The Canadian company’s troubles reflect increased risks for the industry in Latin America, where authorities are taking a closer look at how mining is regulated and taxed. They are determined to capture more of the profits while protecting natural resources.
In country after country, the world’s biggest miners are facing new environmental standards, confronting changing tax and currency laws and defending long-term contracts they thought were written in stone.
Denver-based Newmont Mining Corp. has seen its $5 billion Minas Conga project in Peru stalled amid violent protests over allegations of water pollution. Brazil’s Vale SA sank $2.2 billion into building a mine, railroad and port in Argentina before bailing out in frustration last month over soaring inflation and restrictive currency controls.
“There are more concerns about standards of living and more concerns about environmental issues. At the same time, there’s pressure on governments to increase mining revenues, improve education, health and services,” said Risa Grais-Targow, Latin American analyst at Eurasia Group.
“Peru has experienced exceptional growth, but many feel they have not benefited and have been left out. Most of the conflict there revolves around water, whereas in Chile there’s a growing middle class concerned about the environment.”
The court ruling against Barrick on Wednesday in Copiapo, Chile, sent shares of the Toronto-based company tumbling 6 percent to a new four-year low. The stock recovered some Thursday, rising 27 cents, or 1.1 percent, to close at $24.73 a share.
Chile’s environmental and mining ministries are on record supporting the suspension of work on the Andes mine. Critics allege construction has spread dust that has settled on the nearby Toro 1, Toro 2 and Esperanza glaciers, hastening their retreat, and is threatening the Estrecho river, which supplies water to the Diaguita tribe living downstream.
Barrick said it will work “to address environmental and other regulatory requirements” on the Pascua side of the project. But it insisted construction will continue on the mine’s Lama portion in Argentina, where mining is regulated by provincial governments rather than national officials.
The company said it’s following all applicable Argentine laws, but environmentalists say Pascua-Lama and Barrick’s nearby Veladero mine, which produced 611,000 ounces of gold last year, clearly violate the nation’s 2010 law forbidding any mining on or near glaciers.
While Barrick has blocked enforcement of the law so far, Argentina’s Supreme Court has ordered a nationwide inventory of water supplied from glaciers as well as peri-glacial areas — the rocky underbeds that hold water after glaciers retreat.