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Chilean environmental authorities on Friday ordered Barrick Gold Corp to halt work at its massive Pascua-Lama project and fined the company $16mn, citing serious environmental violations at the site. |
A Chilean court in April had partially halted the $8.5bn gold project, which straddles the border of Chile and Argentina, to weigh claims by indigenous communities that Barrick has damaged pristine glaciers and harmed water supplies.
Environmental authorities said on Friday that the fine is related to a serious “breach” and four serious violations of environmental controls around the project.
This is the latest in series of setbacks for the world’s largest gold producer as it struggles to balance its need to keep costs in check while attempting to replace ounces through costly projects like Pascua Lama at a time when the price of gold is sagging.
The massive costs of Pascua had led to some speculation that Barrick may mothball the project as part of its drive to reel in capital spending - a trend that has swept across the sector over the past year.
Barrick in a brief statement said Chile’s Superintendence of the Environment has asked the company to complete Pascua-Lama’s water management system in accordance with the project’s environmental permit before resuming construction activities in Chile.
The company said it is in the process of reviewing the regulator’s demands and said it remains fully committed to complying with all aspects of the regulator’s order.
A spokesman for Barrick declined to comment on whether the order would delay the project timeline and further increase the cost of the project.
Barrick, the world’s largest gold producer, warned last month it would stop spending on the project if the timetable for resolving the project’s regulatory problems remained unclear.
Barrick has poured about $4.8bn into Pascua-Lama, which was expected to produce 800,000 to 850,000 ounces of gold per year in its first five years of full production. It expects to spend a total of about $8.5bn.
The complex project, on Barrick’s books for more than a decade, has encountered repeated delays in the face of political wrangling and the challenges of building a mine that is 3,800m to 5,200m above sea level.