|More than just costs are a concern at Barrick Gold’s $8.5B Pascua-Lama megamine|
by Catherine Solyom, Postmedia News
December 14th, 2012
Courtesy of Barrick GoldAn aerial view of Barrick Gold's Pascua-Lama deposit shows the location on the Argentinean side of the Andean frontier looking west into Chile.
Pascua-Lama, on the border of Chile and Argentina — Standing on a precipice 5,200 metres above sea level, the air is thin and the vistas are long.
Just breathing is difficult at this altitude, with a howling wind disturbing the utter, majestic silence of the snow-capped Andes mountains, threatening to blow you over the edge.
You’d think you were alone at the top of the world.
But what happens up here in Pascua-Lama, where Canadian mining giant Barrick Gold is developing the first open-pit gold mine to straddle two countries, will have a huge impact on the people living in the valleys below on both sides of the border — for better or for worse.
After more than a decade of intense debate — often played out in front of the Canadian embassies in Santiago and Buenos Aires — the mine is set to open in 2014, and to produce 850,000 ounces of gold a year, as well as vast amounts of copper and silver.
Up to 10,000 people, many of them from the villages closest to the mine, will be employed during the construction phase and another 1,650 will operate the mine for at least the next 25 years.
Those numbers don’t include all the people hired to feed and clothe those living at the summit camps as they work day and night, summer and winter, in temperatures ranging from 30 degrees Celsius to minus-40.
To the spinoff effects, add the myriad contributions the company is making in the name of corporate social responsibility — from schoolbooks and adult education programs to providing dentists and digging irrigation canals — and you can see why the Barrick logo has come to replace local government emblems on so many billboards and buses.
But critics, local and in the faraway capitals of Buenos Aires and Santiago, fear the project — located in virgin territory amid glaciers that feed several rivers below — could also wreak long-term environmental havoc if chemicals make their way into the river systems or the glaciers are damaged.
According to Barrick, the mine will use up to 38 tonnes of explosives a day to blast mountaintops into rocks, then up to 27 tonnes of cyanide and 33 million litres of water per day to extract the gold.
Some critics, like the mayor of Vallenar, Chile, who was once a miner himself, said it’s not safe for anyone to work with heavy machinery and toxic chemicals at that altitude, where winds can gust up to 300 kilometres an hour and rock falls, electrical storms and avalanches are a danger. According to Lucio Cuenca, director of the non-governmental organization Latin American Observatory on Environmental Conflicts (OLCA), at least 14 workers have died on the Chilean side since 1997, when exploration at the mine site began in earnest, several from accidents when their vehicles rolled over, one in a rock fall and five who froze to death. Barrick would not provide figures or details on the deaths at the mine site.
More recently, the Chilean government ordered Barrick on Oct. 31 to suspend pre-stripping at the mine — blasting off the very tops of the mountain peaks that don’t contain valuable ore — out of concerns workers were breathing in too much noxious dust. Work has not yet resumed.
In the longer term, opponents worry about what will happen to the villages, deep in South American wine country, if the glaciers melt or the rivers they feed are contaminated or simply run dry.
There is a lot at stake: Barrick, the largest gold producer in the world, with the most mines and the most reserves, has already spent $3.7-billion to develop the mine, including millions for a sustained public-relations campaign to convince locals the mine will be beneficial to their communities — not just to shareholders.
Barrick’s CEO, Jamie Sokalsky, has made Pascua-Lama the company’s priority, even as its cost forecasts have almost tripled during the last three years. In 2009, the project was expected to cost $3-billion. Now it’s estimated at $8.5-billion, news that on Nov. 1 made the Toronto-based company’s stock plummet by 8%.
Meanwhile, the governments of Chile and Argentina, like others throughout Latin America, have facilitated foreign — mostly Canadian — investment in “mega-mining” projects like Pascua-Lama in the hopes they will pull depressed regions out of economic stagnation by providing jobs and royalties.
Barrick will pay 3% of its profits, estimated at $1.4-billion per year, in royalties — after deductions — split between the two countries if and when the mine finally opens.
It is not so easy to put a number on the cost to farmers and wine producers, already living in the most arid region on Earth, if their worst fears come true and their entire way of life evaporates along with the glaciers above.
They can live without gold, they said. But they can’t live without water.
For them, the rush for gold and silver at Pascua-Lama is symptomatic of a second, gentler, conquest of the Americas — this time, led by the Canadians.
