--Provincial survey finds no impact on glaciers from Barrick's
operations
--2010 glacier law bars development that may damage glacial
ice
--Mining companies suspend projects on rising costs, regulatory
uncertainty
By Shane Romig
BUENOS AIRES--Argentina's mineral-rich San Juan Province has
cleared two mines owned by Barrick Gold Corp. (ABX, ABX.T) of
posing a threat to Andean glaciers in a move likely to be contested
by environmentalists trying to use a glacier protection law to stop
several mines.
Argentina has enjoyed a mining boom in recent years thanks to
high mineral prices. But grass-roots opposition to mining, soaring
costs, regulatory and tax changes, and the controversial glacier
law could jeopardize investment in the sector.
San Juan's findings come as good news for Barrick and other
mining companies operating in the province, which have asked the
Supreme Court to strike down the glacier law.
The San Juan government said the study it plans to submit to the
Supreme Court didn't find "potential or actual environmental impact
on glaciers or peri-glaciers in the areas" surrounding Barrick's
Pascua Lama and Veladero mines.
The Veladero gold mine started operations in 2005, while the
$8.5 billion Pascua Lama project, which straddles the border
between Argentina and Chile, is under construction.
A Barrick spokesman declined to comment.
San Juan has joined Barrick in challenging the glacier law,
saying that environmental matters fall under provincial
jurisdiction.
"We are going to continue complying with the law, but always
defending our rights," said San Juan Gov. Jose Luis Gioja in a
statement.
The provincial government said it will next conduct a glacier
survey for Canada-based McEwen Mining Inc.'s (MUX, MUX.T) $2.9
billion Los Azules copper project and the Paso Agua Negra
tunnel.
The glacier law, which President Cristina Kirchner signed in
2010, limits economic activity in the areas surrounding glaciers
and requires the provinces to conduct surveys of glacial ice that
may be affected by economic activities like mining and oil
exploration.
Farmers and environmentalists fear that mining will accelerate
the melting of the Andean glaciers, which feed the rivers and
streams that provide irrigation water at lower elevations.
Environmental groups--armed with images from Google Earth that
they say show glacial ice at mine sites--have targeted Barrick and
other big-ticket projects in San Juan Province such as Xstrata
PLC's (XTA.LN) multibillion-dollar El Pachon copper project.
Though dwarfed by Argentina's vast agriculture exports, mining
is still an important source of foreign currency.
The volume of Argentina's mineral exports rose 10% on the year
in 2012, but slipped 2% in value to $5.3 billion due to lower
prices, according to research firm IES. Gold and silver accounted
for half of those exports, and mineral shipments made up almost 7%
of the country's total exports.
Mining companies face an increasingly difficult operating
environment in Argentina, whose vast mineral wealth has hardly been
touched.
Currency controls make it almost impossible for foreign mining
companies to send profits home, while import restrictions lead to
delays in getting equipment into the country.
Mining companies also face soaring material and labor costs due
to annual inflation that most private-sector economists say is
running about 25%.
Faced with those difficulties, some companies have delayed
projects in Argentina, which has led to friction with provincial
governments.
In December, Pan American Silver Corp. (PAAS, PAA.T) shelved
work on its Navidad silver project in Chubut Province because
inflation and proposed tax increases on the mining sector would
make the project inviable.
That same month, Brazilian mining company Vale SA (VALE) halted
construction of its Rio Colorado potash mine in Mendoza Province to
evaluate "changes in the economics of the project."
Vale had previously said that Rio Colorado would start operating
in the second half of 2014, and eventually produce as much as 4.3
million metric tons of potash a year. Potash is a fertilizer whose
importance has grown thanks to large-scale soybean farming in
Brazil and Argentina.
Mendoza Province has threatened to revoke Vale's concession for
Rio Colorado if it doesn't resume work on the $6 billion mine.
Mendoza Gov. Francisco Perez gave the company until Feb. 4 to
submit a new time frame for construction.
If not, the project will be considered "abandoned" and the
"concession will expire" due to Vale's noncompliance with its
commitments, the governor's office said in a statement this
week.
Write to Shane Romig at shane.romig@dowjones.com
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