Chile's Rich Patina Fades for Goldcorp
On second thought, Goldcorp shouldn't count their chickens before their hatched when it comes to doing business in Chile.
Even though the country's supreme court restored its environmental permit for the miner's $4 billion El Morro copper project, an appeals court has once again suspended it following complaints from the local indigenous population that the required consultations with them weren't properly conducted.
El Morro project, Chile. Source: New Gold corporate presentation, November 2013.
It's been a long, torturous legal process for the miner in trying to get the project up and running. With an estimated 8.4 million ounces of gold and 6.1 billion pounds of copper, El Morro is Goldcorp's only major asset in Chile, one it owns jointly with New Gold in a 70/30 split. But it was brought a halt in February 2012, when an appeals court said the Huascoaltinos indigenous community had a right to have greater input into the project and could take a bigger piece of the pie from the resources ultimately mined. The Supreme Court affirmed that decision, saying Chile's permitting authority had not adequately consulted with the Huascoaltinos before issuing the permit.
In August, Goldcorp submitted a new compensation plan for the project, giving the indigenous Diaguita ethnic population, which owns surface rights to El Morro, thousands of hectares across the region. But earlier this month, the group's lawyers said they would file new appeals, arguing the consultation, based on an International Labor Organization convention, wasn't properly conducted. They're also concerned the mine is planned on what they deem their sacred ancestral land, and it could harm livestock farming while restricting scarce water supplies.
Miners, globally, are confronted with similar challenges to their expansion plans. Taseko Mines is combatting local indigenous groups and a flawed environmental review process in British Columbia for its New Prosperity copper and gold project; a project pursued by Gabriel Resources and backed by Newmont Mining in Romania has ground to a halt because of local resident concerns; Beowulf Mining in Sweden has faced protests and delays caused by the indigenous Sami people, who oppose its iron ore mine in the Arctic Circle, as it will affect their reindeer herding; Belo Sun just had its environmental permits in Brazil suspended; and back in Chile, Barrick Goldindefinitely suspended its Pascua-Lama gold mine over environmental concerns that have bogged down its development.
Although Chile's supreme court gave Goldcorp the green light again last month and the miner said it would "carefully consider the most appropriate next steps it will take to develop the El Morro project, with the aim of satisfying the long-term needs of all interested parties," it has also said that although New Gold wants to forge ahead with plans to have the mine operational by 2018, it might just mothball the project for the time being because of falling gold prices.
Chile is world's biggest copper producer, with 5.42 million tonnes produced (Peru is a distant second with 1.25 million tonnes), and it accounts for 60% of the country's export revenue, but as it closes the door to mining opportunities amid a growing inventory glut of the metal, it may end up pinching its own fingers. Since Goldcorp was already leaning against further action at El Morro, it may from this latest setback relatively unscathed.
Developing a rich patina
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