A Perfect Uproar at Pascua- Lama and Canadian Miner Barrick[

         A PERFECT UPROAR AT PASCUA- LAMA AND   CANADIAN    MINER BARRICK[pic 2]

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EXECUTIVE SUMMARY[pic 15]

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Gold mining, with harsh chemicals, copious waste and a history of destroying ecosystems, is arguably one of the world’s dirtiest industries. It was a precept, which helped build the Canadian miner Barrick into the world’s biggest gold producer, but ultimately forced the shutdown of its most ambitious project - Pascua Lama in Argentina and Chile border. Company faced social license crisis where Barrick considerably failed in working with community and stakeholders by demonstrating to them that it is in everybody’s best interest to develop the Pascua Lama mine. Company makes high profile effort to explore what went wrong and determined to do the “right thing” in order to see the project through.

In this paper I have identified material issues with supporting evidence that would have caused to put Pascua Lama Project on hold.  While acknowledging that there are some more material issues affected this project, this analysis is framed around the community engagement, economic development and water management. It is recommended, company’s high level commitment for responsible mining, supported by a robust governance framework. The following ground level recommendations are presented related to the identified material issues as moving forward strategy.

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INTRODUCTION

Barrick is a Canadian based international gold mining company operating across 5 continents. Company promotes its vision to be “the world’s best gold mining company by operating in a safe, profitable and responsible manner” and articulates the values: Integrity, Respect and open communication, Responsibility and accountability, Teamwork and creating shareholder value.

Pascua Lama is gold, silver and copper mine on the border of Chile and Argentina, in the commune of Alto del Carmen, Province of Huasco in Chile. Canadian mining giant Barrick Gold obtained development license from both the countries for the project. Pascua-Lama underwent a rigorous environmental impact assessment in Chile and Argentina prior to its approval. According to the geographical   landscape of Pascua Lama, most of the mine’s pit is in Chile and 80% of the site including processing and logistics facilities would be in Argentina.

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Despite their initial welcome and more than $8 billion spent on the project’s construction and programs to address environmental and community concerns, strong and organized opposition to the project snowballed.  

Company faced social license crisis where Barrick considerably failed in working with community and stakeholders by demonstrating to them that it is in everybody’s best interest to develop the Pascua Lama mine. Significant environmental concerns popped up from community and environmental groups and mine development was plagued by suspension of environmental permit in 2013.

Company makes high profile effort to explore what went wrong and determined to do the “right thing” in order to see the project through. The question now was: What was the right thing?

CRITICAL ANALYSIS

In order to find reasonable answer to the above question, this report provides analysis of social, environmental and economic issues that are most material to the Pascua Lama Project.

Community Engagement

Business depends on developing and maintaining stable and respectful relationships with the communities near the mines. The success of the project is dependent on long-run societal stability. It is must for business to secure “social license” to operate from the community. The ultimate consequence of not building sound relationship with community might be cancelling the project. The court has suspended the environmental permit of Pascua Lama Project due to strong community opposition. Poor handling of amplified public and emotional perceptions of material hazards; has been dramatically impacted to increase the business risk to the company.  Therefore, poor community engagement has been identified as the one of the most material sustainability issues of the project.

Below excerpts from the case, very well indicate the results of Barrick’s weak approach to the social performance.

“Managers on both Argentina and Chile sides were running their own shows, not talking to each other. The people in charge were on unfamiliar ground but they rarely referred to local expertise”

“Barrick’s community relations staff poorly engages with community and more aggressive outreach is likely needed”

“The people in the valley believe that the glaciers in the mountaintop hold water and release in the dry season and keep rivers flowing. As per leading experts, this not entirely true and ice contributes minimally to the water system. But for the people in the valley, the issue is more emotional than scientific, and Barrick has done little to soothe the disquiet”