MercoPress. South Atlantic News Agency

Chilean court suspends major 8.5bn dollars gold development project in the Andes

Pascua-Lama was originally forecast to produce 800,000 ounces to 850,000 ounces of gold per year

A Chilean appeals court on Monday formally suspended Barrick Gold Corp’s controversial 8.5 dollars billion Pascua-Lama gold mine until the company meets environmental standards and builds infrastructure that will prevent water pollution.

In April, the Copiapo Court of Appeals temporarily and preventively froze construction of the project, which straddles the Chile-Argentine border high in the Andes, while it examined claims by indigenous communities that it has damaged pristine glaciers and harmed water supplies.

On Monday, the court said it was ordering a freeze on construction of the project until all measures required in the government’s environmental license for adequate water management, “as well as urgent and transitory measures required by the environmental regulator,” are adopted.

Chile’s environmental regulator has also suspended Pascua-Lama, citing major environmental violations, and asked Barrick, the world’s top gold miner, to build water management canals and drainage systems. Barrick has said it is fully committed to complying with all aspects of the regulator’s order.

The court ruling also called for the project’s environmental license to be reviewed and for all data on nearby glaciers to be presented to the regulator.

Barrick or the indigenous Diaguita community now has days to appeal the ruling to the Supreme Court.

A potential decision from the Supreme Court would likely be issued this year, but it is tricky to anticipate how it might rule on Pascua-Lama, originally forecast to produce 800,000 ounces to 850,000 ounces of gold per year in its first five years of full production.

Last year, the Supreme Court suspended a key permit for Canadian miner Goldcorp Inc’s El Morro copper-gold project, and rejected the planned 5 billion dollars Central Castilla thermo-electric power plant. But it also cleared the way for the unpopular HidroAysen hydro-power project.

A full court-ordered halt of the project would be a major hit for Barrick as 80% of the metal reserves are on the Chilean side. It would also be a further blow to Chile’s business-friendly reputation.

Several big mining and power projects have faced setbacks in recent months in Chile, the world’s No. 1 copper producer, where around 60% of export revenue comes from the metal.