Thursday, November 22, 2007

Barrick Gold Corporation abandons mine in Argentina citing RABID LOCAL OPPOSITION – cites rising Resource Nationalism as cause

Translation: The World against Barrick Gold / Here are the guilty henchmen of the bi-national Pascua Lama mining project: Mulet, Frei, Trivelli

Risky business

[Thu, 22 Nov 2007] IT’S A TWO-HOUR charter flight to get to Cerro Vanguardia, the AngloGold Ashanti gold mine tucked away in the nether regions of Patagonia, Argentina. At the mine the landscape is oddly reminiscent of the Karoo.

St Julian, 150km to the east, is the nearest settlement: a craggy, windswept town that derives much of its employment from AngloGold’s open pit operations. While there are benefits for places such as St Julian from the mining that impacts on its community, other provinces in the country are turning their backs on the prospect of digging for minerals.

That’s just one element of the growing trend known as resource nationalism. Central and provincial government, local communities plus pressure groups – either working together or in isolation – are harassing resources companies: in general, lobbying for a larger share of revenues or raising environmental concerns. In Argentina, the La Rioja, Rio Negro and Tucuman provinces have totally banned open pit mining.

Earlier this year the provincial government of Mendoza province, known for its vineyards and ski resorts, banned open pit mining. The ban was short lived but sent up a warning flare for those mining in Argentina.

The opposition to mining in some areas isn’t necessarily resource nationalism in its true sense: which is to say, governments leveraging their power to gain more for the country. But it is a reflection of a growing trend, where communities and governments are increasingly aware of how they can influence what happens around them, on occasions shunning investment in their local resources and at other times welcoming it but demanding a larger slice of the pie.

In March, Barrick Gold said it would leave the site of its proposed mine in the Famatina Mountains in the Argentine province of La Rioja after rabid local opposition. Provincial governor Angel Maza, which the local opposition claimed was too close to Barrick, was suspended.

Such experiences haven’t deterred mining companies in their quest for resources in Argentina. AngloGold continues to invest in Cerro Vanguardia. It’s lifted by $1m its five-year, $20m exploration budget as it looks to expand production past the mine’s current life of 2018. Other companies continue working on various projects and diversified resources company Xstrata may start developing a new copper mine in Argentina’s San Juan province in year a or so.


Power sees resource nationalism in its many forms and as part and parcel of current resources business. He says integration into and acceptance by the local community is key for any successful Brownfield and, in particular, Greenfield mining operation in many emerging markets.

A number of South American countries (apart from Argentina, where most of its indigenous people were wiped out by the Spanish invaders) have large, indigenous under classes. As democracy grows many politicians in South American countries aim to represent those communities, turning to them increasingly for support.


The speed of Chinese growth and that country’s emergence as an economic and increasingly political powerhouse also plays a part in resource nationalism. “Chinese demand for resources is growing exponentially and China’s prepared to write cheques to obtain access to resources. The price at the margin isn’t something they’re overtly concerned about.”

Says Powers: “They’re bringing a can-opener – in terms of funding for infrastructure projects, often rail and road links that would enable any mine to transport its minerals from isolated areas to market. I suspect when the minerals become available China (where it’s invested in infrastructure, etc) will have the first right of refusal.”

Here is the full article.