Uncle Sam goes green over a goldmine

Rupert Cornwell
Tuesday 17 May 1994 23:02

WASHINGTON - Most land deals are nothing special. But not one reluctantly agreed to by the United States government this week, involving the sale of nearly 2,000 acres of central Nevada to a Canadian company for the price of dollars 5 per acre. Under that chunk of sagebrush scrubland lies gold worth dollars 11bn ( pounds 7.5bn). And Uncle Sam will not see a penny of it, writes Rupert Cornwell.

How the richest gold deposit in the US fell into foreign hands for such a pittance is the direct consequence of an 1872 law aimed at speeding the settlement of the West. It allows metal mining companies virtually unlimited rights to buy up federal lands for a pittance and develop them without paying royalties to the Treasury.

For more than a year, the Senate and House of Representatives have squabbled over a bill correcting the anomaly. After the Toronto- based American Barrick Resources applied to purchase its Barrick Goldstrike mine at Carlin, Nevada, the Clinton administration stalled in the hope a compromise measure could be agreed. Finally, a federal judge to complete the sale, for the grand total of dollars 9,765.

At a bitter little ceremony in Washington this week, Bruce Babbitt, the Interior Secretary, did so. Behind him was a mock cheque for dollars 10bn made out to Barrick and signed 'by the American people'. Environmental groups have called it the 'Great Terrain Robbery'. For Mr Babbitt it was 'the biggest gold heist since the days of Butch Cassidy'.

But Barrick is unrepentant, claiming it has already invested dollars 1.5bn in a venture which will create 1,500 new jobs. Even so, there is a tidy profit waiting. The mine contains an estimated 30 million ounces of gold. At the current price of dollars 380 an ounce, that works out at dollars 11.4bn.

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