Barrick Gold (NYSE, TSX:ABX) is dealing with the negative blowback from the massive cyanide spill from one of its mines in Argentina. As a criminal investigation works its way through the country’s court system, the company is still busy attempting to clean up the spill, upgrade its Veladero Mine in Argentina’s San Juan province (near the Chilean border), and ultimately piece together what wrong.
Shares of Barrick were about 0.5% higher on Friday, bouncing back from opening 1% in the red to trade around $6.60 per share by the late afternoon. In spite of the continued controversy over the cyanide spill, the company’s stock has surged more than 10% over the last two trading days. Over the last year, however, the firm’s shares have plunged, losing nearly 60% of their value.
About 2 weeks ago, in mid-September, a sluice gate at the Veladero Mine was accidentally left open, allowing copious amounts of a cyanide solution to leak into the nearby Potrerillos River. Investigators are still attempting to unravel how the mistake was made; Barrick itself had no reliable answer. Consequently, environmental lawyers in Argentina are seeking a judge’s approval to depose any and all parties who may have some level of culpability.
According to the Buenos Aires Herald, the list of “parties of interest” includes the country’s Environment Secretary, Sergio Lorusso; the Mining Secretary, Jorge Mayoral; the San Juan (provincial) Environment Secretary, Domingo Tello; the president of the San Juan Mining Chamber, Santiago Bergé; as well as various officers representing the Argentinian division of Barrick Gold.
As a result of an internal investigation and water quality tests conducted along the Potrerillos River, more than 1 million liters of cyanide leaked into the water—more than 5 times the original estimates of the scope of the accident. Recent tests have shown that the water is safe to drink, but it remains unclear whether or not local aquifers have been contaminated by the escaped cyanide.
Barrick Rehabilitating Its Reputation
The response from environmental advocates has been swift in this case, which should come as no surprise given Barrick’s history and reputation—especially in South America. Whether right or wrong, the company has developed an image of the heartless, greedy corporation in many areas of Latin America, where socialist and pro-union sentiment is fairly widespread. (It doesn’t help that Barrick is a multinational corporation, making them seem even more foreign and alien to local communities.)
It was reported that the production limits imposed upon the Veladero project have been lifted. Barrick can resume normal operations as well as embark on its plans to modify its preventative measures at the site.
So far, Barrick has been upfront and wholly cooperative with the investigation, and has indicated it is willing to take suggestions and consider ways to improve upon its disaster prevention protocols. The company is cooperating with the authorities, though no charges have been filed yet even as the criminal investigation is already underway.