$11.5 billion ....
Gold Mine Plans Rile Chilean Community
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By LARRY ROHTER The New York Times
Published: Jul 30, 2006
ALTO - DEL CARMEN, Chile - There is gold in these hills - at least $11.5 billion worth at last count, in a wind-swept area studded with glaciers, more than 15,000 feet up in the Andes.
The world's biggest gold company wants to mine it, but is finding that a harsh terrain is not the only obstacle in its path.
Though the Chilean government has tentatively approved the $1.5 billion mining project, called Pascua-Lama, opposition here in Huasco province is intense and growing.
Local environmental and civic groups contend that the proposed mine will allow the Barrick Gold Corp., of Canada, which has recently become the world's largest gold company, to harm the local water supply, destroy agriculture and walk away without paying taxes or royalties.
"As residents of the Huasco Valley, our interest is maintaining a permanent ecological balance so that people and farming can develop and prosper," said Mauricio Rios, president of the Committee for the Defense of the Huasco Valley, a civic group in Vallenar, the provincial capital. "Barrick wants to make as much money as possible in 20 years and then leave," he added. "So what do we gain? They say they are going to create jobs, but at what cost?"
Puzzled Over Controversy
Barrick has responded by emphasizing that it has taken steps beyond those required under Chilean law to ensure that the environment is not damaged and the water supply is protected. It says the mine will bring jobs and development.
"It still puzzles me why there is so much controversy," said Ron Kettles, the Pascua-Lama project manager. "This is far and away the safest and most environmentally sensitive project that I've ever built in 40 years in this business."
At a time when the price of gold has risen sharply - it has more than doubled in less than five years, and is now at $635 an ounce - the stakes for Barrick are enormous. In a 2004 legal filing in Canada, the company says that Pascua-Lama, which also contains silver deposits worth an estimated $7.5 billion and some copper, represents "approximately 25 percent of Barrick's worldwide gold reserves."
But the stakes are just as high for local people, who will be here long after the mine closes and who depend on agriculture and runoff from the highlands for drinking water and irrigation in an otherwise parched region.
Home to 70,000 people, the Huasco Valley is a narrow ribbon of green that flows from the Andes west to the Pacific Ocean, just south of the world's driest desert, the Atacama. Thanks to skillful irrigation, local farmers, including some who belong to the Diaguita indigenous people, have become successful exporters of grapes, avocados, olives, guavas and even mangoes to the United States, Japan and Europe.
Environmental Concerns
What Barrick proposes is to carve a huge canyon, about a mile wide and about 2,000 feet deep, at the Pascua-Lama mine, which stretches over the border into Argentina. The ore would then be crushed and milled and the gold extracted using chemicals that include cyanide. Environmental groups and farmers have expressed concerns that the operations will end up tainting and diverting the local water supply.
"What the government is doing doesn't make any sense," said David Martinez Campillay, a small grape grower in the community of Chinguito near here. "Chile used to be known only as a mining country," he added, "and so we were encouraged to branch into new areas of agriculture so that our country could export different products, like fruit. We did that, and now what does the government do? It favors a project that is only going to be here 20 years."
Environmental concerns are not the only issues. Under regulations that date to the last days of the Pinochet dictatorship and were liberalized in 1990, gold, silver and copper mines in Chile are effectively exempted from most taxes and royalties. That enrages many of the project's opponents.
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