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SANTIAGO, Oct 7 (Reuters) - Chile's Supreme Court has halted the development of the El Morro gold and copper mine owned by Canada's Goldcorp, saying that local indigenous groups who oppose the $3.9 billion project need to be better consulted.
The court said on Tuesday that an environmental permit awarded last year should be stopped until a fresh consultation, based on an International Labor Organization convention, has taken place with the local Diaguita community.
Goldcorp has just received the ruling and is reviewing it, spokeswoman Christine Marks said. "Goldcorp remains committed to open and transparent dialogue with its stakeholders."
The decision is the latest in a string of rulings that have found against mining companies looking to invest in the top copper exporter. Like many of its resource-intensive Latin American peers, Chile is struggling to find a balance between mining-led growth and environmental protection.
Billions of dollars worth of projects have been put on ice or delayed in recent years, snarled up in red tape and opposed by local communities.
Tuesday's decision overturns a local appeals court finding from last April, which dismissed an appeal lodged by the Diaguita.
The Diaguita - who also opposed the massive Barrick Gold Pascua-Lama project, stalled since last year - claimed that a previous consultation on El Morro was not properly conducted.
They also say the mine in northern Chile is planned on what they deem as sacred ancestral land, and that it could pollute a local river.
El Morro is a potentially large, low-cost copper and gold producer which had been due to begin operations in 2017.
But the project seems to have gone to the backburner for Goldcorp. It was absent from a list of organic growth opportunities mentioned by Chief Executive Chuck Jeannes at a gold conference in Denver last month, with Jeannes pointing to the Camino Rojo project in Mexico as the company's biggest internal opportunity.
El Morro is 70 percent owned by Goldcorp and 30 percent by New Gold. Goldcorp edged down 0.2 percent and New Gold fell 2.2 percent on the Toronto stock exchange at mid-afternoon, in line with other gold stocks.
Reporting by Eric Lopez, Additional reporting by Nicole Mordant, Writing by Rosalba O'Brien; Editing by Diane Craft and Richard Chang