Eduardo Flores, senior vice-president with
Barrick Gold Corp. (
TSX: T.ABX,
Stock Forum) recently spoke to Chilean financial newspaper Diario Financiero about the work the mining giant is doing at its stalled Pascua Lama gold-silver project, which straddles the border between Chile and Argentina.
As has been widely reported, Barrick has faced a series of challenges at the site, due to the high elevation, cost overruns, and environmental pressures.
The following has been translated from the original Spanish verision.
What is happening at Pascua-Lama?
The construction is completely stopped in both Chile and Argentina; we are complying with all environmental and regulatory obligations in both countries and ending the engineering design of what will be the definitive management system waters. At the same time, we are working on community outreach. We have initiated dialogue and relocated our offices from La Serena to Vallenar (the capital of Huasco Province); We're working and collaborating with the regional government, and we continue to strengthen the team.
To restart construction, finish what agreed with the Superintendent of the Environment, what is that?
First, we committed to the immediate development works to collect non-contact water coming down from the glacier, which was what was done in 2013, we invested about $ 50 million and we delay almost nine months to complete. Today it is working, but it will stop it as the definitive works are. Of these, we are completing engineering and it should be presented in the coming months to authority, to seek their approval.
Does that include entering the System of Environmental Impact Assessment (SEIA)?
Let's follow what the regulation says. We are reviewing the rules of how to define what is the most appropriate way to obtain permits. However, you must give greater strength to the project and its development. This includes discussing with communities.
El system will be better than originally thought?
With lessons learned, we not only comply with the regulation, but to go beyond. The design has to be more robust. We can not have any mistakes in this process, because it is the keystone to unlock the project. Engineering will finish by the end of the year and then will come the environmental approval.
How we are going to hold off on permits and how the construction is a process that we estimate in several years, which gives us the ease of working on other fronts of project development.
In originally spoke of 18months for do all the works what happened?
When we sanctioned authority, the major focus was the short term. The second point was to design and build Phase II, which has been far more complex than what we had in mind.
Costs and Opportunities
Do you think you can complete the project?
The company has made ??significant changes. We hope to find the way. Personally, leading this process, I think there's definitely a chance, small, but it exists. So we have to be careful and we can not go wrong. We have no room for error, I am convinced.
Echar walking Pascua-Lama depends on many factors
He's not a factor and are not just issues that drove us. We also depend on what is happening in the social, economic and political world. But we must do the best we can from our point of view and (in that sense) we have made ??significant changes within the company. It is something that is also pushing Barrick under the concept of partnership. To the extent that we can be partners in Atacama, if we can grow this concept, we can develop this and other projects.
What the cost of terminating Pascua-Lama?
Today we are in the middle of the road, but this will probably mean another US$4 billion more. The team is looking at how best to implement the project. There are a couple of factors that are positive, because the cost of construction is more competitive than a couple of years. Must see if you can capture it and be even more efficient, so you have a better planned execution.
Is there a way to update the project design?
It's difficult for a project to change direction. We are in the middle and we want to finish based on the criteria established in the beginning. We are not making substantial changes to the design, but a performance optimization. The idea is to make the project at the same time it takes us to complete the construction of the water system.
New reputation
How is the relationship with the community?
The work we do with diaguitas (indigenous people). We continue to work in detail with the compliments of the Environmental Qualification Resolution regarding our social obligations. But we want to go further. Moving to the region will allow us to increase the dialogue process. For example, we're looking at how we can generate more local employment. We are discussing with our contractors how to increase employability.
This is going to generate that in the future, the Third District has a significant share of employment, for example, when you have to build the system of water management, which will require around 1000 direct people and between 3,000 and 5,000 indirect.
You have said that you are "trying" to rebuild the reputation, how will that be accomplished?
To do this, first we need a complete fulfillment of our obligations. And second, full transparency. Further dialogue with diaguitas (indigenous people) few months ago we also started a similar process with the rest of the communities, where the whole team is explaining what the status of the project, listening, working the discrepancies as they come and go making commitments. This is a long way, do not know when we will be in a position to say that we have redone the relationship.
It's a matter of trust?
Absolutely. I think we have begun to generate some degree of confidence, to the extent we do and meet our obligations, but also explaining our challenges.
Last April, Pascua-Lama has reached an agreement with 12 indigenous communities to advance a process of understanding, which between December and January should trigger a document with common conclusions.
How advanced is the agreement they have with diaguitas (indigenous people)?
It's been a long process, took several months talking. The Memorandum of Understanding (MoU, for its acronym in English), it looks transparent project information. We freely, voluntarily and in good faith, have begun to openly display what we are doing and what we think for the future. The MoU seeks to communities, with their teams, may have an independent view of the project, to make comments about how they will develop and operate.
Between December and January we will have a technical report, which we will surely encounter situations where we must meet that vision that we find.
Esto will have a counterpart in decisions about the project?
We're in good faith on the table. If we sit without the belief that we will have to modify some things, not resolve potential discrepancies.
Why it is important now to agree with them?
The world has changed rapidly in a few years. Environmental permits have no guarantee that we have the long-term viability. We must be in harmony with the environment and we did not and now we're piecing.
How are the criticisms that have been the representativeness of those involved in the MoU?
It's difficult to have contact with 100% of the represented . We made ??sure to sit with the majority. In the province of Guasco there are 22 communities and 12 that are on the table.
They represent about 70% of organized diaguita (indigenous) population. The other 30%, for various reasons, is not and they have every right to disagree, but we have to move forward with those who represent the majority. I wish we could talk more, but the important thing is that you do not have the freedom of not wanting to participate or join.