MercoPress. South Atlantic News Agency

Open pit mining project in Uruguay questioned in Parliament and by environmentalists

Senator Abreu, the environment impact study come before signing the contract, and where are the 140m dollars guarantee?

A major open pit mining project in Uruguay to extract and export magnetite (a kind of iron ore) and which the government of President Jose Mujica plans to instrument this month has been exposed to a battery of criticism because the administration refuses to show the terms of the contract and farm groups argue there is no final environment impact assessment study.

 The Aratirí project or Valentines project, from Zamin Ferrous, allegedly an Indian consortium, which had originally promised to invest 2.8 billion dollars in developing the extraction and processing of magnetite includes a most controversial 212 km concentrate slurry and return water pipelines to transport the concentrate from the mine to the port to be built along prime agriculture land.

Furthermore the Uruguayan opposition points out the government will be signing the contract and then proceed with the environment impact study, violating Uruguayan law since the study must be previous to signing any commitment by the government.

The opposition also wants to know the terms of the contract, and if Zamin Ferrous effectively deposited the 140 million dollars guarantee, or 5% of the overall project, as demanded by Uruguayan mining law.

Lawmaker Gerardo Amarilla from the Environment Committee of the Lower House revealed that a few days ago he received a member from Environment Office, who revealed his office is planning to modify the limits of protected areas along the Atlantic coast, so that the mineral slurry pipeline leading to the ocean export port has a more direct layout.

“We immediately contacted Natarajan Ishwaran, head of Unesco Environment Sciences Office pointing out that the Uruguayan government is planning to modify the area of the biosphere reserve”, said lawmaker Amarilla who underlined that the slurry and return water pipelines to transport the mineral cuts precisely across the biosphere reserve“.
”The project could have a significant and irreversible environment impact in an area of high bio-diversity“, insisted Amarilla.

Senator Sergio Abreu pointed out to the contract, which he says remains 'secret' and the fact it will be signed before the environment impact assessment study is completed, plus the fact the people who live in the area have not been consulted as Uruguayan legislation demands. He also warned that asbestos would be used in the pipeline seals.

Another opposition Senator, Ope Pasquet, warned that the government can't sign a contract before knowing whether the company has deposited the 5% guarantee. ”It is essential to know if the company effectively made the deposit; this is particularly significant following the Pluna incident and the so-called 'perfect guarantee'“.

Uruguay's flag carrier Pluna was closed down in 2012 but the issue was so fumbled up that it ended with the imprisonment of the private associates and forced the resignation of Economy minister Fernando Lorenzo. The head of Uruguay's main government bank, Jorge Calloia, Banco República, involved in the granting of a 13 million dollars guarantee for the auctioning of Pluna's Bombardier has refused to resign.

Uruguay's Executive Secretary Homero Guerrero said that ”95% of the contract's content has been agreed“, and that the whole operation involves 2.8bn dollars and effectively the mining company must deposit 5% in guarantee of the planned investments.

According to Zanin Ferrous website, the Valentines Project is ”the largest productive, industrial and logistic project in Uruguay’s history. It involves the development of a major magnetite mining, processing and exporting facility in Uruguay. Within the 120,000 Ha licence area is an Archaean BIF trend 55km long and 12km wide. The area is approximately 250km from both the coast and the capital Montevideo“.

There is a proven 2.5 billion tons measured, indicated and inferred JORC resource, with over 260, 000 meters of drilling completed and the total potential of the resource is 4 to 5 billion tons.

”The product is a premium magnetite concentrate with greater than 68% Fe, less than 2% SiO2 alumina and low levels of other contaminants. A centralised processing facility and associated infrastructure is to produce 18 Mtpa of DR concentrate in Phase I, with an additional 18 Mtpa planned for Phase II“.

”A 212 km Concentrate Slurry and Return Water pipelines is to transport the concentrate from the mine to the port. The planned mine life is greater than 20 years“.

Finally a ”Definitive Feasibility Study (DFS) was completed in Q2 2011. First production is planned for 2015”.