"The mining industry should be studying strategically what is happening with Barrick in order to avoid future headaches"
The mining industry in Chile is experiencing a complex scenario that includes falling copper prices, increasing operational costs and the tightening of borrowing conditions.
On top of that, a fourth factor that miners are facing is the staunch opposition that local communities are mounting against some of the most emblematic projects, including Barrick Gold’s Pascua Lama, and Codelco’s Andina 244 expansion project.
So who’s to blame? Is the mining industry guilty of submitting deficient studies for evaluation and leaving itself open to a barrage of criticism? Or is the evaluation system itself at fault?
BNamericas spoke with Alex Godoy, professor at Chile’s Universidad del Desarrollo, to learn his take on this issue, and whether or not the sustainability factor is being given due consideration by the country's mining industry.
BNamericas: How do you see the situation the mining industry is facing when it comes to dealing with environmental or sustainability issues?
Godoy: I don't think the mining industry is taking all factors into account when dealing with sustainability issues because, at an executive level, the concept of research & development is not being considered for environmental purposes. And that is something that you see in the kind of professionals that they hire to conduct these studies.
The type of professionals that the mining industry is hiring, for environmental purposes, are mostly engineers whose role is to avoid, limit or solve issues of pollution, but not in the design and the R&D of areas that are critical for the industry’s competitiveness.
BNamericas: Is that reflected in the quality of the studies that are submitted for environmental evaluation?
Godoy: I echo the comments made by the head of the environmental authority SMA a few weeks ago when he said that the quality of the studies submitted is not good.
BNamericas: Why is that?
Godoy: I think there are two factors. One is to do with the quality of the professionals that miners hire to conduct the studies. I think that they shouldn't just be specialists or technicians, they should have a higher level of preparation [in sustainability issues]. And two, I think a number of companies have chosen to cut corners on this issue over fears that the project's cost will increase and the level of return will not be as high as they expect.
The sum of these two issues leads to the "judicialization" of the projects, which in turns leads to even higher costs. A well developed environmental study from its inception shouldn't have to be "judicialized."
BNamericas: Do you think the existing institutional framework is adequate to meet current environmental and sustainability needs?
Godoy: I think it would be premature to introduce any changes to the system. I mean, the SMA and the environmental tribunals were only recently created and they need time to adjust.
Let's leave the institutions alone and see how they work in their first year to consider whether or not introducing any changes.
BNamericas: Local communities have taken the lead role to stop projects they oppose. Do you think this trend will continue?
Godoy: Within community opposition, there are valid criticism points, but there are also some who have taken advantage of it. I've seen cases in which some of the critics lack any grounds, but miners fall into the trap and agree to provide a number of benefits in order to avoid issues later. And that's when you enter into a vicious circle.
BNamericas: Barrick Gold's Pascua Lama has become a sort of symbol of the situation, as the project has been paralyzed over and over again due to environmental and social concerns. Do you see that happening to other projects, for instance, in the case of Codelco's Andina 244 project?
Godoy: I think all miners should be learning from the mistakes Barrick has made. The issue is whether or not the professionals in charge of the project have the knowledge to understand what's really happening.
I think the mining industry should be studying strategically what is happening with Barrick in order to avoid future headaches.
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