The Defeat of Pascua Lama

How local resistance halted construction of a destructive mining project on the Chilean border

March 9, 2016

Mural at the Church in Alto del Carmen: “Our thirst for gold will leave us without water.\" (Photo by Fabiana Li)

High in the Andes mountains, along the border between Chile and Argentina, construction at the Pascua Lama mine is at a standstill. Once presented to investors as one of the largest and most valuable gold mining deposits in the world, Pascua Lama has become a liability for miner Barrick Gold, a cautionary tale for the mining industry, and an unlikely (but still uncertain) victory for anti-mining activists.

Barrick – a Canadian company with headquarters in Toronto and mining operations spanning from North and South America to Africa and Papua New Guinea – halted the Pascua Lama project in October, 2013 after years of local, national, and international opposition. Two and a half years later, Barrick’s critics await the company’s definitive departure while the company hopes for a miraculous recovery that will bring the project out of its long hiatus. It is now considering a “drastic revision” of the project that could see a reduction in the size of the mine and a possible partnership with China’s Zijin Mining Group.

 I have followed the Pascua Lama story since my first visit to the area in 2009, and at a distance from Canada, where Barrick has been the target of protests accusing the company of human rights violations abroad. The long and troubled history of the Pascua Lama project reflects some of the changes that have taken place in Latin American mining over the past two decades, from the mining boom of the 1990s through the rise and fall of mineral prices. The fate of Barrick’s $5 billion investment in Pascua Lama may still hang in the balance, but what is certain is that mineral extraction today brings a new set of economic, social, and political challenges for mining companies. Among them is the growing force of resistance to mining activity, which has brought water, pollution, and the rights of communities to the forefront of debates over resource extraction.

Most notable in campaigns against the project was Barrick’s proposal to “move” the glaciers to make way for the mine. Though the company later abandoned its notorious “Glacier Management Plan,” the glaciers – and their possible destruction by mining activity – captured the public imagination. For mining critics, Pascua Lama offered clear evidence of modern mining’s indiscriminate and often environmentally harmful expansion, supported by economic policies and legal frameworks that made it possible for corporations to go where capitalist enterprises had not gone before. 

Mining’s New Frontiers

In the 1990s, investment in exploration and extraction activities grew significantly in countries like Peru, where neoliberal reforms created a favorable climate for foreign investors and attracted a number of “mega-mining” projects. In Chile, the neoliberal economic model encouraged the participation of multinational corporations in the mining sector, which had been almost entirely nationalized during the government of Salvador Allende. In 1997, the presidents of Chile and Argentina signed the Mining Integration Treaty allowing mining development along the mountain range between the two countries, and made the Pascua Lama project possible. Activist groups like OLCA (Observatorio Latinoamericano de Conflictos Ambientales - Latin American Observatory for Environmental Conflict) warned the public about the creation of a “virtual country” intended to pave the way for other developments, opening up the cordillera to bi-national projects and creating a new territory of extraction.

The Treaty expanded the frontiers of resource extraction beyond national borders (75% of the Pascua Lama project is located in Chile and 25% in Argentina) and into formerly inaccessible or unprofitable locations. At an altitude of between 3800 and 5200 meters— one of the highest altitude mines in the world— Pascua Lama pushed the limits of human labor and technology. Mining operations and machinery were designed for the cold, snow, and high altitude, but mine workers protested against the harsh working conditions and rumors circulated about work-related deaths. In January 2011, construction workers hired by a subcontractor blocked access to a tunnel designed to transport materials between Chile and Argentina to demand better compensation.

Despite Pascua Lama’s difficult geography, technology promised to resolve any challenge to mining expansion. In Chile, two of the biggest challenges are water and energy, resources that are scarce in the country’s arid mining regions. In the North, mining companies competed with local communities for already-scare water resources, highlighting inequalities inherent in the distribution of water rights and exacerbated by water privatization. New mining projects included plans to build desalination plants and transport seawater from the coast – expenses that were justified by the high price of metals during the mining boom. Meanwhile, hydroelectric dams in the South promised to meet the mining sector’s energy needs. However, the proposed construction of dams in ecologically sensitive areas like Patagonia galvanized popular opposition, and brought with it increased environmental awareness and activism.

The most extreme example of technological optimism was Barrick’s proposal to move the glaciers from the mine site to another location with bulldozers and front loaders, using controlled explosives to break up the ice. This proposal, presented in 2001 as an addendum to the project’s Environmental Impact Assessment, only intensified opposition to the project. The Chilean government eventually approved the Pascua Lama project, but with more than 400 conditions – one of them being that the glaciers could not be relocated or destroyed.

To get around the problem, Barrick modified the size of the mining pit, claiming that since the glaciers now lay outside of the mining pit limits, they would not be affected by the project.

At the same time, Barrick representatives and informational materials downplayed the importance of the glaciers, using the terms “ice reservoirs,” “ice fields” or “glacierets” to emphasize their small size and relative insignificance as sources of water.  The strategic use of scientific data and terminology is a common element of corporate public relations campaigns, but it also reveals the profound disconnect that often exists between the views of company representatives and local people.  In 2010, an engineer working at Barrick’s community relations office emphasized in an interview that the amount of water used by the mine would be small. He was adamant that the glaciers were irrelevant in terms of their contribution to the water cycle, and that agriculture uses more water than mining. For him, the problem was not the amount of water available, but how both the company and local residents could manage water resources in a way that would allow mining and agriculture to co-exist. It was the responsibility of the farmers to conserve water and improve the efficiency of their irrigation canals, he implied.

Scarcity and Exploitation in the Huasco Valley

My conversations with residents of the Huasco Valley provided a different view of water from that presented by the company, a view based on the residents’ experiences with chronic water scarcity in an area known for its arid climate and severe drought.

