SPECIAL REPORT ON PASCUA-LAMA: Part 2 – The journey to development

The journey to Pascua-Lama first began back in 1994, when Barrick acquired Lac Minerals Limited, a Toronto-based gold producer whose assets included the Pascua-Lama exploration property and 40% ownership of the nearby Veladero property. Both properties are located in the highly prospective Frontera gold district.

Barrick’s 2001 acquisition of Homestake Mining Company consolidated the company’s ownership of Veladero, gaining the remaining 60% of the project. Veladero would advance to be the first to commence operations, with first gold pour in 2005.

As Barrick invested in exploration and developed feasibility studies, Pascua-Lama was deferred in the late 1990s and into 2000 due to low gold and silver prices. Over time, however, gold reserves steadily increased from original estimates of 2.3 million to the current 17.8 million ounces.

In 2000, the national governments of Argentina and Chile ratified a historic Mining Integration Treaty. The landmark treaty provides a co-operative framework for the development of cross-border bi-national mining projects, starting with Pascua-Lama. The company continued its work on optimizing the project and embarked on the complex permitting process.

The development of Pascua-Lama parallels a period of rising global awareness about environmental issues, from energy conservation in daily life to standards for industrial performance. Growing public expectations of companies have been evident in Argentina and Chile for many years. Within this context, Pascua-Lama was subject to one of the most thorough and exhaustive reviews by authorities in the history of both countries.

In 2004, the company’s Pascua-Lama team submitted two separate but complementary Environmental Impact Assessments, one to Chilean authorities and a second to regulators in Argentina. Each document was thousands of pages long. Barrick’s teams had sought out and engaged local and international experts in such fields as hydrology, engineering, geochemistry, environmental management and glaciology, drawn from numerous private sector firms and over a dozen universities and scientific institutions.

Government regulators in both countries had mandated a broad public consultation process. The company went even further than regulations required, setting up community offices in local towns and villages and systematically consulting with stakeholders within the project’s area of influence and beyond. An extensive door-to-door information campaign was organized, with staff visiting residents and providing information. They held nearly 1,000 meetings and dozens of open houses in Chile’s Atacama region and in Argentina’s Iglesia and Jáchal districts. Members of the Pascua-Lama team talked, they listened and answered questions, engaging with government officials and regulators, academics, scientists, environmentalists, industry associations, media and the public. Formal consultations took place over 15 months in Chile and 20 months in Argentina.

During this time, Pascua-Lama’s location near the ice bodies in the Andes became the subject of genuine interest and considerable distortion. Ron Kettles, project director for Pascua-Lama, recalls how early, inaccurate claims and misinformation circulated on the Internet about the project. Drawing on extensive input from some of the world’s leading glaciology experts and academic institutions, Kettles and the Pascua-Lama permitting team mapped out the different ice bodies in the vicinity of the project and explained in detail how they would be protected and monitored using scientific best practices and protocols. Pit limits were revised to ensure mining would not impact on ice fields (Toro 1, Toro 2 and Esperanza). Further engineering advances and design improvements were made to address community concerns and meet all environmental requirements and approval conditions on both sides of the border.

In 2006, EIA approval was received from CONAMA, Chile’s national environmental agency, and COREMA, the country’s regional environmental authority. Later that same year, the Independent Mining Environmental Evaluation Commission gave approval in Argentina. Over 420 conditions were set out in the Chilean EIA and more than 500 conditions in Argentina.

With little prompting, Kettles will explain in painstaking detail any one of the hundreds of environmental measures required by permit. He believes the Pascua-Lama project that has taken shape over the years will be among the most environmentally responsible mining projects in the entire industry.

As Kettles points out, 'Pascua-Lama has been designed to be operated and managed under extremely strict and detailed environmental standards. This includes provisions to ensure that mining does not impact the glaciers or water quality and quantity for downstream communities in Chile and Argentina.'

Recognizing the opportunities for development that Pascua-Lama would bring, in 2007 community leaders from Chile found their voice, issuing an impassioned letter of public support for the project. The joint letter was signed by the presidents from seven community associations representing some 6,600 families in Vallenar, Huasco Valley and Alto del Carmen, as well as organizations representing local mothers and seniors.

The letter read…'For many years, we have seen how our families, friends and neighbours have been forced to leave their homes in search of jobs… We have seen how our young people are frustrated when they can no longer pursue their dreams…'

The elected leaders from these communities expressed confidence in Barrick’s plans for environmental management and their right to determine their own future… 'there are many who fight against our people’s progress, to keep them living in inadequate conditions, with no aspirations. But it is time for us to raise our voices demanding the same opportunities that others have had. Our people deserve prosperity.'

Then, this past May, Barrick’s president and CEO Aaron Regent made the go-ahead announcement for Pascua-Lama. The company had finalized the project’s economic parameters, received key construction permits, and resolved outstanding fiscal matters with the governments of Chile and Argentina. At the time, Chile’s president, Michelle Bachelet, and Cristina Fernández de Kirchner, president of Argentina, expressed their satisfaction that the important milestone had been achieved.

The project is now proceeding through the construction stages, with commissioning expected in late 2012 and the first gold pour in 2013. Discussions with project financiers are underway, targeting $1 billion in project financing. Igor Gonzales, president of Barrick South America, is proud of the many employees who worked on the project over the years. He feels they have played a pioneering role, engaging in a constructive dialogue about environmental and social responsibility within the mining sector, while advancing a project that will create opportunity in places where options today are limited.

Gonzales is also confident that when the hundreds of newly trained local employees start to build Pascua-Lama shortly, the result will be a better designed and managed project.

"The Pascua-Lama project we have today sets the bar high," said Gonzales. "It takes advantage of the latest science, engineering and environmental advances in modern mining, while bringing important benefits to communities. That is what responsible mining is all about."

Next: An insider's guide to environmental management.