Argentina, Chile Fail To Agree On Royalties From Barrick Mine
By Daniel at 2 September, 2008, 7:39 pm
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Argentina, Chile Fail To Agree On Royalties From Barrick Mine
Last Update: 8/28/2008 7:12:19 PM
By Shane Romig
Of DOW JONES NEWSWIRES
BUENOS AIRES (Dow Jones)–A meeting between Chilean and Argentine tax authorities
in Buenos Aires Thursday failed to produce a breakthrough on how to divide
royalties from Barrick Gold Corp.’s (ABX) planned cross-border gold and silver
mine.
Negotiations will continue, Argentina’s Mining Secretariat said in a press
release, although it didn’t say when talks would resume.
Chile says it should get 80% of the royalties because roughly that proportion of
the project is on Chilean soil. Argentina, however, wants a 50-50 division of the
tax payments.
Barrick Gold has suspended the project until the tax issue is settled, and as
spring approaches in the southern hemisphere, hopes are fading that construction
will be able to start this year. Summer provides a window of opportunity to build
at the 4,600-meter-high Pascua-Lama site before harsh winter weather arrives.
“We have been focused for some time on completing the final steps and resolving a
few key fiscal issues in order to begin construction,” Barrick spokesman Vince
Borg said.
Earlier this year, Borg expressed disappointment with the delays. “We have said
that we are disappointed with the lack of progress made on these issues - the
cost of the Pascua-Lama project has increased by about 15% due to the time delays
and the ongoing impact of inflationary cost pressures,” he said.
Chilean authorities, who have fully approved the project, have indicated that the
ball is in Argentina’s court now.
“On the Chilean side, the issue isn’t stuck at all,” Chilean Mining Minister
Santiago Gonzalez said Monday.
With delays continuing and costs rising, there is mounting speculation that the
company may consider moving the project entirely into Chile.
But Gonzalez said the gold miner hadn’t approached the government to discuss that
change.
Such a change could require approval from local environmental authorities and
could delay the project further.
As to modifying the project design and moving some of the facilities to Chilean
soil, Borg said that the company is always looking at alternatives to improve the
project. A new environmental evaluation, if changes are made, would depend on the
scope of the modifications, he said.
In the late 1990s, Argentina and Chile signed a mining integration treaty, and
have since inked several additional protocols regarding specific mining projects.
In 2004, the two governments signed a protocol to specifically address the
Pascua-Lama project, which straddles the Andes. While most of the mine’s open pit
is planned for the Chilean side, the majority of the processing facilities would
be located in Argentina, where the terrain is flatter. In addition, the ore
treatment facilities would benefit from the synergy with Barrick’s nearby
Veladero gold mine in Argentina.
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