The Real Blunder Of Pascua Lama

The Real Blunder of Pascua Lama

by Lucio Cuenca Berger National Coordinator, Latin American Observatory of Environmental Conflicts -- OLCA

26th June 2006

Pascua Lama exists as a bi-national mining project because in the year 1997 the governments of Argentina and Chile signed the "Treaty of Mining Integration" dealing with with the border region along the Andes, and which constitutes the legal framework governing the development of the mining business. Before this treaty, it was not possible to mine this mountainous region because deposits located in Chile in "borderized zones" and in Argentina in "border zones" and/or "security zones," were areas subject to restrictive laws.

The transnational mining companies, Barrick Gold in particular, pursuaded the governments of both countries that it would be beneficial to create a legal instrument to facilitate the mining business in the border regions.

A recent ruling of the 14th Civil Court of Santiago (case # 1912-2001) reversed the mining claims of March of 1997, by which Rodolfo Villar García ceded to mining company Minera Nevada -- subsidiary of Barrick Gold in Chile -- the rights to properties where the Pascua Lama mine is being constructed. This brings the thorny problems of this complex conflict to the fore. The judge completely nullified the contract between Villar and Barrick Gold, and ordered the return of rights of ownership in the properties Amarillo Norte and Tesoro (where Pascua Lama is located) to Rodolfo Villar.

Those of us opposed to the Pascua Lama project - no matter who may be its owner - understand that this is a property dispute between miners and provides only a temorary setback to mining operation. It isn't the end of the story. Take the declaration by Villar's lawyer, Hernán Montealegre, that, "if there is an interesting offer, this possibility will be examined by Mr. Villar and I don´t think that Barrick would commit suicide and has to be ready to pay something that comes near to the real value of this property and clean up the shameful image that it's swindled a person by paying them $10,000 pesos and violating the Constitution."

What would really constitute a bigger obstacle for Pascua Lama is the implications of a ruling on some of the legal points generated by the Binational Mining Treaty with Argentina to concretely facilitate development of the bi-national project. The Mining Treaty establishes that, in order to have operations along the border, the parties need to sign Additional Specific Protocols, where the "area of operations" and the procedures are determined for each project.

In the case of Pascua Lama, this protocol was signed and set into law by the Decree of the Ministry of Mining on December 11 of 2004. In this protocol -- among other things -- the "area of operations" is detailed, limits are set and Nevade Ltd Mining Company's 193 mining claims ("already constituted") and the eight "in process" are identified. In this list there are "Amarillos" of 3,600 hectacres and "Tesoros" of 2,100 hectacres. These mining claims are those which were returned to Rodolfo Villar, and one could thus conclude that the decree contains serious flaws and should be itself nullified.

It is painfully obvious that the Chilean government has enacted this Decree with such defects. One might think that the government didn't know. But this case has a long history which the authorities could not ignore. For example - in the event that an order was decreed over the disputed claims which "prohibits the signing of acts and contracts and/or encumbrences and/or transferrals over each of the beforementioned mining properties." This would make it sufficient to request a certificate of ownership which is valid in the mining district of Vallenar. Our authorities, when they want to make things easier for the "big investors," leave certain matters aside, and other matters pass easily above the law.

Focusing on the principle of invalidation, Article 53, and following articles of the Administrative Arocedures (Law 19.880) which regulates the acts of the authorities under the Decree, it is clear that the decrees should be nullified where there are serious flaws.

This could be the moment to start to rectify a series of other irregularities and illegalities which have been denounced, but which the governments in power has, up to now, ignored in the face of pressure from the transnational mining companies.

It is now up to the Ministry of Mining - and President Bachelet - to put up or shut up