests have centered not only on concerns over harmful effects of copper mining but also on sharing of copper export income proceeds.
Environmental protests, poor regulatory framework and governmental zeal for nationalization have also stymied investment in Bolivia, Argentina and Ecuador.
Bucking the trend, Chinese-owned Ecuacorriente signed a $1.4 billion mining development in Ecuador, but both Bolivia and Peru are struggling to restore investor confidence after a series of policy moves that put off international business interests. In 2012 India's Steel & Power Ltd. pulled the plug on a $2.11 billion mining and steel project in Bolivia.
Lack of regularity clarity is also hindering investment in mining projects in other neighboring countries except Brazil, which has deployed mostly its own funds to embark on a multibillion dollar regeneration in its minerals sector.
Global Trade News
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