The Price of Gold in Chile

Abstract

Straddling the Chilean–Argentine border high in the Andes, near a field of glaciers, lies an ore body that by mining industry estimates is large enough to yield 750,000 ounces of gold, 30 million ounces of silver, and 5,000 tons of tradable copper concentrate (typically consisting of 25–30% copper) every year for 20 years. Whether these valuable metals would stay in the ground, at least for the foreseeable future, or be extracted in an open pit mine is the topic of an ongoing tug-of-war between environmentalists and Canada’s Barrick Gold Corporation, the claim holder and one of the world’s largest gold miners. Just about any new extractive industry proposal will attract protests, says Vincent Borg, Barrick Gold’s senior vice president of corporate communications. He says Pascua-Lama, as the proposed mine is called, has been a target of environmentalists’ wrath just because it’s the latest large mine on the drawing table. But the Pascua-Lama case includes a few unique twists: perhaps 5% of the metals lie under glaciers, the site sits on land in two countries, and as gold and silver mines go, it is at a high altitude, a little over 15,000 feet above sea level. Tremors from regional earthquakes also are no stranger to Huasco Valley. According to the USGS, the region saw 6.7-magnitude earthquakes in 2006 and 2002, while a 6.8-magnitude event occurred in 2003. By now, hoops have been jumped through, most i’s dotted and t’s crossed, protests conducted, and appeals exhausted. Just about all of the major players on this issue, for and against, say that the mine will almost certainly open in the near future. However, some activists are grasping at a thin thread of hope that new appeals to Chilean regulatory agencies, as well as other legal maneuvers could halt the project. What concerns me is that this particular mine has a very high resource value. That can drive people to assuming and making promises about a project that just realistically can’t be upheld. — Jim Kuipers, Kuipers and Associates LLC