UPDATE 1-Chile court freezes Goldcorp El Morro mine to weigh appeal

Fri Nov 22, 2013 4:34pm EST

SANTIAGO Nov 22 (Reuters) - A Chilean appeals court has preventively frozen Goldcorp's El Morro copper and gold mine while it weighs an appeal by indigenous communities, in a fresh setback for the troubled project.

The roughly $3.9 billion mine had been given the green light last month, after Chile's Supreme Court froze its environmental permit last year until the company fully consulted the local Diaguita community.

The Diaguita say the consultation, based on an International Labor Organization convention, was not properly conducted. They also say the mine is planned on what they deem their sacred ancestral land and fear it could pollute a local river.

El Morro, 70 percent owned by Goldcorp and 30 percent by New Gold, had been due to begin operations in 2017.

Goldcorp did not immediately reply to request for comment.

The company said in October that it "will now carefully consider the most appropriate next steps it will take to develop the El Morro project, with the aim of satisfying the long-term needs of all interested parties."

El Morro is one of several mining and power projects that have suffered setbacks in Chile, the world's No. 1 copper producer, where environmental and indigenous groups are increasingly taking their complaints to court.

One of the most emblematic cases is the Pascua-Lama mine of fellow Canadian miner Barrick Gold Corp's. The mine straddles the border with Argentina and is close to where El Morro is planned. Barrick said last month it was shelving the controversial gold project indefinitely.

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