On January 17 2018 the Superintendence of the Environment (SoE) issued Environmental Resolution 72, which ordered the permanent cessation of Compañía Minera Nevada (CMN) SpA's Pascua Lama mining project.(1)

Project's purpose

The purpose of the project – which was being undertaken in Alto del Carmen, Huasco, Atacama – was to produce and commercialise gold, silver and copper in the form of dore metal (gold and silver) and copper concentrate, contemplating an annual production of:

  • 615,000 ounces of gold;
  • 18.2 million ounces of silver; and
  • 5,000 tons of copper.

The Atacama Regional Environmental Commission originally approved the project through Environmental Resolution 39/2001. It subsequently modified it through Environmental Resolution 24/2006, which expanded the open pit and increased the salaries of the exploitation and labour force, among other things.

Initial breaches

Through Environmental Resolution 477/2013, the SoE had previously imposed a fine of 16,000 annual tax units (ATUs)(2) on CMN SpA for various breaches(3) and ordered it to undertake the following urgent and provisional measures:

  • the cessation of construction works pending the implementation of a water management system;
  • the temporary construction of a catchment;
  • various transport and discharge works; and
  • the monitoring of environmental variables contemplated in the environmental resolution.

However, a March 3 2014 Santiago Second Environmental Court judgment held that Resolution 477/2013 (excluding the provisional measures) was null and void due to a series of defects, which it ordered be corrected through a new resolution.(4) The Santiago Supreme Court confirmed the lower court's decision on December 30 2014.(5)

Subsequent investigation

On April 22 2015 the SoE began a new administrative investigation procedure(6) by filing charges against CMN SpA.(7)

On May 14 2015 CMN SpA presented a remedial programme to the SoE. However, the SoE rejected the programme on the grounds that it did not include all of the infractions contained in the formulation of charges.(8)

On August 28 2015 CMN SpA filed a claim with the Santiago Second Environmental Court,(9) which was rejected on December 30 2016.

Environmental Resolution 72

On January 17 2018, after considering the background and evidence provided during the investigative process, the SoE ordered the permanent closure of the Pascua Lama mining site based on the following breaches:

  • The riverbed had not been protected in accordance with the environmental resolution.
  • The impact to species had exceeded the authorised limits.
  • The Water Quality Response Plan had not been activated.
  • Discharges to water had breached water quality standards.
  • There had been only partial compliance with the requirement to monitor glaciers located in the project's area of ??influence.

In addition, the SoE imposed a series of fines (totalling 12,360 UTAs) for 24 additional breaches and ordered CMN SpA to:

  • adopt a series of urgent control and security measures regarding riparian vegetation and hillsides and fertile plains;
  • prepare a distribution and density study of the hillside vegetation;
  • extend its wildlife monitoring; and
  • perform a geochemical characterisation of certain material.

Article 57 of the Organic Law of the SoE states that a resolution ordering the permanent closure of a project site must be referred to consultation by the Environmental Court. As such, the case was subsequently sent to the Antofagasta First Environmental Court.(10) In this regard, and within the framework of this consultation, the incumbent judges of the court conducted a site visit, the reasons for which are expected to be issued soon.

Next steps

On February 3 2018 CMN SpA filed a complaint with the Antofagasta First Environmental Court against the resolution ordering the final closure of the project site, claiming the illegality of the penalties imposed.(11)

For further information on this topic please contact Trinidad Prieto at Montt y Cia SA by telephone (+56 22 233 8266) or email (tprieto@monttcia.cl). The Montt y Cia SA website can be accessed at www.monttgroup.com.

Endnotes

(1) Environmental Resolution 72 was issued as part of SoE Administrative Investigation D-011-2015.

(2) At present, one ATU is worth approximately $940.

(3) Environmental Resolution 477/2013 was issued as part of Administrative Investigation A-0002-2013, which was initiated after CMN SpA self-reported breaches on January 22 2013. The SoE objected to the self-reported breaches due to inaccurate information and its view that the breaches were ongoing. The company was found to have adopted no measures to eliminate or reduce the negative effects of the breaches and to have provided information that could not be verified, thus giving rise to a subsequent audit. These matters were accumulated and addressed in Administrative Investigation D-011-2015.

(4) Case Docket R-6-2013, Santiago Second Environmental Court.

(5) Case Docket 11.600-2014.

(6) Case Docket D-011-2015.

(7) Resolution 1, April 22 2015.

(8) Resolution 7, June 24 2015.

(9) Case Docket R-75-2015.

(10) Case Docket S-5, Antofagasta First Environmental Court.

(11) Case Docket R-5-2018, Antofagasta First Environmental Court.

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