SRSrocco: Big Trouble For The World’s Largest Gold Mining Company

“Unfortunately, Barrick does not understand when NO means NO.  While the company is putting out public statements that the…”

by Steve St Angelo of SRSrocco Report

Regulators in Chile ordered the permanent closure of Barrick’s Pascua Lama Gold Project on their side of the border.  This is very bad news for Barrick because the majority of gold mine is located on the Chilean side of the project.  The massive Pascua Lama Gold Mine straddles the border and is situated in both Chile and Argentina.

According to Barrick’s mining plan, the large open-pit mine would be located predominantly in Chile, while the processing plant would be constructed and operated on the Argentinian side.  However, after years of protest by locals through government agencies as well as serious environmental concerns, on January 17th, the SMA, the Chilean Environmental Superintendence ordered the permanent closure of Barrick Gold’s Pascua Lama open-pit gold mine project and imposed a fine of approximately $12 million on the company.

Now, Barrick’s official response was quite interested indeed:

The Pascua-Lama project is currently operating under a temporary closure plan in Chile. During this period, the Company has continued to manage all aspects of the project in a responsible manner.

The sanction is part of a re-evaluation process ordered by the country’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project. The revised sanction includes a reduction of the original administrative fine imposed by the SMA in 2013, from approximately $16 million to $11.5 million. Based on a preliminary review of the resolution, the SMA has not revoked Pascua-Lama’s environmental permit (RCA) but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities. The Company will complete a detailed analysis of these requirements and will provide further details in due course.

For new readers, Barrick is the largest gold mining company in the world with annual production over five million ounces per year.  There are two interesting aspects of Barrick’s response to Chile’s SMA mine closure.

First… Barrick states the Pascua-Lama Project is currently operating under a “temporary” closure plan in Chile.  While Barrick may be operating under the illusion of a TEMPORARY closure plan, Chile’s Environmental Superintendence has not only ordered the permanent closure of their side of the project; they also included the closure of all surface mine facilities.

Second… Barrick makes a positive claim that the SMA did not revoke Pascua-Lama’s environmental permit (RCA).  While this may be spun as a win by Barrick, the only reason Chile’s governmental agency did not revoke Barrick’s environmental permit was to be able to oversee the proper closure of the company’s project on their side of the border.

According to the article Complete and Permanent Closure of Pascua Lama: The Power of Conviction and Persistence, published on MiningWatch.ca, Chile’s SMA did not revoke the environmental permit for the following reason:

(…) with the cancelation of the RCA, the state loses the normative basis for imposing environmental mitigation measures during project closure, which are fundamental to control environmental risks and damage.

So, what we see here is the difference between “Corporate Spin” of the situation versus the “actual legitimate reasons” by Chile’s governmental agency.  Chile’s SMA did not revoke Barrick’s environmental permit because they want the legal ability to manage any environmental risks or damages.

While some readers may view my stance on corporate corruption by large mining companies as being a “LEFTIST,” I rather look at it as what is “FAIR” for everyone.  Actually, I am quite surprised by individuals in the alternative media community who back these large corporate mining companies against the interests of the local populations in foreign countries.  I gather the mindset of these individuals in the alternative media community is that it’s okay to protest about the corruption by the Fed, Central Banks, and large corporations when it is impacting a person living in the WEST, but a different story entirely when it comes to the same principle applied to indigenous and local peoples in foreign countries.

For example, I have written several articles about the blatant disregard for local communities and their environmental concerns on Tahoe Resources Escobal Mine in Guatemala.  The Escobal Mine has been and continues to be plagued by the protest of large numbers of local peoples surrounding the mine.

While Guatemalan Supreme Court reinstated Tahoe’s Escobal Mine license on Sept 12th, after it was temporarily banned on July 6th, the legal battle continues as the mine is still plagued with ongoing local protests as well as a road blockade that delivers vital supplies to the mine.  With the company unable to continue operations, on Jan 15th, Tahoe Resources cut 25% of its workforce (250 people) at its mine.  The company stated that there could be more worker cuts if the legal battle drags on.

Okay, getting back to Barrick’s Pascua-Lama Project.  Because the Chilean Government has decided to protect the vital glaciers and the environment surrounding the Pascua-Lama Project, by forcing the company to close the project on their side of the border, Barrick has continued the construction of the processing plant on the Argentine side.  Barrick hopes to mine the smaller ore body on the Argentine side of the project as well as move forward with a plan to mine Chile’s ore body by utilizing an underground mine.

Unfortunately, Barrick does not understand when NO means NO.  While the company is putting out public statements that the environmental concerns of surface mining are in the past and that they plan to move forward with an underground mine, the Chilean locals and governmental agencies aren’t buying it.

Again, according to the MiningWatch article linked above:

Barrick asserts that the charges address past problems and claims it is now focused on a responsible future that envisions the option of an underground mine. The company claims that this proposal would addressing community concerns by reducing the project’s environmental impact.

Barrick’s actions speak louder than its words. During years of conflict over the Pascua Lama project, Barrick trampled local interests that respect and protect glaciers, water, and nature in general. It is precisely Barrick’s actions – and the importance and fragility of the ecosystems that they affect – that the SMA took into account in ordering the closure of the mine site.

At the Observatory of Environmental Conflicts (OLCA), we have accompanied the local community in its resistance to the ill-conceived Pascua Lama project since its inception 17 years ago. We have witnessed Barrick’s strategies to divide, co-opt, harass and discredit local actors; its financing of political campaigns; and the withdrawal of the state from the area, making communities dependent on the mining company for education, health care, and local development initiatives. We have exposed all of this as it occurred and countered it to the best of our abilities.

Projects like Pascua Lama are only made viable through corruption, the violation of human rights, and by putting at risk essential ecosystems.

You see, a massive gold mine the size of Pascua-Lama, with its serious environmental issues, would be very difficult to take place in a Western country where there are much more strict environmental standards enforced by governmental agencies.  However, in many third-world countries that are plagued with corrupt ruling parties, big corporate MONEY TALKS.

While I have no problem with mines that are opened with the majority of consent by all parties involved, future large corporate mega-mines that want to BUY their way to commercial mining status, by disregarding local concerns and environmental issues, are going to be dealing with an uphill battle… as it should be.

Lastly… for those large mega-mines that might be moving forward, without the support of local communities or governmental agencies, there is one positive force on your side.  The very energy that is used to make these mega-mines possible will peak and decline in a few short years.  Thus, without an energy source, these mines will likely DRY UP and BLOW away in the future.

We must remember, the Falling EROI – Energy Returned On Invested will impact the largest entities the most.  Thus, large corporations, large retail box store chains, large complex governmental agencies and even mega-mines will be affected the most.

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