UPDATE 4-Chilean court suspends Barrick's Pascua-Lama mine project
* Court orders environmental permit be reviewed * Indigenous groups say project hurts water supply, glaciers * Chile environmental regulator also suspended gold mine By Erik Lopez SANTIAGO, July 15 (Reuters) - A Chilean appeals court on Monday suspended Barrick Gold Corp's controversial Pascua-Lama gold mine until the company builds infrastructure to prevent water pollution, and ordered the mine's environmental permit be reviewed. In April, the Copiapo Court of Appeals temporarily and preventively froze construction of the $8.5 billion project, which straddles the Chile-Argentine border high in the Andes, while it examined claims by indigenous communities that it has damaged pristine glaciers and harmed water supplies. On Monday, a three-judge panel of the appeals court, in a unanimous decision, ordered a freeze on construction of the project until all measures required in the government's environmental license for adequate water management, "as well as urgent and transitory measures required by the environmental regulator," are adopted. Chile's environmental regulator had already suspended Pascua-Lama, citing major environmental violations, and asked Barrick, the world's top gold miner, to build water management canals and drainage systems. "Barrick is committed to operating at the highest environmental standards at all of its operations around the world, including at Pascua-Lama, and is working diligently to meet all regulatory requirements at the project," the Toronto-based company said in a statement on Monday. The court ruling also ordered Chile's environmental assessment authority (SEA) to review the project's environmental license. While the suspension is broadly in line with the freeze already imposed by the environmental regulator, the request that the project's permit be reviewed sets the stage for an additional, and protracted, administrative review. It could take anywhere from six months to two years to review the license, given the novelty of the procedure and the project's complexity, said Luis Cordero, a law professor at the Universidad de Chile. "This is a new process, there's an obligation to inform the community, it's possible to make fresh observations and it's possible to appeal again," Cordero said. "Pascua-Lama has a long road ahead." OUTLOOK UNCLEAR Barrick or the indigenous Diaguita community now have days to appeal the ruling to the Supreme Court. A source close to the company said Barrick is not likely to appeal the decision. The Diaguitas could contest the ruling if they deem the measures imposed by the court to be too weak, and could potentially ask the top court to revoke Barrick's permit, lawyer Lorenzo Soto told Reuters. "If we appeal it would be because the safeguards as ordered aren't sufficient," Soto said. Additional measures include the order that all data on nearby glaciers be presented to the new environmental regulator (SMA). The court also ordered that the regulator survey the project at least once every six months. If the issue is appealed to the Supreme Court, a decision would be likely this year, but it is tricky to anticipate how the top court might rule on Pascua-Lama, originally forecast to produce 800,000 to 850,000 ounces of gold per year in its first five years of full production. Last year, the Supreme Court suspended a key permit for Canadian miner Goldcorp Inc's El Morro copper-gold project and rejected the planned $5 billion Central Castilla thermo-electric power plant. But it cleared the way for the unpopular HidroAysen hydro-power project. A full court-ordered halt of the project would be a major hit for Barrick, since 80 percent of the metal reserves are on the Chilean side of the project. It would also be a further blow to Chile's business-friendly reputation. Several big mining and power projects have faced setbacks in recent months in Chile, the world's No. 1 copper producer. Around 60 percent of Chile's export revenue comes from the metal. Although Pascua-Lama still appears at risk, environmental regulator SMA, which monitors projects that have been approved, told Reuters it should not face a permanent block if Barrick meets all the requirements. The regulator said the earliest Pascua-Lama could be reactivated is one to two years. Even so, Chilean courts have appeared increasingly open to lawsuits from environmental or social groups against mega projects. Many in the economically stratified country feel mining profits have bypassed them and hurt the environment and are increasingly taking their demands to court. Climate change has shrunk Andean glaciers between 30 and 50 percent since the 1970s and could melt many of them away altogether in coming years, according to a study published in January in the journal The Cryosphere. Barrick said last month it is slowing construction at Pascua-Lama as it looks to rein in spending, which is already billions of dollars over budget. It said it would re-sequence construction to target first production by mid-2016, deferring some $1.5 billion to $1.8 billion of planned capital spending in 2013 and 2014. Barrick's U.S.-traded shares closed up 0.8 percent to $15.06 on Monday.
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