A Chilean court’s halt to construction of Barrick Gold Corp.’s $8 billion, border-straddling mine on the high spine of the Andes is only the latest setback in Latin America for the world’s largest gold miner.
Barrick also faces growing environmental resistance in Argentina, which shares the Pascua-Lama mine project, and the Dominican Republic‘s government is insisting on rewriting the royalty contract for its $4 billion Pueblo Viejo mine.
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
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