SAN JUAN, Argentina(Reuters) - Barrick Gold Corp failed to complete improvements to the Veladero mine in Argentina that could have prevented the third spill of cyanide solution in 18 months, leading to eventual sanctions for the world’s biggest gold miner, a judge told Reuters.
Barrick appears to have missed deadlines on three orders from local authorities, including replacing pipes, before the March 28 spill, said Pablo Oritja, the judge overseeing cases related to Veladero in the nearby town of Jachal, where “Barrick out” graffiti lines the streets.
“If they had changed pipes as ordered, the decoupling (of pipes) would not have occurred,” Oritja told Reuters on Friday, the day after meeting the head of the mining police in western Argentina’s San Juan province, where Veladero and Jachal are located.
The findings “will eventually end in sanctions against the company,” said Oritja, judge at the Judicial Court of Jachal.
The investigation into past negligence, along with the provincial government’s review of Barrick’s mine improvement plan, could delay the Canadian company’s goal of restoring one of its top five mines worldwide to normal production in June.
Barrick (ABX.TO) (ABX.N) has followed established regulatory procedures to comply with the requirements issued by San Juan authorities following the recent spills at Veladero, spokesman Andy Lloyd told Reuters in response to Oritja’s comments.
Sanctions would come from the San Juan government and could include a fine and restrictions to operating Veladero. Oritja, who indicted nine current and former Barrick executives accused of negligence after Barrick’s first spill in 2015, could also levy more charges if he determines cyanide posed harm to people or the environment.
San Juan’s government suspended the addition of cyanide to Veladero’s gold processing facility after the latest spill, and gave the mine an ultimatum to overhaul safety and environmental operations. Cyanide is used to separate the gold from ore.
In September, all operations at Veladero were temporarily shut down, adding to Barrick’s troubles in South America, where its Pascua-Lama project on the Argentine-Chile border has been on hold since 2013 due to environmental issues, political opposition, labor unrest and development costs.
San Juan province Mining Minister Alberto Hensel says the repeated Veladero spills may result in a fine higher than the $9.8 million Barrick paid after the first spill, when a United Nations agency said 1 million liters of solution containing cyanide spilled into a river providing drinking water.
The spills in September 2016 and March of this year were smaller and contained in the mine site, Barrick and the San Juan mining police said.
Still, Oritja ordered blood tests last month to check for health problems related to cyanide in residents of Jachal, a town of mostly mud homes 150 kilometers from Veladero that remains poor despite its proximity to Argentina’s largest gold reserves.
Lloyd said there have been no health risk to communities or the environment, though the company seeks to improve transparency and relations with nearby towns.
The incomplete orders referenced by Oritja were given in December and February and involve fixing Veladero’s pipe system, a source at the San Juan government told Reuters.
Hensel said Barrick also failed to complete an “urgent review” of the pipe system before the third spill. Lloyd said an engineering report on the pipes was completed “in recent weeks.”
Lloyd said Veladero had 2,685 active environmental obligations and a compliance rate of 99 percent, and was taking action on the one percent.
“This is a strong track record when you step back and consider the number of permits and obligations involved, and the fact that at any mine, there is always an ongoing process to respond to and implement regulatory actions that take time to complete and involve ongoing discussions with regulators,” Lloyd said.
Barrick presented San Juan province with a new plan in late April, Hensel told Reuters, after an initial one was rejected. All proposed work would need to be approved and completed before restrictions are lifted, he said.
Primary repairs, included in a $500 million five-year investment plan, should be finished before a recently announced sale of half of Veladero to Shandong Gold Mining Co (600547.SS) is finalized, Lloyd said, though Shandong will share future costs.
Barrick could complete the work in May and is targeting normal operations in June, depending on local government approvals and the resolution of all legal matters, Lloyd said.
In addition to investigations from the San Juan government and Oritja, Federal Environment Minister Sergio Bergman has asked another court to halt all operations at Veladero pending repairs.
“The repeated incidents imply negligence,” Bergman said in an interview. “Barrick did not comply with what was demanded.”
Additional reporting by Maximiliano Rizzi and Nicolas Misculin; Writing by Caroline Stauffer; Editing by Mary Milliken