Getting it right: A look at the mine approval process

Residents near Barrick’s Cerro Casale project in Chile attend an open house.

Before building a new mine, Barrick must complete detailed impact studies and consult with communities. The process takes years, but lays the foundation for responsible mining.

Permitting a new mine has become a more complex process, as the scale of projects grows and regulatory standards become more stringent. At the same time, the process has also become more inclusive and transparent and involves significantly more stakeholders.

Whether in well-established mining jurisdictions or developing regions with little or no history of mining, the same early-stage requirements exist: the permitting and approval process must address the interests of communities, regulators, bank lenders and shareholders.

Derek Riehm, Vice President of Permitting and Approvals at Barrick, says preparation of an environmental and social impact assessment (ESIA) forms the backbone of any permitting process.

It begins with the collection of baseline environmental and social data over an entire project area. Barrick’s permitting experts use this information to evaluate a proposed mine’s impact on water, air, plants and wildlife, as well as local communities and businesses. Where potential impacts exist, Barrick must explain how it proposes to mitigate or compensate for them.

As Barrick’s projects grow in scope, so too do its ESIAs, which can be thousands of pages long and encompass data about dozens of communities. Depending on the complexity of the project, the cost of completing an ESIA can range from $5 million to $10 million and can take anywhere from two to four years to complete. “In the past, we used to basically build a mill, an administrative building, an equipment-storage facility and then we’d mine the pit,” Riehm says. “Today, it’s not unusual for a project to include a power plant, pipelines, well fields and ports — and you’ve got to get approvals and permits for all of them.”

The growth in project size is one of several factors adding to the complexity of the approval and permitting process. Another is increased government regulation, Riehm says. “Regulations are more rigorous, and there are more of them,” he says. “A decade ago, we might have dealt with one level of government. Now, we deal with all kinds of different government agencies, as well as federal, regional and local levels of government.”

Barrick’s Derek Riehm and Manuel Tejos hold four of the many volumes that comprise the Cerro Casale environmental impact assessment.

The permitting process for Barrick’s Pascua-Lama project has been particularly complex, as the project encompasses territory in Chile and Argentina, requiring applications for permits in both countries. After obtaining approval to build the project in each country, Barrick has since had to seek operating permits from 80 different regulatory agencies across the two countries for various activities and facilities associated with the project, says Manuel Tejos, Manager of Environmental Permitting for Barrick in South America. All told, the project requires about 1,100 permits for everything from tailings dam construction, to water treatment and electricity supply, to the construction of roads and potable-water quarries, Tejos says.

Building projects in developing countries with little or no history of mining is another challenge. This can mean dealing with weaker government institutions, regulators who are new to mining and even corruption. Barrick employees who are involved in permitting are expected to follow the company’s Code of Business Conduct and Ethics, and unethical practices are not tolerated. “It can be more complex to work in these jurisdictions; however, we apply the same strict international standards at all our projects,” Riehm says. “We don’t cut corners.”

In 2007, before Barrick had obtained funding for its Pueblo Viejo project in the Dominican Republic, the company discovered that two endangered tree frog species would be impacted by the project. Barrick’s biodiversity standard requires the company to minimize, mitigate or fairly compensate for significant impacts on biodiversity that cannot be avoided. In addition, banks and export credits agencies typically require compliance with International Finance Corporation (IFC) standards in order to fund projects. Consistent with IFC standards for environmental risk management, Barrick initiated a $2 million biodiversity project to mitigate this impact. The project includes a captive breeding program, which is preserving many of the frogs living in the affected area.

In addition to facing tighter regulatory and lending standards, mining companies face greater scrutiny from stakeholders during the approval and permitting process. “As more and more stakeholders become involved in the process, permitting is increasingly dependent on external forces,” Riehm says. “This really underscores the importance of ensuring we maintain our ‘license to operate’ as a company. If we’re recognized by communities and governments as a responsible mining company it makes the permitting process that much easier.”

