Barrick Gold’s Perfect Storm Peter Munk on Resource Nationalism and the Changing Global Paradigm

The origin of problems according to Barrick Gold

Barrick Gold’s Perfect Storm Peter Munk on Resource Nationalism and the Changing Global Paradigm



“Please understand” … pleaded Peter Munk several times to shareholdersgathered in Toronto on April 24th for Barrick’s annual shareholdermeeting (AGM) as he laid out the reasons why Barrick Gold has lost nearly three-fourths of its company value, why projects are being closed due toenvironmental contamination, and why all of a sudden gold, and Barrick Gold stock in particular, doesn’t look so attractive. The speech is a revelation of what really drives the gold miningindustry and one of the most controversial industry leaders in particular.

Munk was clearly referring to Pascua Lama, the multi-billion dollar goldproject on the Argentine-Chilean border that has become a constant headache forBarrick Gold. The project is riddled with environmental problems and unpredictedand escalating costs, and suffered as a result of the collapse of the financingscheme Barrick hoped to build with subsidized public money from EDC (Canada)and EXIM bank (USA). Today, the mine remains closed in Chile for failure tocomply with environmental regulations. Barrick’s legal appeals have had noinfluence on the Chilean authorities.



A year ago today, Munk boasted that the fundamentals were brilliant.Barrick was on the verge of launching two of the most spectacularly unique goldmines, Pascua Lama in Argentina/Chile and Pueblo Viejo in the DominicanRepublic. Both projects would be characterized by exceptional production, longlife, and some of the lowest average operating costs per ounce. This yearthough, Munk was reduced to asking, “What can I say to you? ...The fundamental stoday could not be more different than they were a mere twelve months ago. Our two mines are both in trouble”. (AGM Speech: Minutes 43:00-44:00)

At both Pascua Lama and Pueblo Viejo, Barrick has run into significant problems.Munk attributed this to growing resource nationalism, which he referred to numerous times throughout his speech. He says it’s a global phenomenon and the underlying characteristic of the new mining paradigm.

He posed the following hypothetical situation to the audience: “You’rethe new president of a small Latin American country… You have two choices, keepon taxing the people… or go after that big multinational huge globalcorporation with billions of dollars of assets. … This is totally understandable, it is the essence of this enormously rapidly growing resource nationalism… It is the ultimate threat to the very lifeline of the mining industry, which ultimately will cause an enormous spike in commodity prices. (Minutes46:00 - 47:00)

He pointedto leaders such as Hugo Chavez of Venezuela and Evo Morales of Bolivia … suggesting that “there’s a whole slew of new modern populist leaders that may not follow the rule of law as we expect them to do”. (Minute 48:00)

While never explicitly stated, it was clear that his critiques were no tso much about Chavez and Morales, but rather referred to his frustration with Argentina and Dominican republic

Ironically, the venting and frustration over host government rule-bendingquickly vanished when Munk came to the issue of executive pay. There, Munk pointed to the impressive CV of newCo-Chairman John Thorton, former Goldman Sachs chief, as a justification for awhopping US$11.9 million pay package from the gold giant to have Thorton takeover Barrick, which has dropped in value by nearly 75% since its recent marketpeak.

In his closing comments, Peter Munk reached out to the essence of whatsustains the gold industry. Companies mine, process and sell gold not forsocial or economic development, not for social progress and not for the benefitof the needy or the poor communities in the countries where Barrick Gold isinvested




So, the conclusion of BG speech:

• Dominican president is as radical and keep the same political lines of as Chavez and Morales
  

• The most important mines of BG are Pascua lama and Pueblo viejo have a populist leader that "dont follow the rules of law"

• BG always follow the rules of law
  

• BG is not in DR for social progress or the needy poor communities of Cotui.
  

• BG never mention pollution, smuggling cyanide, fines, etc so all those "rumors" are probably a lie

• Barrick Gold has lost nearly three-fourths of its company value, shareholders are VERY scare
  

• It's ok to pay somebody a bonus of $11.9 millions made from dominican gold , but not a single dime yet to dominican people
  

source: www.gowebcasting.com/events/barrick/2013/04/24/2013-annual-meeting-of-shareholders/play/stream/7102

These are the personal words of BG president Peter Munk in the last shareholder meeting..
Personally I am speechless ..

You make your own conclusions..

Unfinished business

The Barrick Gold issue



Everyone is happy about the big agreement of the Dominican government  with Barrick Gold related to Pueblo Viejo Gold mine in Cotui, but there are certain issues not finished yet..
 In a press conference after a meeting of several hours between senior officials and Barrick Gold executives in the National Palace, the government announced the pact to amend the contract, to be submitted to Congress as soon as possible.

 Among other points, the agreement will raise Government revenue by more than US$1.5 billion over the project's duration, in addition to the US$10.0 billion projected in March 2013, and raises the profit split from 37.1% to 51.3 % for the country, and lowers Barrick’s from 62.9% to 48.7%

Everything looks clear in the agreement..except for a couple of things:

• We haven't seen a dime yet..

• We haven't get clear what is going to happens with the millions in fines of BG that they already owe to the Dominican state.. ..

• 
  Do BG have any plan to employ Dominican people instead of bringing more peruvians?

