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NEWS: The growing costs of the Pascua Lama mine

The Globe and Mail reports, “Fresh from a visit to South America, Barrick Gold Corp. chief executive officer Jaime Sokalsky told the Denver Gold Forum (the annual gathering of gold industry’s top brass) on Tuesday his company has prepared a plan to bring the massive Pascua-Lama project in the Andes into production in line with a new budget and timeline. …Pascua-Lama, a project set at the height of the Andes mountains between Chile and Argentina, promises to become one of the world’s largest gold mines when it is completed in mid-2014, but it has faced mounting challenges since Barrick began targeting production. The price tag for the mine is now as high as $8-billion, up from $3-billion in 2009. Capital cost increases were attributed to a series of issues, including lower-than-expected contractor productivity, engineering and planning gaps, cost escalation and schedule extension.”

The Globe and Mail article doesn’t note two other issues that may be adding to the escalating costs of Pascua Lama. In October 2010, Reuters reported, “Barrick was also seen affected by the Argentine Senate’s passage of a law that would curb mining on the nation’s glaciers. Analysts say the law could make it more expensive or even impossible for Barrick to develop its huge Pascua Lama site high in the Andes.” And in early-September market analysts Trefis reported, “Barrick Gold Corporation might have another problem on its hands as far as the Pascua-Lama project is concerned. The Chilean Supreme Court struck down the planned 2,100-megawatt, $5 billion Castilla thermoelectric power plant project this week, citing environmental concerns. Barrick’s Pascua Lama mine (was) to be supplied with power from the Castilla project. We believe that power headaches will only result in additional delays and costs.”

Another potential headache for Barrick is a growing ethics scandal investigation in Canada. In mid-September, the Canadian Press reported, “Prime Minister Stephen Harper’s chief of staff, Nigel Wright, is now the subject of a formal conflict of interest examination by the federal ethics watchdog. Mary Dawson’s office confirmed Tuesday that the ethics commissioner has launched an examination of Wright’s dealings with Barrick Gold Corp., under section 45 of the Conflict of Interest Act.” In August, the Canadian Press had reported, “Companies were ‘freaked out’ that Harper’s performance at the Summit of the Americas (where he blocked a resolution on Argentina’s claim to the Falkland Islands) was making it harder for them to obtain permits from the Argentine government for their mining operations, said New Democrat MP and ethics critic Charlie Angus.”

It should also be noted that in July 2007, CBC reported, “Prime Minister Stephen Harper was greeted with ‘Harper go home’ and ‘Canada: What’s HARPERing here?’ signs as he spent his last day in Chile visiting a controversial Canadian mining company. Dozens of protesters waited outside Barrick Gold’s Santiago headquarters for Harper’s visit, which one Chilean environmental activist called ‘inappropriate’.”

That CBC report highlighted, “The protesters claim the company’s gold and silver Pascua Lama Project in the Andes Mountains is displacing indigenous people, polluting rivers and damaging three glaciers. One 2002 environmental report by the General Water Directorship estimates the three glaciers have shrunk by 50 to 70 per cent, allegedly as a result of work done during Barrick’s exploratory phase, such as road building. Runoff from the glaciers fuels watersheds in the area, supplying water to many communities. ‘There’s a shortage of water in the summertime, and it’s only sustained because of the glaciers,’ one protester told CBC News. ‘Because of the destruction of the glaciers, there won’t be water in the short term, there won’t be water for the communities.’ Lucio Cuenca, national co-ordinator of the Latin American Observatory on Environmental Conflicts claimed the visit gives the project the ‘tacit approval’ of the prime minister.”

The Diaguita Huascoaltinos Indigenous and Agricultural Community in Chile opposes the Pascua Lama mine. In their May 2009 submission to the Parliament of Canada, they stated, “Barrick Gold seeks to extend the Pascua Lama project to the top of the Pachuy Ravine, which is located within the grounds of the Community lands recognized by the 1997 domain title. Although the Diaguita Huascoaltinos have decided to deny Barrick entry to our land, the Mining Code requires us to let them take over our ancestral lands. Although the mining work has not begun to date, there have been roads built by the mining company, and the exploration activities carried out in the high mountains have created severe deterioration of some wetlands and large-scale landscape deterioration. This is especially critical as the landscape determines the drainage capacity of the rock formations and defines microclimatic conditions. Environmental conservation and mega mining projects are not compatible.”

The Council of Canadians/ Blue Planet Project stands with the Diaguita people. At our June 2012 ‘Shout Out Against Mining Injustice’ conference in Vancouver, Sergio Campusano Villches, the president of the Comunidad Agrícola Diaguita Los Huascoaltinos, spoke against the Pascua Lama mine.