Argentina tells Barrick to overhaul Veladero gold mine

BUENOS AIRES/TORONTO (Reuters) - Argentina mining officials told Barrick Gold Corp it must overhaul environmental and operating processes at its Veladero mine, following last week’s cyanide solution spill, while the country’s environment ministry asked for a total suspension of operations, according to statements on Friday.

The Veladero mine camp, one of Barrick Gold Corp's five core mines, near the city of Jachal, Argentina, is pictured on September 15, 2016. REUTERS/Sergio Leiva/File Photo

National and provincial officials told Barrick executives at a Thursday meeting that the Canadian company’s ongoing business in the country hinges on a new working plan for the open pit mine, the country’s energy minister said.

A pipe carrying cyanide solution ruptured at the open pit mine on March 28, the third incident at the mine in 18 months involving cyanide-bearing solution. A Barrick spokesman said the meetings were constructive.

“We have told the company to change their standards and invest, modify the project’s engineering to ensure these incidents never happen again,” Energy and Mining Minister Juan Jose Aranguren told Reuters in an interview on Friday.

He said the company’s concession to operate the mine would have been at risk if it had not agreed to an external audit on Thursday.

The Thursday meeting, which also included Barrick President Kelvin Dushnisky and the governor of San Juan province, came as Barrick confirmed a Reuters story on a deal with China’s Shandong Gold Mining Co, which bought a 50 percent stake in Veladero for $960 million.

Barrick, the world’s largest gold miner, has been temporarily restricted from adding cyanide to the mine’s gold processing facility. The Toronto-based company, which counts Veladero as one of its five core mines, said no material impact was expected on the mine’s projected 2017 production.

Barrick’s work plan should include “the complete re-engineering of the operational and environmental processes and standards of the Veladero enterprise,” a statement from the San Juan government said.

“We have held constructive meetings with government representatives in recent days and have agreed on a path forward that addresses their concerns,” said Barrick spokesman Andy Lloyd.

Aranguren said the province would make any decision on an eventual fine for Barrick but had the full support of the national government.

Separately on Friday, Argentina’s environmental ministry asked a federal court to halt all activities at Veladero, “until there is a guarantee that there will be no environmental damages,” it said in a statement.

Operations at the high-altitude mine were temporarily suspended last September, after falling ice damaged a pipe and spilled some ore saturated with cyanide solution over a raised bank.

Additional reporting by Maximiliano Rizzi, Maximilian heath and Hugh Bronstein in Buenos Aires a; Editing by Marguerita Choy and Matthew Lewis