Argentina's Senate passed a law on Thursday that curbs mining on and
around the nation's glaciers to protect water supplies, a measure
praised by environmentalists but criticized by industry supporters.
Analysts and an Argentine mining chamber have warned that the law could
hinder construction of the massive Pascua Lama mine, which is being
built high in the Andes by the world's biggest gold miner, Barrick Gold
Corp (ABX.TO: Quote).
Senators approved the law 35 to 33, agreeing to include changes made in
the lower house that pro-mining provinces had opposed. Some analysts
say provincial government could seek to overturn the law in the Supreme
"This vote cut across all party lines and I think we passed the best
proposal," ruling party lawmaker Miguel Pichetto told local radio,
adding that he expected President Cristina Fernandez to sign the bill
into law promptly.
Fernandez has indicated she will sign the law this time around after
vetoing a similar measure two years ago on the grounds it would hamper
growth of provincial economies, a decision that angered environmental
The new law, which also bans oil drilling on the country's glaciers and
the surrounding areas, aims to safeguard water reserves. It sets
standards for protecting glaciers and so-called periglacial areas and
penalizes companies that pollute or damage ice fields.
"Water is a human right, gold is not," Sen. Daniel Filmus, one of the
bill's backers, told Reuters in a recent interview. "If any of these
mining projects includes work on glaciers or surrounding areas, it will
be banned outright."
Analysts say it could make it more expensive or even impossible for
Barrick to develop the Pascua Lama site, although the company says the
ore body it has permission to mine does not lie under a glacier.
"We do not mine on glaciers, and in fact, Barrick has already
implemented a comprehensive range of measures to protect them as well
as other sensitive environmental areas around both the Veladero mine
and the Pascua Lama project," company spokesman Rodrigo Jimenez said in
"We will continue with our normal activities and comply with the applicable legal framework," he added.
Gold mining companies were trading lower in Toronto, but Barrick might
have taken an extra hit due to the passing of the glacier law.
Haywood Securities analyst Kerry Smith said the news might be having a
"marginal" effect on Barrick's shares, which were trading down more
than 2.7 percent at C$47.25, but added that the lower gold spot price
was more likely driving shares down.
Barrick says it has already committed more than 25 percent of the
capital for Pascua Lama, with the project's pre-production capital
budget estimated at $2.8 billion to $3.0 billion.
Pascua Lama straddles the Argentine-Chilean border and is located in
Argentina's San Juan province. Barrick's Veladero mine, also in San
Juan, produced 611,000 ounces of gold in 2009.
Mining-friendly provincial governments such as San Juan might try to
challenge the law in the Supreme Court, arguing they have the right to
decide how to manage their natural resources. (Factbox: [ID:nN17129548]
Constitutional experts say the law could trigger a lengthy legal battle
that could disrupt or end Barrick's plans. They say the company also
could eventually seek compensation.
Anti-mining sentiment is strong in the South American country, making
the debate over the glacier law a sensitive political issue a year from
the next presidential election. (Additional reporting by Jorge Otaola
and Helen Popper in Buenos Aires and Cameron French and Julie Gordon in
Toronto; editing by Jim Marshall)