MICLA

McGill Research Group Investigating
Canadian Mining in Latin America

Pascua Lama, Chile

Key Data

Company:Barrick Gold Corporation Operational status:Suspended Materials extracted:silver, copper, gold Type of mine:Open pit Main issues:Permitting, Land Rights, Indigenous Rights, Water

Description

The Pascua Lama mine is a gold, silver, and copper mega-project on the border of Chile and Argentina, only 10 kilometres from the Veladero mine in Argentina. Owned by Barrick Gold, it is one of the largest gold and silver reserves in the world, containing over 15 million ounces of proven and probable gold, and over 675 ounces of silver.[i] After many years of delays and growing financial costs, production began in 2009.[ii] The Chilean side has since been ordered inactive in the face of major environmental concerns[iii], and conflicts over land rights have dogged the project since its planning stages. Much of the conflict is related to the mine’s geographic location—it sits near 3 important glaciers, which provide fresh water for nearby communities. [iv]

Environmental concerns are a primary focus for the conflict; Barrick compiled its first Environmental Impact Statement (EIS) in 2000, after it began exploration in 1996.[v] This report made no mention of the three glaciers in the area –Toro I, Toro II, and Esperanza.[vi] A second EIS was published in 2004.[vii] [viii] [ix] This same year, the governments of Chile and Argentina both approved the project.[x]

In April 2013, Barrick was ordered by a local court to stop development and start an investigation into claims of damage to the glacier and pollution of the water supply. The order was based on concerns raised by Diaguita community members in the Huasco Valley (see below). [xi]  A month later, a Chilean court ordered the mine to freeze production indefinitely, fining it 16 million dollars for “serious environmental damage”.[xii] Upon appeal, this fine was overturned, with an environmental court told to re-assess each infraction individually. Barrick was eventually found to have violated both its environmental permit and Chilean law on water contamination.[xiii]

Local community members based in the Huasco Valley, many of them indigenous peoples who rely upon the glacier as a source of water for irrigation, have expressed longstanding opposition to the Pascua Lama project. Notably, the Diaguita peoples have claimed the project sits atop their ancestral lands.[xiv] In 2005, the Chilean Consumers’ Organisation argued to the Organization of American States that the project would violate Chile’s international commitments to protect the Diaguita’s subsistence rights.[xv] In November of the same year, protesters presented a letter to the president of Chile demanding Pascua Lama be cancelled, but were met with police violence.[xvi]

As mentioned previously, indigenous community members were at the forefront of the push to investigate environmental damage. In 2009, Diaguita activists appeared before the Inter-American Commission on Human Rights, which found that Chile had violated their rights “to consultation and participation…to property and natural resources… [and] to make a living and [to practice] their customs and traditions”. Writing for the American Indian Law Journal, Cynthia Vel argues that this action set the precedent for 2013’s court-ordered stoppage.[xvii] In May 2014, Reuters reported Barrick had engaged in talks with its indigenous opponents, coming to agreements with 15 communities. The agreement may involve the payment of an “indigenous royalty”, but the mine’s operations remain suspended.[xviii]

The mine’s location has also been a source of tension between Chile and Argentina. Production was made possible by the Mining Integration and Complementation Treaty between the Republic of Argentina and the Republic of Chile, signed on December 29, 1997.[xix] [xx] While designed to settle issues of taxation and jurisdiction in this trans-border area, early delays to the Pascua Lama project were nonetheless partially attributed to a dispute between the two over how the mine would be taxed.[xxi] Moreover, journalists like Fernando Solanas and academics like J.M. Cypher have expressed concern that this treaty poses a threat to both countries’ respective national interests, ceding some of their sovereignty and limiting their potential revenue streams to multinational corporations.[xxii] [xxiii] In 2014, Argentine officials in San Juan province continued to lobby Chile to allow Barrick to unfreeze production (which has been halted on both sides of the border). However, Barrick will need to construct a water treatment facility in order to reapply for an environmental permit in Chile. [xxiv]

Finally, Pascua Lama has been the subject of litigation and controversy in North America. In 2014, it was the subject of a class-action lawsuit, with the claimants alleging “the company knew or should have known that it would have to overcome significant obstacles” throughout the life of the project. The suit alleges the systematic underestimation of risks related to the mine’s operations, a claim which Barrick denies.[xxv]

Bibliography

[i] Barrick Gold Corporation. “Pascua-Lama (Project).”  http://www.barrick.com/operations/argentina-chile/pascua-lama/default.aspx

[ii] Team, Trefis. “A Look at Barrick Gold’s Pascua Lama project.” Forbes, http://www.forbes.com/sites/greatspeculations/2014/09/11/a-look-at-barrick-golds-pascua-lama-project/.

[iii] Koven, Peter. “Barrick Shares Plunge after Chile Court Suspends Pascua-Lama project.” Financial Post, http://business.financialpost.com/2013/04/10/chile-court-temporarily-suspends-barricks-pascua-lama-project/.