Barrick’s community consultation efforts typically go beyond minimum legal requirements. At Pueblo Viejo, community engagement started five years before the company began gathering baseline data for the ESIA. The process included a census of 1,268 households in 34 communities near the project. Although the ESIA has been approved, community consultation is ongoing and now covers 101 communities over the entire project area.

Community consultation at Pascua-Lama began in 2000 and continues today. Barrick’s community relations employees have participated in more than 1,000 community meetings during that time, including 253 in 2010 alone. The Pascua-Lama community relations team has also engaged in a comprehensive door-to-door education campaign, visiting as many as 500 homes per month in some towns to share information, and obtain feedback, about the project.

Meanwhile, at Barrick’s Cerro Casale project, community consultations are also continuing. Barrick hosted open houses, workshops and numerous meetings with local authorities and other stakeholder groups in the past year. The company submitted a revised environmental impact assessment in July that contains revisions to a design from the EIA approved in 2002. Located north of the Pascua-Lama project in Chile, Cerro Casale is one of the world’s largest undeveloped gold-copper deposits, with gold reserves of 23.2 million ounces and an estimated mine life of more than 20 years.

A completed ESIA document identifies the potential effects on the planned project area. It is incumbent upon mining companies to work with local governments and communities to develop plans to mitigate the negative impacts and facilitate the positive ones, and Barrick goes to great lengths to do so.

For instance, while completing the ESIA for its Veladero mine in Argentina, Barrick determined the operation would disturb some of the sparse plant life in the area. So the company mounted an operation to move the plants to a safe area nearby. Barrick spent $1.3 million to relocate 25,000 square meters of native alpine vegetation, which provide valuable pasture land for wildlife in the arid region. It was the first project of its kind in Argentina, and the company is implementing a similar project at Pascua-Lama. “It’s been a successful project,” says Rod Jiménez, Barrick’s Vice President, Corporate Affairs and Communications for South America. “And it’s important to note that, we not only helped protect the environment, we generated knowledge that didn’t exist before.”

In Chile, Barrick addressed concerns about rising traffic volumes in communities near Pascua-Lama by building a new access road to the project. Unlike the existing road, the new road bypasses populated areas, alleviating concerns about the potential effects of increased traffic on local communities. Through April of 2011, Barrick had spent $70 million on the 106-kilometer road. “We took the concerns of the community to heart and we collaborated with government regulators and community representatives to find a better alternative,” Jiménez says.

New access road in Chile to the Pascua-Lama project.

At its Donlin Gold project in Alaska, Barrick originally planned to use oil as the primary fuel source for the operation. Transporting the oil to the remote site involves loading it on barges that would have traversed hundreds of kilometers of the river system in the southwest corner of Alaska. In 2011, the company changed strategies, choosing to use natural gas to fuel the operation. The gas, which has a lower carbon footprint than oil, will be shipped by pipeline rather than barge, reducing the risk of a spill. To be sure, oil in the form of diesel fuel will still be required at Donlin to power transport vehicles at the site, but by using natural gas to fuel the electricity-generating plant at the site, the amount of oil required will be reduced substantially.

While mining operations will inevitably have impacts that will need to be mitigated, Barrick’s overall aim is to have a positive impact and promote sustainable development in the communities near its operations and beyond. Barrick’s mines and projects are a catalyst for economic development and create jobs, both direct and indirect, often in areas where employment opportunities are lacking. In 2010, the company’s total economic contribution to its host countries was estimated at more than $9 billion. This figure includes local and regional purchases, payments to governments and employees, and substantial investments in community programs. Funding for these programs totaled $42 million and helped improve local infrastructure, education, health care, access to fresh water, electricity and job-skills training.

“It is critical to work closely with communities and develop plans together,” says Peter Sinclair, Barrick’s Vice President, Corporate Social Responsibility. “By incorporating the community’s needs and concerns up front we have a much greater chance of ensuring the delivery of sustainable benefits from mining.”