Barrick heeds Chilean court, halts work on Pascua-Lama mine

Wed Apr 10, 2013 6:46pm EDT
 
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By Alexandra Ulmer

SANTIAGO (Reuters) - Barrick Gold Corp halted construction on its huge Pascua-Lama gold and silver mine in Chile on Wednesday after a local court ordered the suspension to weigh indigenous communities' claims that the project destroys glaciers and harms their water supply.

The appeals court in the northern town of Copiapo said it will analyze the complaints of "environmental irregularities" in connection with Barrick's (ABX.TO: Quote) project, which has been plagued by soaring costs and opposition from environmental groups.

Barrick said in a statement that it would continue to work to "address environmental and other regulatory requirements to the satisfaction of Chilean authorities." It also said it was too early to assess the impact of the suspension on the project's overall capital budget or its timetable.

Perched high in the Andes mountains on the Chile-Argentina border, Pascua-Lama is expected to cost between $8 billion and $8.5 billion, and Barrick could now face a long and costly legal battle to complete it.

A court source told Reuters the dispute could take several months to resolve and an appeal to the Chilean Supreme Court is likely.

The suspension of one of Chile's largest mining projects is the latest in a series of setbacks to key metal and energy projects that threaten extensive investment in the world's top copper producer.

Barrick's shares tumbled 8.6 percent to close at C$24.81 on the Toronto Stock Exchange, while its shares sank 8.4 percent to $24.46 on the New York Stock Exchange (ABX.N: Quote). The shares are now near a 4 1/2-year low on the both the TSX and NYSE.

The world's biggest gold mining firm, Barrick said construction on the Argentine side, where most of the infrastructure is, will not be affected by the court order. But since roughly 80 percent of the metal reserves are located in Chile, any permanent prohibition would kill the project.   Continued...

 
The gold processing plant under construction in Argentina, at Barrick Gold's Pascua-Lama mine site is pictured in this February 2, 2012 handout photo. REUTERS/Barrick/Handout/Files