Barrick undeterred by Argentine glacier ruling

Despite an unfavourable court ruling, Barrick Gold (ABX-T, ABX-N) is confident that its Pascua-Lama gold-silver project in Argentina’s San Juan province will push ahead.

Argentina’s Supreme Court ruled that a much-debated law aimed at protecting glaciers will in fact stand, after it was blocked by challenges from provincial governments and mining companies operating in the high Andes.

The law — which forbids mining on glaciers and surrounding areas — was passed in 2010, but its execution had been held up by a federal judge in San Juan province, who suspended the application of six articles of the law after complaints by mining industry groups. The provincial judge’s injunctions have been struck down by the Supreme Court.

Barrick points out that its Pascua-Lama project — which has weathered its share of criticism from environmentalists — is not on a glacier, and explains that its development would not be forbidden by law.

Barrick began mine construction at Pascua-Lama in 2009, and its projected completion by 2013 could be delayed by a detail in the law that requires an inventory of all glaciers and periglacial areas in the country. (Periglacials are loosely described as areas where ice has retreated, but water remains below the surface.)

Pascua-Lama’s development could be postponed because no mine can go into production until the inventory is completed.

But Andy Lloyd, Barrick’s senior manager of communications, says that the High Court has not ruled on the constitutionality of the law, which means that its implementation is not yet certain.

And while several mining companies in the region joined Barrick in voicing concerns about the law, Barrick’s specific concerns, according to Lloyd, are threefold.

Firstly, the definition of a periglacial area is unclear.

Secondly, potential impacts on glaciers at Pascua-Lama and Barrick’s neighbouring Veladero gold mine have been evaluated by environmental impact assessments, and the company is already in compliance with provincial glacier-protection laws.

And finally, Barrick believes, along with the provincial government of San Juan, that the law is unconstitutional because it regulates matters that are under provincial jurisdiction.

This last point is crucial, because the law wrests much of the control that provincial governments have over mining projects, and places it in the hands of the national government in Buenos Aires.

Glacier protection is always a hot-button issue in Argentina because glaciers supply large reserves of water for human consumption and agriculture.

A similar law to the one being debated was passed in 2008, but it was vetoed by Argentine President Cristina Kirchner.

Pascua-Lama is a high-altitude gold project holding one of the world’s largest untapped resources, with proven and probable reserves of 17.9 million oz. gold and 676 million oz. silver.

Barrick expects average annual gold production between 800,000 and 850,000 oz. in the first five years of operation, at negative total cash costs of US$225 to US$275 per oz., based on a silver price of US$25 per oz.

The project spans both sides of the Chile-Argentina border, and while Lloyd points out that there are small, “glacierette” ice fields on the Chilean side, they are not relevant to Argentine law, and have been specifically dealt with by Chilean regulators.

Pascua-Lama is 10 km northwest of the Veladero mine, which has been in operation since 2005, and would not be affected by the new law.

The news had little impact on the company’s share price, with Barrick’s stock off just 1.8% to $38.80 in Toronto, on 980,000 shares traded.