Gold Lacks Luster In Argentine Town Residents fear pollution from proposed mine

Gold Lacks Luster In Argentine Town Residents fear pollution from proposed mine

By Reed Lindsay, Special Correspondent Newsday Inc.

July 13, 2003

Esquel, Argentina - A billion dollars' worth of gold is buried in the snow-capped mountains cradling this quiet town deep in Patagonia.

Like most people here, Lucio Cheoque wants it to stay there.

A year ago, Meridian Gold, a Nevada-based mining company, paid $320 million for the rights to build an open-pit gold and silver mine less than five miles from town. The project won support across officialdom: the governor, the mayor, the city council, the chamber of commerce, the influential construction workers' union.

The company promised to provide 400 jobs during the eight- to nine-year life of the mine and to inject millions of dollars into the struggling local economy. It would use the newest technology to prevent environmental contamination.

Lucio Cheoque, a 70-year-old retired ranch hand, did not believe a word of it.

"It's a lie," spit Cheoque, as he ambled in tall black boots, flared gaucho-style pants and a wide-brimmed brown hat down a mud and rock street on the edge of town. "They're going to pollute our water. Apart from that, they're going to take away the gold and silver. Just like the politicians, they're shameless."

After more than a decade of economic liberalization and untrammeled foreign investment ended last year in the worst depression in Argentina's history, its people have wised up - even in small town Patagonia.

The mine sparked a citywide revolt that has sent the government reeling and forced Meridian Gold to stop drilling, perhaps permanently. Deeply distrustful of their political leaders and suspicious of foreign business interests, thousands of locals have marched in massive demonstrations never seen before in Esquel. In a non-binding plebiscite held March 23, more than 81 percent voted against the mine.

Few expected the tidal wave of opposition in this conservative town of 30,000, least of all Meridian Gold, whose stock price dived from $20.70 a share in September to $8.87 in April. It closed in New York at $12.03 on Friday.

"We have the government on our side," said Deborah Liston, the company's investor relations manager, in a telephone interview. "It's the people and the community that's created the difficulties."

These difficulties began in October, when a few dozen locals met at a school. They worried that the mine might contaminate water supplies, especially after hearing that it would use truckloads of cyanide to cull the gold from pulverized rock.

The process is standard in gold mining, and Meridian Gold assured residents that care would be taken to prevent spills and to dilute the spent cyanide to harmless concentrations. But the word "cyanide" was enough to ferment worry, especially for middle class locals who had come to the pristine wilderness to escape the sprawl and crime of Argentina's cities.

Soon, hundreds were gathering to discuss how to fight the mine. The meetings became known as the Assembly of Self-Convoked Neighbors of Esquel, a sort of unofficial town hall that scorned affiliation with political parties and the government.

"This wouldn't have happened 20 years ago," said Jorge Oriola, 51, a goateed local historian. "In every sense this has been an anti-globalization movement: it is against politicians and official policies, against a multinational company, in defense of the environment, and fundamentally, it is an attempt to conserve what we have."

Many locals questioned the purported economic benefits. Privatizations and other free market policies during the 1990s have left a bitter taste for many Argentines who say their politicians let multinational corporations rake in profits while the economy collapsed.

"It's pretty clear to us that we can't count on the government to regulate," said Pablo Quintana, 38, a local newspaper reporter and a prominent figure in the town assembly.

The plebiscite reversed the political winds. The city council and mayor have since banned mines that use toxic substances. And the provincial legislature suspended open-pit mining until a special commission designates zones in which it will be permitted.

Still with 60 percent of people in some neighborhoods unemployed, a small minority backs the mine. "I've got no job, no firewood," said Pedro Herrera, 61, leaning on a rickety plank fence outside his cinderblock and sheet metal house. "We need work."

Meridian Gold officials say they will go ahead with the mine after winning the community's support. But opponents say it is too late. They have rejected calls for a dialogue with the company, and are calling on the city council to pass another ordinance that would expel Meridian Gold from town.

Copyright © 2003, Newsday, Inc. Reproduced with permission