• What is going to happens with the cyanide and mercury? How are they going to clean that mess?

• What is going to happens with the crops of cocoa beans, coffee beans and fishing infrastructure that we had before..?   Any reforestation plans either?

• Did anybody realize that we are pushing for more marginality of Dominican people by allowing the eviction of 600 families?

• So far, instead of bringing prosperity to Cotui area, BG only brought misery , illness, cyanide, evictions, and poverty..
  What the government, in charge of protecting its people ,is going to do about it?

• Is there any plan study to analyze the horrendous environmental consequences of Barrick Gold in DR?

2000 years later..I still hearing Jesus saying, "Father, forgive them, for they don't know what they are doing. .

Barrick Gold Fined $16M For Environmental Problems At $5B Pascua Lama Project In Chile

Chile blocks Barrick Gold mining project

 

Diaguita Indians celebrate victory in seeing mining giant Barrick Gold Corporation fined for environmental violation.

More bad news for some embattled gold miners. On Friday, Barrick Gold was halted around noon in New York as reports surfaced indicating the Chilean government had forced the company to “paralyze” its operations in Pascua Lama, one of the largest gold and silver resources in the world into which Barrick has poured nearly $5 billion in. Silver Wheaton , a joint-venture partner in the project, was halted a few minutes later.

According to Chilean daily El Mercurio, Barrick will be fined about 8 billion Chilean pesos, or $16.4 million, given the company’s failure to comply with environmental regulation. Beyond the fine, Chile’s Superintendent for the Environment, Juan Carlos Monckeberg Fernandez, has established that all construction activity at Pascua Lama must stop immediately.


The Pascua Lama project is located in the Andes Mountains, between Chile and Argentina. Barrick had already announced its operations in Chile were halted in its latest earnings release, as the company was assessing environmental and regulatory requirements, while negotiating with a court of appeals. Barrick has invested nearly $5 billion in Pascua Lima, which holds almost 18 million ounces of proven and probable gold reserves and 676 million ounces of silver.

The main problem appears to be the water management systems at Pascua Lama, El Mercurio reported. The open-pit mining project has the potential to contaminate water in the area, and according to the Chilean government, Barrick hasn’t taken the proper precautions, precautions it had agreed to previously.

It hasn’t been a good year for gold, or anything related to it. Major mining companies have all suffered steep stock price declines. Barrick Gold is among the worst performers, down more than 40% in 2013, but others like Newmont Mining NEM -0.78% and Goldcorp are also well in the red, down more than 20% each. Gold prices have also taken a beating, with bullion currently trading below $1,400 an ounce.

                                 Diaguita people

 People from the Diaguita indigenous group whose community lives downstream from the mine allege that their water supply and glaciers have been contaminated by the construction work.

The Diaguita people who live in small towns along rivers that flow down from the mine were feeling a sense of victory on Friday.

"Even though we seem so small, we could beat Barrick, which is a giant," said one community member Osvaldina Guzman Villegas.

 
______________________________________

Barrick Gold  couldn't fix the contamination issue in Chile, so they lost their mine.Now we are having the same issue in Dominican Republic, but in way worst situation because we are a way smaller country that can not hold so much cyanide, mercury and led.

We need to take care of our people as well, specially the ones that lives in the small towns along the rivers of Cotui.

Eventually we are becoming the Chernobyl of the Caribbean.

The question is: Is BG REALLY trying to stop the pollution in DR?

Organizations keep claiming 5% of the benefits from the Barrick

About 106 organization of Cotui demanded 5% of the benefits from the Barrick Gold
They deposit yesterday a document in the Palacio Nacional with their claims




Santo Domingo.Representation of 106 organizations and unions of Sanchez Ramirez deposit yesterday a document in the National Palace about their position of what they understand should be included in the agreement between the government and the Barrick Gold

Between the issues they want the 5% of the benefits of the exploitations , an improvement over the the environment issue, they want to have an open union of Barrick employees,warranty for the supervision, accounting and transportation of the production, and that the dominican state should have more control, between different issues.



Óscar Pérez Núñez,speaker of the group say they were concern because in the agreement signed between the government and Barrick Gold they barely mention the people from Cotui affected by the mining company


He mention that after the beginning of the exploitation, Cotui is suffering from a big pollution, situation that make people get sick with fever, vomit and diarrhea.

Pérez Núñez said that they are thinking leaving the province and everything behind due to the high contamination int the area

Pérez Núñez, mention in the letter, addressed to the president Danilo Medina, they suggest to give Cotui a 5% of the resources for an institution that would be concern with the problems of the province of Sanchez Ramirez



We have mention this before, over and over.. And people haven't pay attention of some of the inner problems of the community: health, contamination, employment ,water, clean environment,etc.

These affected communities is going to be a reflection of what is going to happens to the rest of the Dominicans.

We can keep talking , and Barrick gold keep taking gold out of DR,we keep their cyanide and mercury and we haven't seen a penny yet of BG.

Somehow, this drama remind me the biggest claim of Jerry Maguire: Show me the money

it's like a never ending situation with BG, when some people come from over seas assuming how naive are Dominicans, while they keep taking the gold away, over and over and over again.

Is there something that we don't know yet?

When this is going to stop?

Edited on 5/23/2013 9:08 AM by ohhhvictor.