Barrick looking to cut costs at Pascua-Lama while project is suspended

The Canadian Press 0

TORONTO, Cananda – Barrick Gold is looking to better control costs at its suspended Pascua-Lama project in South America and renegotiate contracts with its suppliers as it reworks the enormous mine perched high in the Andes.

“We’re going to be looking at talking to every one of our contractors about doing things cheaper and more efficiently,” chief executive Jamie Sokalsky told an investor conference Tuesday.

Barrick (TSX:ABX) announced it was stopping nearly all the work at Pascua-Lama earlier this year as it faced rising costs and other problems at the project under construction.

When Barrick first gave the project the green light in 2009, it was expected to cost US$2.8 billion to US$3 billion to build with commissioning to begin in late 2012 and production in early 2013.

Recent estimates put the cost of the project at US$8 billion to US$8.5 billion.

“While it is in suspension we will refine and update the capital cost estimates and the mine plans and develop the right stages for the resumption of construction,” Sokalsky said.

In suspending construction of the mine, Barrick said it would break development of the project into discrete stages.

Sokalsky’s appearance at the Scotiabank mining conference came ahead a key update from the company on plans to rejuvenate its board of directors.

Barrick (TSX:ABX) has been working to strengthen its governance practices and add independent directors, with changes expected to take effect at its next annual meeting.

Co-chairman and founder Peter Munk has signalled his desire to retire from the board with his fellow co-chairman John Thornton widely expected to fill the role.

Pascua-Lama has been hit by several delays including attempts by an indigenous community living below the project to have its licence revoked and force another environmental impact study.

In September, the Supreme Court of Chile upheld the environmental permit, but said construction must be suspended until work to protect the watershed below the mine is finished.

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