THE world's largest goldmining company is indefinitely suspending construction of its troubled mine straddling the Chile-Argentine border, part of a cost-cutting effort that also involves 10 other mining projects around the world.
Restarting the $US8.5 billion ($A9.01 billion) Pascua-Lama mine will depend on a rebound in metals prices and assurances that Barrick Gold can make profits in an uncertain legal and regulatory environment, the company announced on Thursday.
"We have determined that the prudent course - at this stage - is to suspend the project, but naturally we will maintain our option to resume construction and finish the project when improvements to its current challenge have been attained," Barrick chief executive Jaime Sokalsky said in a statement.
Falling gold prices, rising costs and a sagging stock price weighed down by its Pascua-Lama project have plagued the Toronto-based company. Barrick said the suspension will reduce the company's 2014 capital costs by up to $US1 billion.
The company also said 10 other mines around the world were being scaled back, suspended or sold to focus on more profitable production, part of an overall effort to save $US2 billion.
Barrick has already spent $US5 billion on the project being built between glaciers at up to 5,200 metres above sea level. Earlier this year, Chile's environmental regulator stopped construction on its Pascua side of the project, and imposed sanctions citing "serious violations" of its environmental permit.
No such violations were declared in Argentina despite a national law banning mining on or amid glaciers. In Argentina, mining is mostly regulated at the provincial level, and Barrick's operations represent a third of the local San Juan province's economy.
Barrick had hoped to begin production in early 2014, and previously warned shareholders that it might abandon the Chilean side altogether because of construction delays. The bi-national mine was initially expected to be producing gold and silver by the second half of 2014.
While Argentine officials were eager to keep building, most of the estimated 18 million ounces of gold and 676 million ounces of silver are buried on Chile's Pascua side. On Argentina's Lama side, officials have been trying to figure out how to preserve thousands of jobs. The company already scaled back its workforce from 11,000 to 6,000, partly because of the Chile ruling and also because the southern winter's weather makes outdoor construction impossible.
That work force is not expected to grow once the snows melt, and for now the jobs will be limited to maintaining what's already been built, a company official told The Associated Press.
Barrick remains committed long-term to San Juan province, where it plans to invest another $US400 million next year and where the company's Veladero mine, just downhill from Pascua-Lama, still directly employs 3000 people, said Guillermo Calo, the company's top executive in Argentina.
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