Chile: Oasis in the desert
José Olivares, a baseball cap shading his weathered face, surveys his small parcel of land in the foothills of the Andes, in the municipality of Alto del Carmen, Chile, about 45 km from — and 4,500 metres below — the mine along a switchback road.
Surrounded by green olive and grape vines, mango and avocado trees, it’s hard to believe this town in the Huasco Valley is part of the Atacama Desert — “the most arid place on Earth!” Olivares proclaims with pride.
Drier than the Sahara Desert, it has rained only once here in the last 10 years, he said. And that was five years ago.
Yet the Huasco Valley, a 700-km, 12-hour drive north from Santiago, is the last fertile region in the north of the country, thanks largely to the glaciers above.
Even without rain, the rivers born in the Andes cordillera are replenished by snow and glacier melt, bringing water for irrigation and other uses to about 70,000 people in the valley so they can harvest three crops a year — starting with grapes destined for the U.S. and Canada.
Over hundreds of years, the glaciers have provided cyclical relief to the parched land — the less it rains, the more water is released from the glaciers, to be used for irrigation, much like withdrawing savings from a bank during lean years.
The prolonged drought has taken its toll, however.
For the last three summers, part of the Huasco River, including a 10-km stretch where generations of local children have gone swimming, has slowed to a trickle. Some blame Barrick, though operations at the mine have not yet begun; others point to climate change as the likely culprit.
But few doubt that the mine will mean more competition for increasingly scarce water resources, and that its operations could exacerbate the situation.
According to the terms of the special protocol signed by Argentina, Chile and Barrick Gold in 2004, the company will be entitled to take 42 litres of water per second from the Chilean side, and 350 litres a second from the Argentinian side. That’s almost 34 million litres of water a day. (Right now, Barrick is only using water for the camp facilities, workers and to control the amount of dust in the air.)
Rodolpho Westhoff, Barrick’s environmental manager at the mine site, said the company only intends to use 1% of the Huasco River’s flow, and 55% of the flow of the Taguas River in Argentina.
Catherine Solyum/The GazetteRodolpho Westhoff, Barrick’s environmental manager at the mine site, said his 50 on-site staff members are monitoring everything from the movement of native guanacos (wild llamas) and burrowing parrots across the mine’s 438-square-kilometre territory, to the quality of water at 73 locations — 48 in Chile, 25 in Argentina.
Westhoff’s 50 on-site staff members are monitoring everything, he explained, from the movement of native guanacos (wild llamas) and burrowing parrots across the mine’s 438-square-kilometre territory, to the quality of water at 73 locations — 48 in Chile, 25 in Argentina.
Barrick, in an effort to convince its opponents that the company is committed to environmental protection, has begun soliciting members of the communities below the mine to monitor water themselves. So far, they have done so four times, Westhoff said. Neither the quality nor the quantity of water has been affected, he said.
Then again, the mine is not yet in operation.
Westhoff, a jovial man who was director of a governmental environment agency in the south of Chile before joining Barrick, said his team is closely monitoring the glaciers in particular, which account for up to 70 per cent of the flow of rivers born in the cordillera.
They painstakingly measure the thickness of the snow and ice, and download satellite photos of them three times a day.
“Every day (the measurements) go up and down,” Westhoff said, overlooking Estrecho and LosAmarillos, two glaciers adjacent to the mine pit on either side of the Chile-Argentina border. “Climate warming is a reality. Glaciers in Patagonia and glaciers in Canada are shrinking. We are not immune to that.”
But there is evidence that Barrick’s exploration activities are directly responsible for the shrinkage of three smaller glaciers within the Pascua-Lama territory.
According to a 2009 report by the Dirección General de Aguas — a Chilean government agency charged with monitoring and managing water resources — Toro 1, Toro II and Esperanza glaciers have shrunk by 50 to 70% since the company began exploring for gold in 1997.
There has been no other activity in the vicinity to explain the drastic shrinkage.
Cuenca said that during the initial exploration phase, the company drilled in and around the glaciers and even built a road through one.
The dust that was created, whipped by the fierce winds, landed on the glaciers and turned them a darker shade of grey. The glaciers therefore absorbed more sunlight, and melted.
(According to Westhoff, whose team also measures dust accumulation on the glaciers, 80 per cent of the dust on glaciers is from natural sources blown around by the wind — 20% is from Barrick operations.)
