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Chilean gold project steeped in controversy

Environmental activists use gas masks during a peaceful protest against the multimilion dollar Pascua Lama gold mining project by Barrick Gold Corp. of Canada in the Huasco Valley in northern Chile which they say would harm the environment. The Chilean government authorized the Pascua Lama project but prohibited a relocation of three glaciers in the area originally planned by the company. (Associated Press / The Spokesman-Review)
Associated Press The Spokesman-Review
Environmental activists use gas masks during a peaceful protest against the multimilion dollar Pascua Lama gold mining project by Barrick Gold Corp. of Canada in the Huasco Valley in northern Chile which they say would harm the environment. The Chilean government authorized the Pascua Lama project but prohibited a relocation of three glaciers in the area originally planned by the company. (Associated Press / The Spokesman-Review)

SANTIAGO, Chile — As the world’s largest gold mining company, Barrick Gold Corp. of Canada is used to thinking big.

So perhaps it wasn’t all that shocking that the company planned to relocate three huge ice fields — Barrick hates to call them glaciers — to dig for gold high up on the spine of the Andes mountains.

Oceana, Greenpeace and other environmental groups have raised an outcry over the proposed open pit mine, and Barrick countered with a multimillion-dollar lobbying campaign seeking Chile’s approval for the $1.5 billion Pascua Lama project.

Barrick appeared to win the latest round on Feb. 15 when a regional Chilean environmental agency approved the mine — as long as the ice remains untouched while they dig up the more than 17 million ounces of gold, worth $9.35 billion at today’s prices, which have risen sharply recently to an average of $550 a troy ounce.

The Toronto-based company — which became the world’s largest gold miner when it acquired 81 percent of former rival Placer Dome Inc. last month — reported Wednesday its annual net income for 2005 increased 62 percent, to $401 million. Fourth-quarter profits rose to $175 million from $156 million in the year-ago period, thanks to $50-per-ounce higher price for gold.

Barrick had planned to expose the gold under the ice by breaking up part of the glaciers and dumping the ice in nearby spots along Chile’s 13,100 foot-high border with Argentina. The company hasn’t explained how it will reach the gold without disturbing the glaciers, but praised the decision nonetheless.

“We are satisfied with the approval of Pascua Lama and within that framework we will dedicate the next few weeks to study each demand and conditions set in the decision to proceed ahead with the project,” a company statement said.

Environmentalists plan appeals to Chile’s council of ministers and ultimately to Michelle Bachelet, who takes office on March 11. They’re hoping for a sympathetic hearing from Chile’s first woman president, who has promised to create a ministry of the environment. And Barrick must get similar approvals from the Argentine government

“This battle is just beginning,” vowed Mirna Inostroza, who lives downstream from the project in the fertile Huasco valley, where some 6,000 people live and grow grapes, avocado, olives and other crops.

There hasn’t been a similar opposition movement in Argentina, in part because reaching the gold on that side won’t involve interfering with glaciers. However, Argentina has yet to approve the project, and a commission of Argentine government officials and environmentalists will soon visit Chile to learn how the case has been handled here.

Mining is such a key industry in Chile — accounting for a third of the nation’s $100 billion GDP and 60 percent of its exports — that few expect Barrick to lose in the end.

And even if the glaciers are preserved, some Chileans fear the open pit mine will contaminate their water or make their rivers run dry. Antonia Fortt, an environmental engineer with Oceana, said “the fears about cyanide are justified because this chemical is used to separate the gold from the sterile material, rock and dust, it comes mixed with.”

Barrick counters that the project has been designed to ensure the continued flow of unpolluted water into the valley. The cyanide will be kept in a closed, lined area, and after it’s used to extract the gold, it will be collected and destroyed, spokesman Vince Borg said from Toronto.

“The way you avoid incidents with cyanide is a very high awareness that it can be properly and responsibly managed through such operating methods as very precise transportation procedures and protective measures, and having a response team to deal with any exposures, if they occur,” he added. “We have never had a leak or incident of any consequences related to cyanide,”

Borg also says Barrick has listened to the naysayers, and found many of their points to be valid, especially the need to monitor the quality and quantity of the water in rivers fed by the glaciers. “We have incorporated those concerns into our plans and have modified the project to accommodate those issues,” Borg he said.