Barrick Suffering Big Setbacks In Latin America
Some analysts say that since more than 70 percent of Pascua-Lama's reserves lie on the Chilean side, any permanent ban could effectively kill the project.
Argentina's mining minister, Jorge Mayoral, countered that even without Chile's gold, the project is more than worth the effort.
"It's true that most of the reserves are on the Chilean side, but if we speak about a project of this magnitude and say that at least 30 percent of the reserves are on the Argentine side, then we're talking about a very important quantity of reserves that would guarantee the value of any work unit in the immediate future," Mayoral said.
Andy Kaplowitz, an analyst at Barclays Capital, said in a research note that "we will have to wait to see how this situation sorts itself out, but given that Barrick has already spent $4.2 billion on the project ... and construction is 40 percent complete, we think there is a strong incentive for the developer to press forward with only minimal delays."In the Dominican Republic, meanwhile, the soaring price of gold has the government wanting more from the Pueblo Viejo mine, which has 20 million ounces of gold reserves as well as silver, copper and zinc. Barrick owns 60 percent of the venture and Goldcorp Inc. of Vancouver, British Columbia, owns 40 percent. The companies reopened the mine last year after investing nearly $4 billion, the largest direct foreign investment ever in the Dominican Republic, and have estimated it will eventually pay about $7 billion to the government. But President Danilo Medina and Congress have yet to see any money. They want to rewrite the 25-year contract, which promises royalties only after the two Canadian companies recoup their investment and the venture's profits rise above 10 percent. Barrick's executives "have to change their attitude, because if they don't, the president has told them: 'Either you negotiate or more taxes will be imposed,'" said Ramon Peralta, Medina's administrative minister.
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