Chile court orders “total and definitive” closure of Barrick’s Pascua-Lama

18.9.2020, 13:20 - eeppo

Chile’s environmental court has put the final nail in the coffin to Barrick Gold’s (TSX: ABX) (NYSE: GOLD) giant Pascua-Lama gold-silver project, straddling the border with Argentina, which had been on hold since 2013 over environmental concerns.

The court dismissed late on Thursday a legal challenge from the company to a 2018 ruling. At the time, Chile’s Environmental Protection Agency (SMA) ordered the “total and definitive closure” of the project.

The tribunal’s president, Mauricio Ovideo, confirmed three of the five main charges against Barrick outlined in the environmental authority’s original ruling. The sentence concludes that the  Canadian miner failed to properly monitor glaciers surrounding the project. It also says Barrick’s activities negatively affected the water quality the nearby Estrecho river.

The judge also ruled the gold giant use an unauthorized methodology for calculating water quality levels, which is less detailed and strict than the one required in Chile.

The court also imposed a $9 million fine on the Canadian miner.

The original mine plan for Pascua-Lama, which required a capital outlay in excess of $8 billion, contemplated an open-pit operation that would have affected three small glaciers in the Chilean side of the Andes. It also involved major construction in the area and huge waste dumps.

In 2016, Barrick began a “drastic revision” of the project and agreed to pay $140 million to resolve a US class-action lawsuit that accused it of distorting facts related to the controversial project.

Shortly after, the company abandoned the idea of an open pit at the site, saying it plans to mine underground instead.

Ahead with the Lama portion

In April 2017, it sold a 50% stake in its Veladero mine in Argentina to Shandong Gold Group in a transaction worth $960 million. As part of that deal, which made the two firms strategic partners, the Shandong province-based gold miner committed to help Barrick move forward with Pascua Lama.

Later the same year, the company agreed to pay a further $20 million to a Chilean group in order to settle an arbitration case against the company filed last year after the gold producer halted payments settled in 2005.

Barrick’s president and CEO, Mark Bristow, was hopeful about solving the issues surrounding the project. Shortly after assuming the post last year, he travel to the South American country and met with mining minister Baldo Prokurica.

“Chile is an investor-friendly country, with a significant mineral endowment, and which encourages the development of mining projects,” Bristow said last year. “We believe there are exciting opportunities here.”

More to come…