In its environmental impact report submitted to the Chilean government in 2005, Barrick drew up a plan to move the three glaciers out of the way by taking blocks of ice by bulldozer and “bonding” them to another glacier four kilometres away. Given the widespread public opposition, the plan was rejected by the government — and has been lambasted by environmentalists ever since.
In approving the mine project the following year, the Chilean government said Barrick must not touch or otherwise affect the glaciers with its operations and the two parties agreed to a series of mitigation techniques. Trucks carrying ore or mine tailings are supposed to be covered, and the roads within the mine territory are supposed to be watered regularly to limit the amount of dust in the air.
Cuenca, however, said he is not satisfied. The company has already been sanctioned for not watering the roads, taking water from an area not authorized, fecal contamination in the water, and driving through Alto del Carmen instead of using the bypass road.
Until about eight months ago, locals said, dozens of trucks barreled through the tranquil town of Alto del Carmen every day, carrying explosives and chemicals past the school and up to the mine, despite Barrick’s promise to detour around inhabited areas. That did not help relations with the community, either.
But most importantly Cuenca said, you can’t cover the entire mine pit.
“According to their own documents (Barrick’s 2005 environmental impact assessment report), they will be using 82 tonnes of explosives per day. How will they make sure they are not harming the glaciers? How will they control the dust, and the vibrations? No one knows. We are expected just to trust Barrick Gold. But the livelihood of so many people is on the line.”
Finally, there is reason to be concerned with the omnipresent dangers of acid drainage — where heavy metals in the rock released through blasting wash into the water that flows downstream from the mine — and of cyanide spills, Cuenca said, like the kind that have contaminated areas around other gold mines, from the United States to Romania to Papua New Guinea. In 2000, there was a spill of 65,000 litres of petroleum at the mine, Cuenca said, the same could happen with sodium cyanide.
Westhoff said the mine is designed so that natural streams are diverted from areas where heavy metals have been exposed, and cyanide is used in a closed circuit to limit the possibility of spills. But he couldn’t dismiss the possibility of an accident.
For Cuenca, the problems are compounded by the fact that Pascua-Lama is just the first of six mines being developed by Barrick and other companies within the area covered by the bi-national treaty, all of which pose risks to glaciers and make similar demands on a shrinking and vulnerable water resource, Cuenca said.
The mine, closed to the public except with special permission from Barrick for a guided tour, is out of sight and out of reach.
“So on the one side, communities are having to deal with water scarcity, and on the other, giant companies like Barrick are taking water in the hundreds of millions of litres per day. … And both countries are letting Barrick monitor itself,” Cuenca said.
However, Barrick produces its own environmental impact assessment reports submitted for governmental approval and is expected to produce monthly, quarterly or annual reports on everything from noise and vibrations to the glaciers.
Down in the valley, Olivares, for his part, sees the benefits of Barrick’s investment in irrigation infrastructure.
At first, the company tried to increase water resources available in the valley through cloud seeding — using silver iodide to produce rain artificially. Then in 2005, in an effort to get the 2,000 members of the irrigation users’ board in the Huasco Valley to support the project, Barrick promised to contribute $60-million over 20 years to improve irrigation canals.
Now a new cement-lined canal runs from the Santa Juana Dam through Olivares’s property, guaranteeing a stable source of water for his avocados and grapes, for the time being.
Still, he worries about what’s going on “up there.”
“If we didn’t have these new canals, we would still be in the dark ages of farming,” he said. “But I think they’re putting us at risk with their demands on water. They say we can work together, but water is not unlimited. … And if mining is the only thing left here, the desert will take over.”
Argentina: Turning water into wine — or gold
In October, the province of San Juan — only 367 kilometres from Alto del Carmen as the crow flies, but a 17-hour drive through the Andes — officially declared a state of emergency with regard to water resources. It prohibited the use of potable water for anything but human consumption between 9 a.m. and 9 p.m., seven days a week, including holidays.
Like neighbouring Mendoza province, it is the second straight year strict measures to conserve water will be in place until April — the beginning of the South American winter.
No watering the garden, no mopping floors, no cold showers during the summer’s intense heat, which can easily top 40C.
This, so that wine producers and fruit growers may have water left to irrigate their fields.
Also in October, Barrick Gold’s Veladero mine celebrated its seventh anniversary, and the company moved forward with its construction of the ore processing plant and workers’ camp at Lama — elevation 4,100 metres — seven kilometres northwest of Veladero, Argentina.
