Business, Finance & Economics

A controversial mine


SANTIAGO — The world’s leading gold producer is set to begin building the largest open pit gold and silver mine in the world on the Chile-Argentina border this year, amid accusations that the operation will harm nearby glaciers and endanger the local water supply.

Last month, the Canadian-based Barrick Gold Corporation announced that it was ready to launch its long-postponed binational “Pascua-Lama” project, located in the Andes Mountains more than 3 miles above sea level and 430 miles north of Chile's capital, in Huasco Province. Barrick says the site likely contains 17.8 million ounces of gold and 718 million ounces of silver. Nearly 75 percent of the minerals slated for extraction are located on the Chilean side and the processing plant will be in Argentina. Production is expected to begin in 2013.

“Pascua-Lama will change the entire development of the Huasco Valley, which is an agricultural, and not mining, zone," warned civil engineer Pablo Schnake, a specialist in water hydraulics and the environment. "Communities will be affected by the heavy traffic with dangerous substances and the potential contamination of the river. It will seriously impact the glaciers, which are part of the country’s water reserves."

The $3 billion project has been under scrutiny ever since Barrick Gold purchased the site in 1994 and presented its first environmental impact assessment (EIA), which included the proposal to break up and move three small glaciers in the area to another location.

(The site of the proposed mine. Courtesy of Barrick Gold corporate website)

The plan prompted outcry from civic groups, environmentalists and local residents, who worried the mine would dry up an important source of water for the 70,000 residents of the Huasco Valley, most of whom make their living through agricultural production. 

Ever since, environmentalists and community groups have coordinated protests with similar organizations in the San Juan province on the Argentine side. A few weeks ago, representatives from several countries met with Canadian lawmakers to discuss what they say are problems with Barrick's operations on several continents. 

The uproar finally prompted regional environmental authorities in Chile to add 400 new conditions on Barrick's plan for the Andes mine — including a ban on moving or destroying the glaciers — before approving it.

For its part, Barrick denies that the bodies of ice are even glaciers. Instead, it calls them "ice reservoirs," and says that the ice is an insignificant source of water for the Huasco Valley.

Under the revised plan, the glaciers are located outside the pit's limits. Barrick will comply with the new conditions, said Rodrigo Jimenez, vice president for corporate affairs for Barrick South America. In addition, he said, the company will work with a local university to monitor the glaciers. 

But critics aren't satisfied. “If you detonate 82 tons of explosives in a pit over a mile wide, and lift 13,000 tons of dust into the air every day, can someone please explain how this will not affect glaciers located just meters away?” asked Lucio Cuenca, director of the Latin American Observatory of Environmental Conflicts (OLCA) and a leading opponent of Pascua-Lama.

And to the 5,000 residents of the Alto del Carmen community, who will suffer the direct impact, the glaciers may not even be the most detrimental effect from the mine. They worry about the daily traffic of trucks carrying explosives, fuel and chemicals. The company also plans to use cyanide to extract gold, raising concerns about the handling of the dangerous substance.

“Many in the communities oppose Pascua-Lama because they know the project will endanger the entire valley and their agricultural activity," said Sister Cristina Hoar, a missionary who has lived in the Huasco Valley for more than 20 years, and a leader of opposition to the mine. "But since the company has a lot of money and is offering jobs, it is dividing the community."

The company says it will follow the strictest international safety standards for managing cyanide and other chemicals.

Another source of controversy is a deposit of rock waste (which occurs after minerals are extracted) that Barrick plans to install near the source of El Estrecho river, and which will eventually cover a rock glacier (a solid mass of water mixed with rock and earth under the land surface). Once the rock glacier is covered by the sterile deposit, two things may happen: the glacier may melt and disappear, or the deposits will mix with the glacier and freeze, resulting in a new potentially toxic body of ice.

Barrick denies this will occur. “Based on all the studies conducted by internal and external experts on this subject, no impacts of that sort are anticipated," said Jimenez, who added that the project will include dozens of water quality monitoring stations, in addition to other protective measures.

Despite opposition to the plan, the presidents of Argentina and Chile have welcomed the Pascua-Lama project, hailing its potential to create jobs: 5,500 during the three years of its construction and 1,660 permanent jobs over its estimated 25 years of mine life.

In fact, Cristina Fernandez Kirchner of Argentina and Michelle Bachelet of Chile met privately with Barrick executives in April. They agreed not to double-tax the company, among other matters. The two countries signed a mining cooperation treaty in 1997, which seemed custom made for Barrick when the company discovered that the ore body it owned in Chile stretched across the border. 

The company plans to begin major construction on the mine by September. But hurdles remain. Barrick lacks permits for the construction of two reservoirs, and needs to build a model to predict water resources in the project area, according to the General Directorate of Waters.

Barrick already operates two gold mines in Peru and one in Argentina. Until now, it has only invested in copper mines in Chile. In addition to Pascua-Lama, Barrick Gold is now studying Cerro Casale, just north of Pascua-Lama — the company calls it “the world’s largest undeveloped gold and copper deposits."

Chile’s environmental authority, CONAMA, agreed to respond written questions from Global Post, but never did.

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