Snakes, Shellfish Traps Add to Mining Hazards

Oct. 28, 2013 9:40 p.m. ETSYDNEY— Garry Pearson recalls precisely when a vast lake appeared on the doorstep of one of Barrick Gold Corp.’s ABX.T +0.38% Barrick Gold Corp. Canada: Toronto $21.15 +0.08 +0.38% Oct. 28, 2013 4:00 pm Volume : 2.74M P/E Ratio N/A Market Cap $21.09 Billion Dividend Yield 0.97% Rev. per Employee N/A 10/28/13 Snakes, Shellfish Traps Add to… 10/15/13 For Cost-Cutting Rio Tinto, a … 09/26/13 Canada Stocks to Watch: Blackb… More quote details and news » ABX.T in Your Value Your Change Short position biggest mines in Australia. It was two years ago, just as gold prices hit a high-water mark.
The area’s name—Lake Cowal—hinted there was water nearby. But for most of the decade that Barrick has been exploring for gold or mining in this remote part of New South Wales state, the land was so dry that local farmers used it to graze sheep and other livestock.

Picture of the water of Lake Cowal at the doorstep of Barrick Gold’s mine. Barrick Gold Corp.

Since the lake reappeared, Barrick has faced a raft of water-driven challenges ranging from a scramble to find a floating drill rig to an influx of venomous snakes.
Mr. Pearson, an environment manager whose job at Barrick includes keeping noise levels within acceptable limits, no longer drives to work but jumps into a power boat or kayak. When he reaches the monitoring station, he has to climb atop a three-meter metal chair lapped by the lakewater.
A major problem for Australian mining companies has traditionally been a lack of water. Many of the biggest deposits of minerals like iron ore, coal and gold routinely shipped to industrializing Asian countries are located in remote desert regions—far from a stable water supply or infrastructure like rail and ports.
That has added to the cost of developing mines, and led several of the larger companies like BHP Billiton Ltd. BHP.AU -0.69% BHP Billiton Ltd. Australia: Sydney $37.59 -0.26 -0.69% Oct. 29, 2013 5:07 pm Volume : 5.06M P/E Ratio 18.88 Market Cap $120.15 Billion Dividend Yield 3.43% Rev. per Employee $1,299,100 10/24/13 Heard on the Street: India’s S… 10/22/13 Chinese Smelters Hope for High… 10/15/13 For Cost-Cutting Rio Tinto, a … More quote details and news » BHP.AU in Your Value Your Change Short position to suspend some operations after commodity prices tumbled recently.
When Barrick began exploring for gold at Cowal after acquiring the land in 2001, its problem too was finding enough water to support the mine. It spent millions of dollars on pipes and dams to bring in and store water from far away.
Lake Cowal is one of Australia’s largest ephemeral lakes, meaning it fills up only rarely and quickly dries out. For much of the past century, eucalyptus trees studded an arid landscape and local farmers fenced off much of the land.
“It used to be so dry, the landowners were growing crops on it,” said Mr. Pearson. “Now we’ve got to get a boat and worry about the weather. There’s a high number of tiger snakes, so we have to dodge them as well.”
Encounters with snakes aren’t his only worry in an area that teems with rare birdlife and draws photographers and amateur bird-watchers from afar. Mr. Pearson’s work used to be uncomplicated: a brief trip in a four-wheel drive car. Now, it’s a day-trip by boat.
Navigating the lake, which is 13 miles long and 6 miles wide, is fraught with more hidden dangers. Vessels risk colliding with submerged fence posts, or getting snagged in shellfish traps. With the boundaries of Barrick’s land mostly now underwater, fishermen occasionally encroach on the mining lease to catch yabbies, a local type of crayfish.
To measure noise levels, Mr. Pearson has to perch on a three-legged chair for up to an hour at a time. That keeps him clear of the lake, but exposed to the storms and strong winds that frequently blow.
“The waves can get quite big. You can get a half-meter-or-so wave, so you don’t want to be relying too much on luck,” Mr. Pearson said. “No one’s ever fallen in, though—not on my term.”
Water levels aren’t expected to keep rising, but it is hard to say when they will drop, said Mr. Pearson. If Australia enters another period of drought then they could fall pretty quickly, but the lake is expected to start drying up over the next couple of years, he added.
For Barrick, the re-emergence of Lake Cowal has brought additional costs at a time when the profitability of gold mines like Cowal has come under pressure from falling prices. Cowal produced around 160,000 troy ounces of gold in the first half of the year, with mining due to last through at least 2019. However, gold prices are down more than 19% so far this year, as a 12-year bull run has come to a shuddering halt.
Toronto-based Barrick, one of the world’s biggest gold miners, has been forced to add kayaks and powerboats to its fleet of heavy duty trucks. And as lake waters have risen, the company has had to spend $20,000 on getting even taller chairs for Mr. Pearson and his team.
Barrick says it remains committed to mining the area despite such challenges, convinced there is a lot more gold to be found. However, the lake has complicated its efforts to explore for the precious metal, compelling Barrick to look at substituting heavy earthmoving equipment for a floating drill rig.
Barrick will face fresh obstacles, though, when water levels drop. Company officials say deep mud will persist for some time, so accessing the lake site—and Mr. Pearson’s chairs—will be difficult even by four-wheel drive car.
“When the lake decides to stay dry again, if it ever does, we’ll have dry hazards. Woodland burns really well, it’s like kerosene,” Mr. Pearson said. “So there are advantages to it being wet.”
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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