| Analysis: Argentine glacier protection bill could shut mines by Luis Andres Henao, Reuters |
An Argentine
bill to protect glaciers by banning mining in ice zones could hinder a
new multibillion-dollar gold mine, shutter some projects and slow
investment, although some mining provinces seeking to circumvent the
measure are passing their own laws. The Senate is weighing the
politically popular bill, backed by the opposition, after the lower
house of Congress passed it last week. Proponents say it is crucial to
ensuring Argentina's water supplies into the future. President
Cristina Fernandez has said she would sign the bill, even though she
vetoed a similar law two years ago, citing economic grounds. The
proposed law could make it more expensive -- or even impossible -- for
Barrick Gold Corp to develop Pascua Lama, one of the world's last known
mega-gold finds being built along the mountainous Argentina-Chile
border. "The law's passage could
have a deep impact on Pascua Lama and could limit the development of
other mining projects, many of them high in the Andes, by banning them
outright," said Damian Altgelt, general manager of the CAEM mining
chamber. Barrick says it has
already committed over 25 percent of the capital for Pascua Lama, with
the project's pre-production capital budget estimated at $2.8 billion
to $3.0 billion. The bill, which
also bans oil drilling on the country's glaciers, is aimed at
safeguarding Argentina's freshwater reserves. It sets standards for
protecting glaciers and surrounding areas and creates penalties for
companies that pollute or damage ice fields. "Up
to now, mining projects just had to prove they would not harm the
environment," Altgelt said. "Now, if the project is located on a
glacier or in this ambiguous concept of being near one, it's simply
banned." Mining-friendly
provincial governments are already passing laws that are more flexible
than the national bill, arguing they have a constitutional right to
manage their natural resources. Three
provinces -- La Rioja, Jujuy and San Juan, site of Barrick's Veladero
and Pascua Lama mines -- have passed their own laws. These say mining
projects in glacial areas should be banned only if an environmental
impact assessment, commissioned by the local government, shows they
have an adverse effect. Four other provinces have agreed to take similar action. "Provincial
laws are trying to block this law. But environmental bills like the one
we're trying to pass are national and set the standard." said Miguel
Bonasso, the national glaciar protection bill's sponsor in the lower
house. A long court battle could
result if the laws continue on a collision course, constitutional
expert Gregorio Badeni said, adding that ultimately Congress trumps the
provinces in regulating mining activity. "If
the law is passed, Barrick and other miners will not be able to
continue their projects," he said. "But Barrick could demand hundreds
of millions of dollars in compensation from the Argentine government
because these mining activities were not banned when they made these
investments." He said Barrick, the world's largest gold miner, could also argue the law does not apply to the areas where it operates. IMPACT UNCLEAR In
San Juan province, Barrick's Veladero mine produced 611,000 ounces of
gold last year. The company is also developing Pascua Lama there, which
straddles the Chile border at some 5,000 meters (16,440 feet) above sea
level. Pascua Lama has proven and
probable reserves of 17.8 million ounces of gold. Average annual output
is expected to be between 750,000 and 800,000 ounces of gold in the
first five years of operation. Environmentalists
say studies and satellite images show Pascua Lama is located in a
glacial area. Barrick disputes this, saying the ore body it was
authorized to mine in Pascua Lama and its Veladero mine are not under
ice fields or glaciers, so would not be restricted by the new law. "Barrick
operations should not affect any glacier," company spokesman Rodrigo
Jimenez said. "Our project will not affect the community's water source
or the environment." "We are
extremely confident that the Argentine federal and provincial
legislative framework will continue to support and encourage
responsible mineral development," Jimenez said. However, the lawmaker Bonasso warned Veladero could be closed down if the glacier bill passed. "If
the law were enacted today Barrick would be infringing it because
Veladero is located in a periglacial area," Bonasso said. "Barrick
could be asked to move its development or even cease operations." NO VETO When
President Fernandez vetoed a previous glacier-protection law in 2008,
she said it jeopardized economic development in mineral-rich provinces
like San Juan. Environmentalists
and political opponents accused her of being in cahoots with big mining
companies, and she appears eager to shed that image ahead of an October
2011 election. Fernandez's
husband and predecessor, former President Nestor Kirchner, is expected
to run for president next year and he would need the support of
progressive, middle-class voters. "The
bill will most likely pass in the Senate to become law," said Rosendo
Fraga, a political analyst. "The president has decided not to veto it
because she knows the high political cost that it would entail." Fraga
said lawmakers could still delay the bill's passage in the Senate and
even send it back to the lower house for changes to keep it in a
bureaucratic limbo while provincial governments advance with their own
laws. The law's passage would be
crucial to protecting glaciers as the country's main source of
freshwater, according to Ricardo Villalba, director of the IANIGLA
government institute for snow and glacial research. "Glaciers regulate water in the Andes when it doesn't snow or rain. That's why they're key," Villalba said. "The spirit of the law is to preserve this resource that has a vital significance to the Andes. I hope it passes." (Reporting by Luis Andres Henao; Editing by Hilary Burke and David Gregorio) NOTE: |