[iv] Vel, Cynthia. “Respecting The “Guardians of Nature:” Chile’s Violations of the Daiguita Indigenous Peoples’ Environmental and Human Rights and the Need to Enforce Obligations to Obtain Free, Prior, and Informed Consent.” American Indian Law Journal 2, no. 2 (2014): 641-80.

http://www.law.seattleu.edu/Documents/ailj/Spring%202014/Vel.pdf

[v] Reuters. “Timeline- Barrick Gold Shelves Development of Pascua-Lama.” Reuters US, http://www.reuters.com/article/2013/10/31/barrick-results-idUSL1N0IF1UF20131031.

[vi] Vel, 646-647.

[vii] Miningwatch Canada. “Barrick Gold Faces Determined Opposition at Pascua Lama and Veladero.”  http://www.miningwatch.ca/barrick-gold-faces-determined-opposition-pascua-lama-and-veladero

[viii] Larrain, Sara, and Mylene Andre. “Pascua Lama: Controvertido Proyecto Minero Pone En Riesgo Los Glaciares, El Agua Y El Desarrollo Agrícola En El Valle Del Río Huayco, Norte De Chile.” Programme Chile Sustenable, http://www.mountainpeople.org/fr/documents/CHILILARRAIN.pdf.

[ix] Fowler, James. “Government Study: Chilean Gold Mine Threatens Local Glaciers.” Protest Barrick, http://www.protestbarrick.net/article.php?id=556.

[x] Reuters.

[xi] Mining-Technology.com. “Chilean Court Suspends Construction Work at Barrick’s $8.5bn Pascua-Lama Mine.”  http://www.mining-technology.com/news/newschilean-court-suspends-construction-work-at-barricks-85bn-pascua-lama-mine.

[xii] El Mostrador. “Nuevo Golpe a Barrick Gold: Superintendencia De Medio Ambiente Paraliza Pascua Lama Y La Multa Con Más De Us$ 16 Millones.”  http://www.elmostrador.cl/pais/2013/05/24/nuevo-golpe-a-barrick-gold-superintendencia-de-medio-ambiente-paraliza-pascua-lama-y-la-multa-con-mas-de-us-16-millones/.

[xiii] Jamasmie, Cecilia. “Chilean Court Revokes Barrick’s $16 Million Fine, but Orders New Ones.”  http://www.mining.com/chilean-court-revokes-barricks-pascua-lama-16-million-fine-91428/.

[xiv] Inter-American Comission on Human Rights. “Petition 415-07, Admissibility: Daiguita Agricultural Communities of the Huasco-Altinos and the Members Thereof.” Chile: Organization of American States, 2009.

http://www.cidh.oas.org/annualrep/2009eng/Chile415.05eng.htm

[xv]El Mostrador. “Presentan Queja Contra Estado Chileno Ante Oea Por Proyecto Pascua Lama”.  http://web.archive.org/web/20070717201606/http://www.elmostrador.cl/modulos/noticias/constructor/noticia_new.asp?id_noticia=164693.

[xvi] Miningwatch Canada.

[xvii] Vel, 648-653.

[xviii] Cambero, Fabien. “Update 3-Barrick Strikes Deal with Pascua-Lama Mine Opponents.” Reuters, http://www.reuters.com/article/2014/05/28/barrick-gold-pascua-idUSL1N0OE0PS20140528.

[xix] Bastida, Elizabeth, Ricardo Irarrázabal, and Ricardo Labó. “Mining Investment and Policy Developments:Argentina, Chile and Peru ” Extractive Industries Source Book, http://www.eisourcebook.org/cms/Mining%20Investment%20&%20Policy%20Developments,%20Argentina,%20Chile%20&%20Peru.pdf.

[xx] Jara Caceres, Javier. “Taxation of Trans-Boundary Mining Projects: Analysis of Approaches from a Look of Pascua-Lama,the Cross-Border Mining Project That Challenged Chilean and Argentinian Fiscal Regime.” Dundee University, http://www.dundee.ac.uk/cepmlp/gateway/?news=31318.

[xxi] Santiago Times Editor. “Tax Dispute Delays Chile’s Pascua-Lama Mine.” The Santiago Times, http://santiagotimes.cl/tax-dispute-delays-chiles-pascua-lama-mine/.

[xxii] Cypher, James Martin. “South America’s Commodities Boom: developmental Opportunity or Path dependent Reversion? .” Canadian Journal of Development Studies / Revue canadienne d’études du développement 30, no. 3-4 (2010): 635-62.

[xxiii] Solanos, Fernando. “El Despojo De Los Metales Argentinos.” Argenpress, http://www.argenpress.info/2009/09/el-despojo-de-los-metales-argentinos.html.

[xxiv] Jamasmie, Cecilia. “Argentina Lobbies to Overturn Barrick’s Pascua-Lama Freeze in Chile.”  http://www.mining.com/argentina-lobbies-to-overturn-barricks-pascua-lama-freeze-in-chile-53714/.

[xxv] Paddon, David. “Barrick Named in Class Action Suit over Troubled Pascua-Lama Project.” The Globe and Mail, http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/barrick-named-in-class-action-suit-over-troubled-pascua-lama-project/article18798574/.