|Sergio Campusano, president of the Diaguita Huascoaltinos, holds up Barrick's CSR magazine which claims that Barrick is "Supporting the determination" of the Diaguita. Diaguita from Sergio's community have travelled to Barrick's annual general meetings many years to expose the fact that they oppose Barrick's presence in their territory. His community also had a case admitted in the InterAmerican Commission on Human Rights for violations to their self-determination in approving the Pascua Lama project. photo: Allan Lissner|
**ACTION: Ask the Ontario Teachers Pension fund to join the Class Action lawsuit here **
On June 5, 2013, Lewis and Patricia Clark filed
a class action lawsuit for themselves and other shareholders
against the world's largest gold miner for �making false and misleading
statements and concealed material information� relating to Pascua-Lama�s
delays and costs. The class covers everyone who bought Barrick common
stock between May 7, 2009, and May 23, 2013. Since this date, at least 9 law-firms have taken on the case against Barrick.
The main argument
is that Barrick was lying to the shareholders and public about the
viability and cost of their Pascua Lama project, causing their shares to
trade at artificially high prices. Indeed, a review of Barrick cost
estimates of the Pascua Lama project reveals a startling pattern of the
costs almost doubling each year. But was Barrick just an incompetent
manager, or were they systematically hiding costs related to their
One major contributing factor to cost rises at the Pascua Lama
project is a lawsuit brought by members of the Diaguita Indigenous
community. This suit halted construction work at the mine site until
Barrick builds infrastructure to prevent water pollution, dropping
Barrick's stock price 8.3% in one day. The same Diaguita are appealing that successful ruling, because they feel that it does not go far enough to protect the fragile Andean eco-system.
This is not the first time that Diaguita have brought suits against
the Pascua Lama project. In fact, a case by the Diaguita Huascoaltinos
was actually admitted
by the InterAmerican Commission on Human Rights for Chile's violation
of their self-determination by approving the Pascua Lama project. Having
a case accepted by the IACHR implies that the Diaguita had exhausted
all local mechanisms to seek justice. Despite this history of
resistance, the Diaguita didn't get mentioned in any of Barrick's annual
reports until 2013. On the contrary, Barrick boasted
about its relationship with the Diaguita in it's corporate social
responsibility reports, claiming that it "supported the determination of
an Indigenous people."
The existence of the local Indigenous resistance wasn't the only
thing that Barrick conveniently ignored for years. Barrick has
consistently downplayed it's impact on water resources in the area, claiming that there would "not be any significant impact on the water or its users in the area, including the Huasco Valley." However, internal reports in
2009 by consultants working for Barrick prove that Barrick was aware
that there were large permafrost reserves in the pit area and the
proposed waste pile area of Pascua Lama. These permafrost areas are
significant sources of water for the Huasco Valley, and likely
contributed to cost increases in the Pascua Lama project because of the
difficulty of mining in these areas.
These permafrost areas are also just the tip of the ice reservoirs impacted by Pascua Lama. According to CEDHA,
"Barrick wants us to think that there are only 5 glaciers affected by
the Pascua Lama and Veladero projects and that these are outside the
limits of the projects. The truth is that there are more than 300
Barrick-affected glaciers inside the project zone." Armed with this
information, it should have been no surprise that Barrick's activities
would increase melting and threaten the long-term water supply for the
But even when publicly available reports confirmed that Barrick was
dramatically reducing the size of glaciers near their project, Barrick insisted that it was the fault of climate change.
And it wasn't just the public that Barrick attempted to deceive.
This February, the Environmental Superintendent of Chile filed charges
against Barrick because the Pascua Lama project failed to meet the
environmental conditions related to waste storage at the mine site.
Barrick filed a self-report admitting that they had breached their
obligations, looking for a reduction in the fine.
However, the self-report did not meet the
provision of �accurate, truthful and verifiable facts by the holder.�
The Environmental Superintendent�s charges were accompanied by three
other charges this year from the Environmental Review Commission related
to the company�s glacier monitoring.
This July, the Copiapo Court of Appeals on Monday affirmed
a freeze on construction of the project, until the company builds
infrastructure to prevent water pollution. But this is not a new
requirement imposed on the company. Since 2006, Barrick has known that
it was "obligated to maintain the baseline quality of water" and it has
indicated in all public statements that it intended to do so. It appears
that Barrick was not counting on these environmental conditions being
enforced, or at least was counting on Chile accepting its faulty
Costs associated with the Pascua Lama project have ballooned in
recent years, from around $3 billion throughout 2009 and 2010, to $5
billion by mid-2011 and $8 billion by mid-2012. Today, some analysts are
pegging the cost at $10 billion. Barrick initially tried to blame these
cost hikes on rising costs of steel, cement, fuel and equipment, but
finally revealed in 2012 that these costs only made up for 25% in the
It is very clear that Barrick took steps to mis-characterise its
opposition, downplay it impact on water resources, skirt its
environmental responsibilities, and delay communicating with their
shareholders frankly about this mess. In fact, only a part of the Pascua Lama scandal has even come into mainstream knowledge to date, with Barrick facing considerable challenges in Argentina with respect to the glacier law in that country. Already though, the shareholders are
paying the price.
One day after Barrick Gold faced off with angry shareholders at
their Annual General Meeting this year, three of Barrick's top officials
in South America � the president, the regional vice-president for
corporate affairs, and the general director of operations � all resigned. Their sudden departure added to the controversy over Barrick's flagship project, and all of the scandals accompanying it.