The latest installment in Barrick Gold Corp’s (TSE:ABX) (NYSE:ABX) series of woes clustered around the $8.5 billion money pit Pascua-Lama broke late Monday, with the formal suspension of the massive gold project as a Chilean appeals court ruled against the troubled giant in favour of the indigenous peoples who charge the Toronto-headquartered miner with contaminating their water supplies downstream from the mine.
The unanimous ruling from the Copiapo Court of Appeals concerning an action filed on behalf of four indigenous communities in 2012, held that the mining giant must adhere to the conditions of its environmental permit before construction of the border-straddling mine can recommence. To that end, the company must complete the mine’s water management system.
It feels like deja-vu all over again for the beleaguered giant, which was already the subject of a stop-work order and a multi-million dollar fine from the country’s environmental watchdog agency, Superintendence of the Environment (in Spanish, Superintendencia del Medio Ambiente or SMA), in late May. In addition to the fine levelled, the SMA insisted that Barrick satisfy the conditions of its permits by completing Pascua-Lama's water management system in such a way that it would ensure the watershed below the mine remained uncontaminated before proceeding, but the new ruling goes further by demanding the repair of damage already done to rivers.
The rivers in question feed the farms of the local indigenous population in the arid region of the Atacama Desert, reputed to be the driest desert in the world. Work on the site was already halted in April by the appeals court by way of injunction, while it examined the claims against the world’s biggest gold producer.
It is only the newest headache engendered by the high altitude mine, which crosses the border with Argentina on the roof of the Andes. The most recent in a series of legal woes, writedowns and work stoppages prior to Monday’s news – the announcement that first production from the mine had been pushed back to mid-2016, well past the late-2014 schedule previously proclaimed, as a consequence of May’s decision -- culminated in decade-low share prices for the gold giant.
In a company statement released on the heels of Monday’s ruling, Barrick said it was “committed to operating at the highest environmental standards at all of its operations around the world, including at Pascua-Lama, and is working diligently to meet all regulatory requirements at the project.”
“Barrick's vision is to be the world's best gold mining company by operating in a safe, profitable and responsible manner."
Should it ever get built, Pascua-Lama will be one of the world’s cheapest gold mines as well as one of the largest, with 17.9 million ounces of gold and 676 million ounces of silver.
Barrick was trading slightly up on the Toronto Stock Exchange the morning after the announcement, adding 27 cents to a previous close of $15.69 as of 9.52am EST.