Chubut paves the way for open pit mining

The mine zoning bill in Argentine province Chubut was enacted on Thursday by governor Mario Arcioni after the legislature approved it with 14 votes in favor and 11 votes against. 

The bill will determine in which zones of the province and under what conditions mining can take place, and opens the door for the development of the Navidad open-pit silver project (pictured) by Canada’s Pan American Silver. Open-pit mining and the use of cyanide for mineral processing were banned in Chubut in 2003.  

Earlier in the week, provincial authorities and labor unions were pressing for discussion of the bill to resume soon as it had remained on standby since March. The approval led to several clashes in the southern province and Argentine media reported injuries caused by rubber bullets and at least seven people arrested. 

Pan American Silver said on Thursday it will continue to evaluate the potential development of the Navidad project which had capital costs estimated at nearly US$1bn and comprises eight mineral deposits. 

“The Navidad project is located in the north-central part of the province and is within the designated zone that would potentially allow permitting of open-pit mining,” the company said in a statement. 

“Pan American Silver will continue to evaluate the potential development of Navidad. This work includes engaging in open, transparent dialogue with applicable communities of interest and assessing the permitting requirements, timelines and capital investment.” 

The Argentine chamber of mining executives Caem called the approval a big step.

“This starts a path to the creation of jobs in mine construction and operations, as well as in the value chain, with predominance of local and provincial suppliers,” Caem said in a release. 

THE BILL

The bill divides Telsen and Gastre departments into four zones. 

In zone 1, which includes riverbeds and areas where mining is restricted by the country’s mining code, open pit mining or the use of cyanide will not be allowed.

In zone 2, which refers to a riverbed protection area with a 5km extension, the province can authorize mining as long as companies can guarantee that their operations will not impact the protected area. 

In zone 3, corresponding to riverbeds and streams delimited by water basins, mining can be authorized under strict compliance with the requirements established in the project's environmental impact statement. The environmental regulator can also require new hydrological studies if deemed necessary.

And in zone 4, which comprises areas not included in the other zones, mining will be allowed.

The bill also establishes the submission of complementary impact reports for zones 3 and 4 if there are wetlands or flora and fauna with high levels of vulnerability where mining will take place.

Likewise, the document stipulates that at least 80% of the workforce must be local and local companies must represent 50% of supplies and services at the beginning of projects and 70% during construction peaks.

A trust fund to support the development of infrastructure projects in the province would also be created. 

And regarding taxes, mining companies would pay a 3% royalty on the value of the extracted ore, as well as a compensation bonus of up to 2%. Companies would also pay a 4% contribution of their revenues for mining development.

Photo credit: Pan American Silver