Regulators in Chile ordered the permanent closure of Barrick’s Pascua Lama Gold Project on their side of the border. This is very bad news for Barrick because the majority of gold mine is located on the Chilean side of the project. The massive Pascua Lama Gold Mine straddles the border and is situated in both Chile and Argentina.

According to Barrick’s mining plan, the large open-pit mine would be located predominantly in Chile, while the processing plant would be constructed and operated on the Argentinian side. However, after years of protest by locals through government agencies as well as serious environmental concerns, on January 17th, the SMA, the Chilean Environmental Superintendence ordered the permanent closure of Barrick Gold’s Pascua Lama open-pit gold mine project and imposed a fine of approximately $12 million on the company.

Now, Barrick’s official response was quite interested indeed:

The Pascua-Lama project is currently operating under a temporary closure plan in Chile. During this period, the Company has continued to manage all aspects of the project in a responsible manner.

The sanction is part of a re-evaluation process ordered by the country’s Environmental Court in 2014 and relates to historical compliance matters at the Pascua-Lama project. The revised sanction includes a reduction of the original administrative fine imposed by the SMA in 2013, from approximately $16 million to $11.5 million. Based on a preliminary review of the resolution, the SMA has not revoked Pascua-Lama’s environmental permit (RCA) but has ordered the closure of existing facilities on the Chilean side of the project, in addition to certain monitoring activities. The Company will complete a detailed analysis of these requirements and will provide further details in due course.

For new readers, Barrick is the largest gold mining company in the world with annual production over five million ounces per year. There are two interesting aspects of Barrick’s response to Chile’s SMA mine closure.