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ARGENTINA: Growing Alarm over Mining Boom

Marcela Valente

BUENOS AIRES, Jan 26 2006 (IPS) - The number of mining ventures in Argentina grew 400 percent in just two years, concentrated in the western part of the country along the border with Chile, and the situation has environmentalists and community organisations up in arms.

Driven by a strong rise in international prices for metals and by favourable laws, investment in exploration and development of new mines rose twofold between 2003 and 2005.

A record number of drillings also occurred in that period, indicating the country’s potential in mineral resources.

There are mining projects in all of the provinces along or near the border with Chile (a country with a long mining tradition and strong minerals industry): Jujuy, Salta, Catamarca, Santiago del Estero, La Rioja, San Juan, Mendoza, Neuquén, Chubut and Santa Cruz.

But the largest mines are found in San Juan, 1,000 km west of Buenos Aires.

“To achieve this boom, it was very important to keep in place the rules of the game that were established in the 1990s, and to modify them only for the sake of improvement, because these investments are both high-risk and long-term,” José Herrera, a communications official in Argentina’s Secretariat of Mines, told IPS.

Foreign mining companies enjoy numerous tax incentives – on profits tax, tax on assets and import duties – as well as fiscal stability (which means tax rates basically remain unchanged for 30 years) in Argentina.

In addition, royalties on mineral exports are not paid to the national treasury, but to the provinces where the companies operate. And the royalties must not exceed three percent of total revenues, according to the Mining Code and other laws and decrees regulating the sector.

Global metals prices have soared over the last few years: by nearly 90 percent since 2001 in the case of gold, and 80 percent for silver.

Gold and silver are the most sought after minerals in Argentina. But their extraction requires the use of cyanide, which poses a threat to underground water sources.

In the tourism and ski resort of Esquel at the foot of the southern Andes mountains in the province of Chubut, more than 80 percent of voters rejected a huge open pit mine venture by the Canadian company Meridian Gold, in a non-binding referendum organised by local residents in 2003.

But Herrera played down the risks to the environment and tourism, saying “The minerals are high up in the mountains, far from urban areas.”

The Swiss-Canadian joint venture Bajo La Alumbrera is responsible for one big gold and copper-mining project in the northwestern province of Catamarca.

The company dynamites rock formations in the mountains, and then uses acids to leach the heavy metals out of the tailings. The mineral concentrate is transported by slurry pipeline to another province, Tucumán, and is taken from there by train to Buenos Aires.

The mine, which has been operating for 10 years, was the first major mining project to benefit by the legislation passed in the 1990s. Its defenders point to the jobs that it has generated, but its critics complain that it has polluted the surrounding water, soil and air.

In the same area, a new mining venture, but three times bigger, has again divided local residents, many of whom have organised to fight the project.

Supporters argue that the new mine will create jobs and bring new roads, electrical power and piped water to a previously unsettled area.

“For each job created by mining, between four and five others are generated in construction and services provided by the mine’s suppliers,” said Herrera.

But there are no local refineries or factories to process the minerals, something that would require the presence of many more mines, according to mining companies. That means Argentina’s power industry must import processed copper from Chile, while Bajo La Alumbrera exports unrefined copper.

Herrera dismissed the risks of pollution, saying the industry is governed by specific laws on the environment, which are basically preventative in nature and require the presentation of detailed impact studies before any stage of a project is authorised to go ahead.

In Herrera’s view, some of the criticisms from environmental and citizen groups are “extremist” and arise from a “lack of information.” And in any case, he said, if problems occur, the provinces, as the owners of the natural resources, will enforce the laws and oversee their implementation.

But that is precisely the biggest fear of those who have sounded the alert over the growth of the mining industry.

The provinces, hungry for investment, “adapt” the laws and regulations to the interests of corporations, and exercise basically no oversight with respect to many of the mines, Raúl Montenegro, director of the Environment Defence Foundation (FUNAM), commented to IPS.

“Career officials in the area of the environment sometimes even ask us to block some of these projects because they know that the authorities will not take any action against environmentally harmful ventures,” said the activist.

Montenegro, who was awarded the Right Livelihood Award – also known as the Alternative Nobel Prize – in 2004, pointed to a case in the province of San Juan, where two large mining projects, in Veladero and Pascua Lama, are in the hands of Canadian mining giant Barrick Gold.

A large part of the infrastructure at the Veladero mine, a project that is already well underway, will also be used by Pascua Lama, which is three times larger and extends over the border into Chile.

Both open pit mines will produce gold and silver, using cyanide to extract the minerals from the surrounding ore.

“Veladero and Pascua Lama will mainly affect the river basins that serve as water sources for the valleys of Huasco in Chile and Jachal in Argentina,” said Montenegro, who provided the environment commission in Chile’s lower house of Congress with a report last year assessing the impact of the mines.

The company announced that in the case of Pascua Lama it would have to “move” glaciers in order to get at the underlying minerals. But the environmentalist said the concept of “moving” a glacier is absurd, and added that “They already destroyed glaciers when they built roads leading to Veladero.”

Local residents in the province of San Juan have protested that while the minerals are mainly located on the Chilean side of the border, the tailings pond, which will store the toxic waste that remains after the minerals have been removed from the ore, will be built in Argentina, and in an area of seismic activity.

The epicentre of the biggest earthquake ever registered in Argentina, in 1944, was in the province of San Juan. The catastrophe left nearly 10,000 dead and 20,000 injured, and around 30,000 homes were destroyed.

Montenegro also pointed out that the mines would pollute portions of the San Guillermo Biosphere Reserve, which was declared a protected area by the United Nations Educational, Scientific and Cultural Organisation (UNESCO).

The protected status was actually lifted for parts of the reserve in order to build roads and other infrastructure for the Veladero mine, he added.

And in response to arguments that the mines will generate jobs, Montenegro said most of the work will only be temporary, such as short-term stints in construction, while other jobs, especially in agriculture, will be lost as a result of the mining ventures.

Many farmers in the valley near Pascua Lama were convinced to go along with the project when Barrick Gold offered to set up a large “reparations fund” to provide compensation in case they suffered any damages from the mines.

But Montenegro noted that the fund would become a reality only if the mining ventures go ahead as planned, without any setbacks caused by opponents. And compensation payments would only be forthcoming after damages were proven beyond a doubt.