Table grapes grown for export in the Huasco Valley (Photo by Fabiana Li)

In the Huasco Valley, downstream from Pascua Lama, small farmers and large landowners grow grapes primarily for the export market. The table grape industry brings its own environmental risks and injustices (from pesticide use to unregulated labor practices), but agriculture has provided people with a means of subsistence. Farmers that I spoke to anticipated that the mine, once in operation, would destroy agricultural production in the region, leaving them with contamination and depleted sources of water for their crops. According to residents, neither the company’s short-lived employment opportunities nor Barrick’s agreement to pay the Junta de Vigilancia (Water Users’ Association) $60 million over 20 years to improve irrigation infrastructure could make up for the damages that people feared the mine would bring.

The agreement, as well as Barrick’s other investments in the name of “corporate social responsibility” only made Barrick’s critics angrier. Mario, whose small farmhouse and nearby vineyards provided him with a modest but comfortable way of life, described what fair compensation would mean to him:  “They would have to compensate me for what I own, for what my land is worth, for what I’ve invested in it, and for what I will lose in income, multiplied for each year that the mine is in operation.” Of course, he was well aware of the impossibility of this request, and the solution was simple: “Que se vayan” (“Let [Barrick] leave”), he said dismissively.

On my second visit to the Valley in 2012, the mine’s completion date had been pushed back again, but people worried that construction activities were already reducing the quantity and quality of water in communities downstream from the mine. Farmers were noticing heavy sediment loads in their irrigation canals. Vicente wanted me to see the effects on his farm: melon crops destroyed, muddy water, clogged drip irrigation lines, and no one that he could hold accountable for the damage.

That year, a part of the river had dried up, exacerbating people’s fears that the mine’s construction was affecting the glaciers and snowmelt that normally fed the river.

Farmers blamed construction activity at the mine for increased sedimentation in their irrigation water and damage to their crops. (Photo by Fabiana Li)

Activism and the Law

The protection of glaciers and water were central to campaigns against Barrick, and the concerns that activists put on the table also enabled government agencies to demand greater accountability from the company. In 2009, shortly after the start of construction, regional health and water authorities inspected the mining site and detected “unforeseen impacts” on the Estrecho glacier and the extraction of water from unauthorized points. Inspectors recommended a fine for non-compliance with environmental mitigation plans to protect the glaciers, including taking preventative measures to reduce the amount of dust that could cover the glaciers and cause them to melt. In 2013, Barrick was fined 8 billion pesos (about US$16 million), the highest possible fine under Chilean law, for violations to its environmental permit and failure to install a water management system. These legal sanctions corroborated the claims of activists and signaled a more active government role in regulation.

Barrick also faced legal challenges from the Diaguita Huascoaltinos Agricultural Community, indicating the growing influence – and sometimes resolute resistance – of indigenous groups in conflicts over mining activity. The Chilean government legally recognized the Diaguita as a distinct ethnic group in 2006. The group appealed to international law, such as the International Labor Organization’s Indigenous and Tribal Peoples Convention 169, which recognizes the right of indigenous peoples to determine development priorities on their territory. The Diaguita Huascoaltinos Agricultural Community also accused Barrick of violating environmental regulations, including those related to the protection of glaciers. The group’s leaders demanded that Barrick’s license be revoked, and on April 9, 2013, the Court of Appeals in Copiapó considered their claims and ordered a halt to construction work at Pascua Lama. These developments show the growing force of indigenous organizing, sometimes in alliance with environmental movements (despite tensions and contradictions that might exist between them). But grassroots activism has also been infused with a new language of protest and novel forms collective action around the “defense of life” and the protection of water and glaciers.

In a September 2013 ruling, Chile's Supreme Court upheld the company’s environmental permit but required that Barrick construct a water management system in order to continue with the project. In October 2013, faced with a heavy debt burden and the project’s increasing costs, Barrick announced its decision to temporarily suspend the Pascua Lama project.

The End of Pascua Lama?

Barrick’s promises, its challenges, and its ultimate failures reflect the changes that have taken place in the mining industry and Latin America, more broadly. The financial and technological optimism that brought the project to life characterized the region’s “mining boom” in the late 1990s and early 2000s. Political borders were not an impediment, but could be put aside through a bilateral mining treaty. Even glaciers could not stand in the way of extraction – they could simply be moved, or the mining pit limits redrawn. This optimism started to fade as the Chilean and Argentinean governments argued over the distribution of taxes, and the company faced local opposition and international environmental campaigns against the project. An increased level of activism in various parts of Latin America gave greater visibility to water, glaciers, and pollution in debates over resource extraction. In response, governments were forced to weigh public opinion and international pressure with the desire to promote investment in resource extraction. In Chile, Barrick faced fines and sanctions, which may indicate a new level of scrutiny from environmental authorities – or at the very least, the desire to show that the state is attentive to public concerns over the environment.

Ultimately, however, Barrick’s biggest hurdle may be a financial one. The company anticipated it would spend US$3 billion in construction costs, but this estimate rose to US$8.5 billion due to rising labor, material, and energy costs. A decline in gold and silver prices has also made the project less viable, and its future remains uncertain. Pascua Lama could be an anomaly in the mining industry – a failure caused by a series of missteps, misfortunes, and bad investments – but it could also represent a new reality for Latin American mining. Increased (if still inadequate) environmental oversight, pressure from international solidarity movements, and new activist strategies and forms of resistance may not halt extractivism in Latin America, but these developments have already reshaped the dynamics of mining activity in the region.

Fabiana Li teaches Anthropology at the University of Manitoba in Winnipeg, Canada and is the author of Unearthing Conflict: Corporate Mining, Activism, and Expertise in Peru (Duke University Press, 2015).

Like this article? Support our work. Donate now.