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Jan 18, 2018

Barrick analyzing revised sanctions in Pascua-Lama closure order

Barrick Gold

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(Bloomberg) -- Barrick Gold Corp. is analyzing revised sanctions on its Pascua-Lama project on the Chile-Argentine border after Chile’s environmental agency reduced a fine but imposed new conditions, including the definitive closure of the original project site.

Construction of the open-pit mine was halted by a Chilean court in April 2013. A month later, Chile’s environmental agency, known as SMA, fined the company and ordered it to take steps to safeguard water supplies. The fine was the maximum the SMA could hand down and Barrick was able to cut it to about $16 million by paying within five days. Activists protested, calling for a higher penalty, and SMA was told to recalculate the fine.

The SMA will reduce that fine to $11.5 million and ordered additional environmental monitoring. Pascua-Lama had been operating under a temporary closure plan in Chile.

“Given the nature and the size of the breaches that the company committed, there is the conviction that total and definitive closure, plus an economic fine, is the most proportional sanction in this case,” SMA head Cristian Franz said in a statement.

Revised Plan

The original plan for Pascua-Lama, dating from the early 2000s, would have had an effect on three small glaciers in Chile and involved significant construction on the Chilean side of the border and large waste dumps. Barrick has since abandoned plans for an open pit at the site, saying it hopes to mine underground instead. Its pre-feasibility study isn’t finished but the expectation is that there will be less waste material to manage and much of the infrastructure previously planned for the Chilean side won’t be needed.

“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,” Toronto-based Barrick said a statement Thursday. “The company will complete a detailed analysis of these requirements and will provide further details in due course.”

‘Community Concerns’

It’s not clear if the facilities the SMA is demanding be closed would be needed if a new underground mine plan is adopted. “The closure of existing surface facilities in Chile is consistent with the company’s plan to advance a pre-feasibility study for an underground mining operation at Pascua-Lama, which would address a number of community concerns by reducing the overall environmental impact of the project,” the company said.

Chile’s environmental authority analyzed 33 charges and issued total closure sanctions for five breaches, which include the company’s operations impacting on protected flora and fauna, incomplete monitoring of glaciers and discharge of acidic waters into a river.

Barrick maintains none of these charges resulted in any permanent or irreparable damage to the environment, Andy Lloyd, a company spokesman, said in an email.

Barrick has said it hopes to mine the area for over a century. Last year, it sold 50 percent of its Veladero mine in Argentina to Shandong Gold Mining Co. That partnership includes plans to jointly develop Pascua-Lama and other projects in the El Indio belt. Barrick Executive Chairman John Thornton has said investment in various technologies, including cyanide-free leaching, may speed development of the region.

(Updates with comment from the company in ninth paragraph. An earlier version of this story corrected the translation of the acid release charge in eighth paragraph.)

--With assistance from Laura Millan Lombrana

To contact the reporters on this story: Danielle Bochove in Toronto at dbochove1@bloomberg.net, Laura Millan Lombrana in Santiago at lmillanlombr@bloomberg.net.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Joe Richter

©2018 Bloomberg L.P.