SANTIAGO, Chile - A Chilean appeals court ruled against the world's largest gold mining company on Monday, favouring Chilean Indians who accuse Barrick Gold Corp. of contaminating their water downstream and creating more doubts about the future of the world's highest gold mine.
The judges in the northern city of Copiapo unanimously ruled that Barrick must keep all its environmental promises before moving forward with construction of the Pascua-Lama mine at the very top of Chile's mountainous border with Argentina. They also said Barrick must monitor the condition of three glaciers next to the mine project.
Chile's environmental watchdog agency already ordered construction stopped until Barrick builds systems to keep the mine from contaminating the watershed below, and Barrick executives have publicly committed the company to fulfilling the requirements of its environmental permit.
But Monday's ruling goes beyond that by demanding repairs to damage in the watershed below, by calling for increased monitoring of the impact on surrounding glaciers, and by opening up the project's environmental license for review. The judges found no evidence of contamination due to mine construction, but said the watershed could face "imminent danger" without more environmental protections.
Attorney Lorenzo Soto, who represents about 550 Diaguita Indians in the case, said this review might even kill the $8.5 billion mine, which has been under development for more than seven years. "The project's conditions aren't the same as they were in 2006. New conditions could be established, and we don't discard any scenario, including the closing of the project," Soto said.
Scarce river water is vital to life in Chile's Atacama Desert, and the Diaguitas fear that the Pascua-Lama mine above them is ruining their resource.
Barrick (TSX:ABX) acknowledged the ruling in a statement late Monday that did not say whether or not the company would appeal.
The company said it "is committed to diligently working to complete all of the projects the regulatory requirements" and is working with Chile's environmental regulator to construct a water management system by 2014, after which time it expects to renew construction on the actual mine.
Still, the ruling could mean more lengthy delays for the binational mine, which was initially expected to be producing gold and silver already. While Argentine officials are eager to keep building, most of the ore is buried on the Chilean side. On the Argentine side, where Barrick fuels a third of San Juan province's economy, officials have been watching closely and trying to figure out how to preserve thousands of jobs.
Barrick's stock traded up slightly Monday at $15 a share after reaching near-historic lows due to falling gold prices and Pascua-Lama setbacks.
Luis Andres Henao in Santiago and Michael Warren in Buenos Aires contributed to this report.