NewsWhore
12-02-2009, 04:20 PM
News commentator Jose Israel Cuello draws parallels between the Falconbridge and Barrick Gold mining contracts. Writing in Hoy, he comments that the initial contract signed with Falconbridge soon proved to be non-functional, with the company producing just to keep up with its operations, earn a profit, and no profits for the state.
Changes in government did not produce a renegotiation of the contract. When finally, someone took note that if there were no profits for the government or the company, as it alleged, then it would be best to close it down. As a result a new contract was negotiated, there were new prices, new markets, new costs and the exploitations resumed. Meanwhile, the company lived off selling energy to the CDE.
Cuello asks the question: what was the difference between the new and the old. He makes the point that in the second contract, a royalty was established according to volume of material exploited. He says that in the case of Barrick Gold the opposite has been the case. In the first contract the government signed with Placer Dome, there was a provision that Placer Dome would pay the government for exploited material. This clause was removed from the second contract that was negotiated after gold prices went up.
The second contract, renegotiated with Barrick after this, purchased the right to the Placer Dome concession, does not establish limits to how much borrowing Barrick can take on, nor revenues are set in regards to the price of the minerals extracted at their time of sale. Cuello says that with the current interest rates and the proven mineral reserves in Pueblo Viejo, the company will easily get all the necessary financing, and the yield will be high enough to recover the investment within five years. He says that that is where the accountants and their depreciations, operational costs and maintenance come in to play.
www.hoy.com.do (http://www.hoy.com.do/opiniones/2009/12/1/304329/El-precedente-de-Falconbridge)
More... (http://www.dr1.com/index.html#7)
Changes in government did not produce a renegotiation of the contract. When finally, someone took note that if there were no profits for the government or the company, as it alleged, then it would be best to close it down. As a result a new contract was negotiated, there were new prices, new markets, new costs and the exploitations resumed. Meanwhile, the company lived off selling energy to the CDE.
Cuello asks the question: what was the difference between the new and the old. He makes the point that in the second contract, a royalty was established according to volume of material exploited. He says that in the case of Barrick Gold the opposite has been the case. In the first contract the government signed with Placer Dome, there was a provision that Placer Dome would pay the government for exploited material. This clause was removed from the second contract that was negotiated after gold prices went up.
The second contract, renegotiated with Barrick after this, purchased the right to the Placer Dome concession, does not establish limits to how much borrowing Barrick can take on, nor revenues are set in regards to the price of the minerals extracted at their time of sale. Cuello says that with the current interest rates and the proven mineral reserves in Pueblo Viejo, the company will easily get all the necessary financing, and the yield will be high enough to recover the investment within five years. He says that that is where the accountants and their depreciations, operational costs and maintenance come in to play.
www.hoy.com.do (http://www.hoy.com.do/opiniones/2009/12/1/304329/El-precedente-de-Falconbridge)
More... (http://www.dr1.com/index.html#7)