Advancing Together With Barrick Gold

Mining Study: Veladero mine has improved economy of Argentina's San Juan province for nearly a decade

Barrick’s Veladero mine has helped trigger a remarkable economic turnaround in Argentina’s San Juan province, according to a recent study. Between 2004 and 2011, the province’s unemployment rate fell 36 percent, and per capita income surged 177 percent to $5,260 from $1,900. Exports jumped 12-fold to $2.5 billion from $211 million, and the province’s manufacturing sector grew at an average annual rate of 13.5 percent, twice the national average.

“Veladero has made an enormous economic contribution in San Juan,” says Alfredo Lasalvia, lead author of a study by the Universidad Tecnológica Nacional (UTN) that measured Veladero’s socioeconomic impact on San Juan. “Economic growth in San Juan outpaced every other province in Argentina between 2007 and 2010, and Veladero played a big part in that. We estimate the mine contributes about 34 percent to San Juan’s GDP.”

Veladero is located in northeast San Juan more than 4,000 meters above sea level. It is the second largest private sector employer in the province (Barrick’s Pascua-Lama project is the largest) with about 3,500 workers, 85 percent of whom are from San Juan. The mine, which went operational in 2005, produced 766,000 ounces of gold in 2012.

The economic impact of Veladero has manifested itself in a myriad of ways, including payment of taxes and royalties, hiring of local residents, and procurement of goods and services in San Juan and other parts of Argentina. In 2005, Veladero paid just $513,000 in royalties to the San Juan government, according to the UTN study. By 2011, royalty payments totaled $48 million and accounted for 86 percent of all royalties collected by the San Juan government.

In 2011, Veladero spent $428 million on goods and services in Argentina, including $190 million in San Juan alone. “veladero generates numerous opportunities for suppliers in San Juan, which leads to the creation of new companies and the growth of existing ones,” Lasalvia says. “That means more jobs are being created, which puts more money in peoples’ pockets, which drives economic activity in the province.”

Industrias Metalúrgicas Jaime, a San Juan-based company that manufactures and assembles industrial products, began assembling off-road truck hoppers for the Veladero operation in 2004. Since then, the firm’s relationship with the mine has expanded to incorporate welding maintenance, maintenance to off-road hoppers and repair work on electronic shovels. The company’s workforce has grown from 25 in 2004 to 180, and its work with Veladero has led to opportunities beyond mining, says company founder Eduardo Jaime. “Mining has had a huge impact on our business,” says Jaime.

Veladero’s economic contribution extends beyond San Juan to the overall Argentine economy. In 2011, Veladero paid $430 million in national taxes and the mine is responsible for a four percent increase in Argentina’s overall exports since its inception, according to the study.

“We feel really proud that we’ve been able to contribute to the overall social and economic development in san Juan, and at the national level,” says Miguel Giménez Zapiola, corporate affairs director for Barrick in Argentina. “Barrick is the main private employer in San Juan, where our Veladero mine and Pascua-Lama project are located. Not long ago, san Juan was one of the poorest provinces in the country. Our growth as a business has had a positive impact and is a good example of how mining can contribute to sustainable development.”

As San Juan’s economy grows stronger, poverty rates in the province are declining and other key socioeconomic indicators are showing signs of improvement. The province’s infant mortality rate fell from 19.6 per 1,000 births in 2003 to 11.0 in 2010 – a 44 percent decrease, and nearly double the 28 percent drop in the national infant mortality rate during the same period.

There are also positive trends in education, particularly in the primary school segment. For instance, the percentage of overage children attending primary school fell by 21 percent between 2003 and 2009, while the number of children forced to repeat a grade dropped to four percent from eight percent. “These are encouraging trends,” Zapiola says. “Economic growth is often a catalyst for improvements in other critical areas, like education. If these incremental gains continue then, over time, they become self-sustaining. More students will graduate, attend post-secondary school and use their degrees to obtain high-skill jobs in San Juan.”

Pablo Lara, a maintenance planning supervisor at Veladero, says one of the biggest benefits of his job is that it allows him to send his children to a school with a strong academic track record. “It shows in their development,” he says.

Lara has taken numerous skills-development courses since he started at Veladero three-and-a-half years ago. The 38-year old has been promoted three times since he joined the company and hopes that, when he reaches retirement age, he will do so as a Barrick employee. “I have grown a lot working here,” he says. “I don’t see myself working anywhere else.”