Little more than a decade ago, one of the world’s largest known gold deposits sat abandoned in the foothills of the Dominican Republic’s Central Cordillera mountain range. Car-sized boulders leached heavy metals into what locals called the “blood river,” its waters ran so red from contaminants.
Today the mine, which reopened as Pueblo Viejo this year, hums with activity. Trucks with tires twice the size of an SUV roll through its massive open pits on roads that cut through the 11km2 site, transporting tonnes of rock to a processing facility.
About 2,000 people already work at the site, churning out shimmering gold bars that are exported to Canada and the US, but the mine has the potential to create 12,700 more direct and indirect jobs and contribute US$1.3 billion a year in exports.
This dynamic, foreign-operated enterprise is part of the country’s effort to develop an industry that could help boost and diversify its tourism-dependent economy.
Yet despite robust commercial production by two of the world’s largest gold mining companies, Canada’s Barrick Gold Corp and Goldcorp Inc, development of the mining sector is vexed by bureaucratic delays and agitation by activists still concerned about pollution and government deals with foreign companies to exploit the nation’s riches.
At stake are billions of dollars and thousands of jobs in a country of 10 million with high levels of unemployment and poverty.
The river close by the mine is no longer bloody, but the destruction wrought by the Rosario mine — the site’s previous name when it was run by the government until it closed in 1999 — left mining with a dirty name locally.
When they took over the mine site, Barrick and Goldcorp launched an extensive cleanup and environmental protection program to prevent pollution of the nearby streams.
The mine says it treats 40,000m3 of contaminated water per day.
Nevertheless, local community groups remained concerned that the heavy metals from exposed rock could end up in nearby waterways, and the opposition says it is in for the long haul.
In the spring, making common cause with the environmentalists, political activists dismayed by sweetheart deals for foreign companies operating in the country waged a public campaign against the Pueblo Viejo mine.
The government was forced to renegotiate what critics said was an overly generous contract signed with the companies in 2009 by then-Dominican president Leonel Fernandez, whose ruling pro-business Dominican Liberation Party has looked for outside interests to develop key economic sectors, such as mining and tourism.
Since the party won relection last year, Dominican President Danilo Medina has sought to distance himself from Fernandez, and he soon became a critic of the contract himself.
In May, a new contract gave the Dominican government about 51 percent of gross profits, up from 37 percent under the original agreement, costing the owners more than US$1 billion at the current market price.
It has not been an easy year for Barrick’s Latin American operations. Indefinite suspension of its Pascua-Lama mine, along the Chile-Argentina border, has contributed to a fall in the company’s stock price and increased pressure for returns at a handful of other mines, including Pueblo Viejo, one of Barrick’s five core projects, company officials said.
While the successful challenge to the terms of the largest single foreign investment in the country’s history has cast a pall over investment in the sector generally, as has the 25 percent drop in gold prices this year, there remains a third source of uncertainty: bureaucratic delays.
In July, the Dominican Congress passed a law to create a new Ministry of Energy and Mining, intended to help develop the industry. However, no minister has yet been named, and questions swirl over the power of the new entity to regulate the energy sector.
The existing Dominican Mining Management Office has been left relatively powerless, leaving hundreds of applications for new explorations pending.
Precipitate Gold Corp launched a Dominican operation in August last year.
The company, also Canadian, expected an eight-to-12-month approval period to explore about 10,500 hectares in the Central Cordillera, the mountainous area that holds the most promise for future mining projects. More than a year and a half has passed.
Meanwhile, in an effort to improve public perception of mining, the government has launched a public awareness campaign along with the industry that highlights the benefits of mining, like jobs in economically depressed regions.