“Here, they call it Lama-Pascua,” joked Miguel Martín, the communications director for Barrick in San Juan, displaying a 24-page special supplement in the local paper devoted to “the mine that changed San Juan.”
By many accounts, Veladero has been a great success, for Barrick and for San Juan. The streets aren’t paved in gold, but they are in better shape, a local journalist said.
The local priest, Rómulo Cámpora, said that after so many earthquakes and economic crises — the last earthquake in 1944 destroyed the entire city, including the church — the mine provides stable jobs, and more importantly to the Catholic Church, more couples are having babies.
Mega-mining has also brought better infrastructure and university facilities, and, according to a study done by the Universidad Tecnológica de Buenos Aires, Veladero alone accounts for 34 per cent of the province’s gross domestic product, up from 23 per cent in 2009.
“We are making a difference,” said Barrick’s vice-president of corporate affairs for South America, Rod Jimenez, adding that Barrick has received 100,000 CVs from people looking for jobs at the mine. “All those taxes and funds go into better education and health. … In San Juan, everyone is somehow related to mining.”
That increasing dependence on mining, and what it might mean for other activities vying for water, is what worries detractors here in Argentina, as in Chile.
Carlos Nadas, a former manager for the world class Graffigna winery in San Juan who is a producer of grapes, said the politicians, together with Barrick, have tried to convince everyone that without mining the province is doomed.
Some of those interviewed are indeed convinced. Especially in areas like Iglesia and Jachal — the closest villages to the mine — where naturally occurring boron in river water, and the distance from markets in Santiago and Buenos Aires limit the kinds of crops that can be grown.
But the city and the province have survived hundreds of years without the mine, Nadas said, and if the government were to invest in the water infrastructure for agriculture and wineries, instead of facilitating mining, the town would survive just fine — without jeopardizing its future.
As it is, and given the chronic water shortage, only 15% of arable land is being farmed, Nadas said. Because of the water shortage, farmers went 100 days last year without being able to irrigate.
Unlike in neighbouring Mendoza, where another Canadian mine project was rejected because it would use sulfuric acid to leach the copper — the Coro mine is now considering doing its processing in San Juan — Barrick has won over many residents here through its corporate social responsibility contributions.
In both Chile and Argentina, the company has provided funding for school buses, houses for the homeless and wireless Internet. It built a community centre in Jachal, and pays for visits to the dentist for children in Iglesia.
“We want to make sure when we leave we don’t leave behind a ghost town,” Jimenez said. “We want to leave a legacy.”
Others, however, said the company is simply buying loyalty — and silencing dissent — through its donations and its omnipresent advertising on television, radio, newspapers and in the streets, where giant Barrick billboards tower over major intersections in San Juan.
Freddy Espejo worked six years at the Veladero mine but said he was fired when he raised concerns about cyanide pools being too close to streams. His ongoing fight against the mine, blocking the access road to Lama to protest the hundreds of trucks that pass through the tiny village of Iglesia, for example, has cost him his job and his wife and family. He now runs a bakery in Iglesia.
What he sees there is not progress.
“My father raised 14 children by growing seeds for export. Barrick gives 300 pesos here, a tractor there, but some people still don’t even have indoor plumbing. And what happens in 25 years when the mine is gone?”
Mirta Oñate, one of the more vocal critics of the mine in San Juan, said contrary to the publicity campaigns, Argentina is getting a raw deal, and the mega-mine, with its great thirst for water and gold, will spell the end of wineries and farming in the region.
While three quarters of the ore will come from Chile, most of the water, and all the chemical processing, will be done in Argentina, ironically within the boundaries of a UNESCO World Biosphere Reserve, the Reserva San Guillermo.
“They’re taking 55 per cent of the water, and leaving all the cyanide — all this for three-per-cent royalties,” Oñate said. “We’re not against mining, just mega-mining that brings all our resources to the first world and leaves us with contamination and drought… If you knew how little water we have, would you be giving it away to the mining companies?”
As the mine nears its opening date after a decade of controversy, those living in the long shadow of Pascua-Lama are apprehensive.
If problems with water scarcity are affecting agriculture now, Carlos Nadas said, what will it be like when the mine opens?
Look at what’s happened with the Bajo de la Alumbrera mine in Catamarca, he said, which is run by Australian Xstrata Copper and Canadian mining companies Goldcorp and Yamana Gold.
The nearby towns and villages used to grow hot peppers, and produce colourful woven goods and wine. Now everyone is in mining. And the province is among the poorest in Argentina.