Pascua-Lama halt carries repercussions for Argentina, Chile

Mon Nov 4, 2013 5:42pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Anthony Esposito and Fabian Cambero

BUENOS AIRES/SANTIAGO Nov 4 (Reuters) - Barrick Gold Corp's decision to mothball its huge Pascua-Lama project on the border of Chile and Argentina has highlighted startling divergences between the two South American countries over mining and energy investment.

In a role reversal of sorts, nationalistic Buenos Aires is championing the now-dormant Canadian-owned project, while stricter environmental norms in business-friendly Santiago paved the way for the project's suspension.

Last week's announcement by Toronto-based Barrick Gold Co was a blow to Argentina's government at a time when it is seeking to attract tens of billions of dollars to develop its shale oil and gas resources.

"Even if the cancellation isn't specifically related to Argentina's economic policies, it's still bad news" for the Argentine economy and the government, said Ignacio Labaqui, an analyst with Medley Global Advisors.

The estimated $8.5 billion project, already about 50 percent complete, had enjoyed the support of President Cristina Fernandez's leftist government, which is trying to change Argentina's reputation for intervention, nationalistic rhetoric and runaway inflation.

Aiming to distance itself from the decision, her government said neighboring Chile was responsible, alluding to a court decision ordering the world's largest gold miner to suspend building Pascua-Lama in the spring due to environmental harm.

"The delays the project is suffering are a product of legal conflicts Barrick has in Chile that prompted the Supreme Court there to get involved after indigenous communities filed complaints," Argentine Planning Minister Julio De Vido said in a statement. "This situation has nothing to do with the project's conditions in our country."

Pascua-Lama has also been plagued by cost overruns and a sharp drop in bullion prices, and policies in Argentina or Chile did not directly trigger Barrick's decision.   Continued...