The Cerro Bayo mine: Who will pay the environmental bill?

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Prospectiing at Cerro Bayo.Prospectiing at Cerro Bayo.
 
The first audits date back to 2017, while the complaints date back to 2019.  More than 7 years have passed since the first signs of environmental non-compliance and only at the end of March 2024 did Chile’s environmental authorities initiate concrete enforcement actions. Today, a doubt arises over who, in fact, will pay: during this period Cerro Bayo Mining Company was sold by the Canadian Mandalay Resources to the Australian Equus Mining (2021) and recently, in March 2024, the latter sold it to its compatriot Mitre Mining.
 
By Patricio Segura
 
By means of an Exempt Resolution on March 20 of this year, Chile's Environmental Superintendency (SMA) brought charges against the Cerro Bayo Mining Company (CMCB) for "non-compliance in the control of particulate matter emissions and commitments to monitor environmental variables." The measure was made public on April 3, by means of a communiqué sent by the inspection body itself.
 
It informs that the penalty for the company could reach 13 billion pesos (about 13.6 million dollars).
 
There are four charges of air pollution and damage to the local flora and fauna that the agency has brought, based on audits carried out by the SMA, the Directorate General of Water (DGA), the Agriculture and Livestock Service (SAG), the Aysén Health Department and the Geology and Mining Service (SERNAGEOMIN), as well as some submissions from private individuals.
 
The first audit was carried out on April 12, 2017 by the SMA, DGA and SERNAGEOMIN.  This generated the opening of a file, which resulted in the sending of the background information to the Sanction and Compliance Division (DSC) in 2019.  Subsequently, five files were opened, which also ended with their dispatch to the DSC.  In parallel, two complaints were filed in 2020 and 2023, one of them by the Municipality of Chile Chico.
 
One of the charges was related to non-compliance with the measures to control emissions of particulate matter, classified as serious, after it was found that the dust suppression system installed in the tailings dam at Laguna Verde does not cover the entire non-flooded area, so wetting is not achieved. Also, it was noted that the system implemented by the company does not operate continuously, not complying with the obligation to maintain, permanently and under any eventuality, the wetting of the tailings dam basin.  The seriousness of this fact was confirmed by the SAG, which visited the sector in August 2023 and stated in a technical report that "the fact of maintaining areas of dry sediments inside the tailings dam implies a risk for the agricultural activity of Bahía Jara, by exposing the area to the dragging of heavy metal contaminants from the tailings."
 
The second charge is for "not having carried out the monitoring of two of the control wells, nor their replacement,” which may involve heavy metal contamination of the tributaries that feed Lake General Carrera.  
 
The other two charges refer to not having recovered with vegetation the areas intervened by the operations as well as not reporting the monitoring of the chemical quality of the soil and vegetation present in the area near the plant, during the years 2021, 2022 and 2023. "Regarding revegetation, it must be added that the holder maintained a quantity of nursery plants lower than that committed in its environmental assessment; keeping the nursery species in a bad state of conservation or lifeless; and the construction of the second nursery committed was not carried out" states the SMA report.
 
Who pays the environmental bill?
More than seven years have passed since the first audit (2017) that was referred to the Sanction and Compliance Department (2019) and four since the first complaints filed by individuals (2020).  During this period, the Canadian company Mandalay Reources (controlling company of Cerro Bayo Mining Company at the time of those first non-compliances) sold the company to the Australian company Equus Mining, which is promoting the Los Domos project, adjacent to Patagonia National Park, through Southern Gold.  The sale, which materialized in December 2021, included the mining properties, resources, infrastructure and the processing plant.  And two years later, in March 2024, Australian Mitre Mining acquired Cerro Bayo. 
 
In practice, under the latter's ownership, there has been no infringement whatsoever, even more so when the announcement of sanctions comes five years after Mandalay Resources relinquished control of the company.  And two months since Equus Mining did the same.
 
For the president of the Private Corporation for the Development of Aysén (CODESA), Erwin Sandoval Gallardo, this situation is serious. "The Superintendency of the Environment takes so long in its investigative processes and in initiating sanctioning procedures for serious environmental infractions that in the end it does not achieve its main institutional objective," he said. 
 
Thus "it is increasingly frequent to find ourselves with faits accomplis or companies that dissolve and dispose of their assets, making it absolutely difficult to prosecute infractions and, ultimately, to enforce environmental regulations", he pointed out.  He explained that this is what is happening today with "the Los Maquis hydroelectric plant, in which the Superintendency's charges were filed when the project was fully built; the Confluencia tailings dam of the El Toqui mining company, whose owner went bankrupt and sold the installations to another company, which today does not want to take responsibility for the environmental liabilities of the tailings dam."
 
And referring directly to Cerro Bayo, he stated that "we have been waiting since August 2021 for the Environmental Superintendency to resolve our complaint regarding the execution of more than 50 mining prospecting projects in the area, carried out by Equus Mining, evading the Environmental Impact Assessment System and within the Priority Site for the Conservation of Biodiversity of the Jeinimeni Steppe-Lagunas de Bahía Jara."
 
He explained that as an organization they have presented multiple complaints on the subject of Los Maquis, Los Domos mining, salmon farms in national parks, and mega-plots "and the regional directorate of the SMA does not take measures, does not inform, and the few inspections are carried out in coordination with the companies.  In many cases it is the environmental courts that have had to correct the negligent actions of this agency, which is supposedly there to enforce environmental regulations."
 
In this regard, she stressed that it is important that the reform to the Organic Law of the Superintendence of the Environment adds "some prohibition of sale of environmental permits of projects with procedures initiated before the SMA or, at least, a transfer process that is regulated and involves consultation with the respective administrative bodies."
 
For the lawyer of Santiago-based public interest environmental law firm FIMA Sofía Barrera Fuentes, an organization that has been involved in various environmental protection actions in the Aysén region, "it would be necessary to see, in this case, how the environmental status confirmed by the SMA with situations of contamination modify the baseline of the environmental authorizations that the company has acquired and from which it could benefit." This, she said, "is a fundamental issue, because it is clear, from the background information provided, that the baseline of the authorizations in force does not match the current reality and the levels of contamination."
 
Barreras adds that it will be necessary to see Mitre Mining's response to these charges, when the company's general manager, Damián Koerber, announced the purchase of Cerro Bayo, he stated that "in a first stage there will be many exploration studies, in order to restart the exploitation of the deposits in two years."  Prior to joining this company, Koerber was exploration manager of Equus Mining Ltda. 
 
 

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