Barrick’s El Dorado?

February 23, 2009

glacier1 Despite their calm assurances, executives at the world’s biggest gold miner Barrick Gold must be at their wits’ end over their stalled Pascua Lama project.

    For two years, Argentine and Chilean officials have been bickering over how to share the lucrative tax proceeds from the cross-border mine, which has been poised for construction to start since late 2006.
    One government official after another  has suggested the green light is imminent. But after making some impatient noises last year, Barrick seems to be biting its lip — resolved for an even longer wait.
    When Barrick reported fourth-quarter results last week, new Chief Executive Aaron Regent put on a brave face about the delay, but his pledge to give an update on the progress in the second quarter suggested a solution is still some way off.
    It is ironic that a diplomatic spat over sharing the spoils of the mine has put the ambitious and controversial project on ice.
    Pascua Lama straddles a freezing, inhospitable spot high in the Andes and faced a storm of protest from Chilean environmentalists before President Michelle Bachelet finally gave it the go-ahead.
    Late last year, an Argentine law protecting Andean glaciers looked like it might be the nail in Pascua Lama’s coffin until a surprise presidential veto kept it off the statute books.
    But none of that matters while the tax row drags on, and the harsh Andean winters mean construction is unlikely to be able to start now until September 2009 at the earliest.
    Company officials have declined to say how much it is costing to maintain the site. Some industry analysts have even hinted Barrick might abandon it altogether.
    But it will take a lot more for the Canadians to lose interest in Pascua Lama. One of the world’s largest untapped gold fields, the site will become even more appealing as prices for the metal nudge up to above $1,000 per ounce again.


Another small aspect that has not been discussed in the media is that Environmental agreements in Argentina eventually expire if the project has not begun or started construction unlike Chile ‘s Environmental agreement . The agreement signed by Barrick and the Argentina government authorities on Feb 15, 2006 has expired after Dec 31, 2008 so this would also require another SEIA study in Argentina further delaying the project according to Luis Faura former concillor of Alto Del Carmen.

Posted by Lucho | Report as abusive

Discussion on how to share the tax millionaire mining project between the two countries is the last major point that remains to be resolved to start the works, according to schedule, should have party two years ago.

As at the beginning. So today the talks between Chile and Argentina on how to share the tax flagship project Pascua Lama gold mining, located on the border between both countries. The inability to resolve this issue prevents the start of construction, which already has a delay of two years.

In June, the Chilean government sent a proposal to Argentina that was presumed then, would be definitive and that would settle the debate. But until now there has been no response from the trans and the dialogue is cut off.

According to a source linked to the talks, the government of Cristina Fernandez would have found no satisfactory proposal. The lack of a response to concern those involved, because at least two years by the mining project, Canadian Barrick, should have initiated the work, according to the initial schedule.

From the beginning, the idea that Chile was the bulk of taxes for services are paid indivisible border here, considering that 80% of Pascua Lama is on this side of the range, while Argentina has proposed a plan “50 -50. The proposal submitted in June was relaxed that point, but apparently was insufficient for the aspirations of the neighboring country.

Added to this is that the political situation in Argentina is quite complicated after the arrest of farmers and their struggle with the government for precisely taxes. According to a source by “El Mercurio”, this is another factor that would explain the lack of dialogue in recent weeks.

The resolution of this issue is key to other bi-national projects can see the light, as it set the tone for what the criteria under which the taxes are distributed. Meanwhile, in the folder of the Binational Commission for the Mining Treaty rested other millionaires projects.

The consequences
Moreover, the delay in the definition is tax makes the cost of the project. At the beginning of the plan, the budget of the works amounted to U.S. $ 1.500 million. But the increase in the price of key inputs like steel, the outsourcing of engineering and energy made the company estimates its current cost between $ 2,300 and U.S. $ 2.400 million.

A few months ago, authorities in the Argentine province of San Juan-sharing project with the neighboring region of Atacama in Chile, Barrick said it estimated at U.S. $ 3,000 million investment to build the mine.

Canadian Barrick has said that the project has not been compromised by this situation, and furthermore, other points are still unresolved. Among them, several sectoral permits Argentina left pending.

Posted by luis salinas | Report as abusive

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see