(Reuters) - Barrick Gold Corp (ABX.TO) said on Thursday it will halt development of its Pascua-Lama mine in South America indefinitely - a surprise reversal on a project that has already cost the world’s largest gold miner more than $5 billion.
Pascua-Lama, which the company had been counting on to provide a large share of its future gold production, has been plagued by political opposition, permitting issues, labor unrest, cost overruns and a sharp drop in bullion prices.
Here is a timeline of key developments at Pascua-Lama over the past 16 years:
September 1996 - Barrick, stepping up Argentine prospecting, considers a developing gold mine straddling Argentina’s border with Chile, high in the Andes Mountains. One of Barrick’s chief targets is the Lama prospect, inside Argentina, just across the border from its Pascua project in Chile.
December 2000 - Barrick says it will delay the start of full-scale construction on the Pascua-Lama project due to depressed gold and silver prices. The capital cost of the project is pegged at $1.2 billion. Previously, Barrick had said it expected Pascua-Lama to contribute a full-year’s production of 800,000 ounces of gold in 2003.
July 2004 - Barrick says it is proceeding with the development of Pascua-Lama despite uncertainty about a planned new mining tax in Chile. It says it will be seeking permits and finalizing fiscal and tax matters over the next 18 months and then begin a three-year construction schedule. The mine is expected to cost between $1.4 billion and $1.5 billion to build.
June 2006 - Chilean environmental authorities approve the Pascua-Lama project despite the opposition of environmental groups concerned about water pollution. The mine’s capital cost is still pegged at $1.5 billion.
December 2006 - Pascua-Lama gets environmental approval from Argentina.
May 2009 - Barrick gives the long-awaited final green light to Pascua-Lama after Chile and Argentina settle a dispute over how the project will be taxed. The company estimates construction costs at $2.8 billion to $3.0 billion.
July 2011 - Barrick raises its forecast for capital expenditures at Pascua-Lama by about 40 percent to between $4.7 billion and $5 billion. The company blames rising costs on higher labor, material and energy costs.
July 2012 - Barrick says the cost of building Pascua-Lama will be much higher than expected, 50 to 60 percent above the top end of its earlier estimate. The new price tag could be between $7.5 billion and $8.0 billion, but a full review is not yet complete.
Barrick blames the higher costs on the decision to manage construction in-house rather than hiring an outside contractor, a move that had been meant to keep costs down.
November 2012 - Barrick nudges back the production date for Pascua-Lama to the second half of 2014 from its previous target of mid 2014, and increases its cost estimate to between $8 billion and $8.5 billion from an earlier estimate of $7.5 billion to $8 billion due to construction delays and higher labor and project-management costs.
April 2013 - Barrick halts construction at Pascua-Lama after a local court orders development be suspended while it weighs indigenous communities’ claims that the project was destroying nearby glaciers and harming their water supply.
May 2013 - Chilean authorities order Barrick to halt construction at Pascua-Lama and fine the company $16 million, citing serious environmental violations.
July 2013 - A Chilean appeals court suspends the construction of Pascua-Lama until Barrick builds infrastructure to prevent water pollution, and orders the mine’s environmental permit be reviewed.
October 2013 - Analysts and shareholders expect Barrick will likely raise the cost estimate for Pascua-Lama, possibly to between $9 billion or $10 billion, when it reports third-quarter results. But there are also market concerns that the total capital cost estimate could be well in excess of $10 billion. Instead Barrick says it will halt development indefinitely.
Reporting by Nicole Mordant in Vancouver and Allison Martell in Toronto; Editing by Peter Galloway