Until now, Latin American debates about the impacts of large, open-pit mining projects have not touched directly on Uruguay. That state of affairs, however, has changed with a proposal to develop a massive, US$3 billion open-pit iron mine 230 kilometers (140 miles) northeast of Montevideo.

The project, which would create the biggest mine ever in Uruguay in terms of size, cost and production, has attracted such strong opposition from environmental, rural, community and labor groups that Uruguayan President José Mujica has announced plans to hold a public referendum on the matter.

Though the referendum would be non-binding, Mujica’s comments on the vote appear to give him little room to push for continuation of the project if it is rejected at the polls.

“The government should not be authoritarian in terms of believing that because it will be in office for four more years, it can decide the fate for 30 years of riches that belong to the nation,” Mujica said last month. “We have the obligation to find ways for the most people possible to participate in the decision we make. I can’t administer the riches of my grandchildren. I should not, although legally I could.”

The president’s plan to hold a referendum must be approved by the Uruguayan Congress, which as of late July had no such proposal under formal consideration.

The iron-ore project, known as Valentines and located in and around a community of that name, would cover 120,000 hectares (300,000 acres). It is backed by Zamin Ferrous, a mining multinational founded five years ago by the Indian magnate Pramod Agarwal to extract iron ore from South America for use in steel manufacture in India, China and other developing countries.

Through its Uruguayan subsidiary, Aratirí, Zamin Ferrous began exploring the area in 2008 and in April 2010 filed an environmental-impact study with the Uruguayan government. It withdrew the study in May for further elaboration after Uruguay’s lead environmental agency, the National Environment Directorate (Dinama), cited deficiencies.

Zamin estimates iron-ore reserves in the project area at 2.3 to 4.3 billion metric tons and the operating life of the mine at 15 to 20 years. The company forecasts Valentines could produce 18 million metric tons of iron ore annually, generating US$1.4 billion in sales and making iron ore Uruguay’s biggest export.

The company would mix the mined ore with water and pump it through an underground pipeline 60-centimeters (two-feet) wide and 230 kilometers (140 miles) long to a port that would be built on the Uruguayan coast as part of the project.

Agricultural surroundings

The iron-ore reserves straddle four local departments: Durazno, Florida, Treinta y Tres and Cerro Largo. In this region of cattle ranches, rice plantations and soy, wheat and corn operations, agricultural producers and rural workers have expressed growing opposition to the project since 2009.

Protests began with blockages of principal roadways, but the opposition became more visible on a national level at the beginning of this year, when more than 20 environmental and social organizations formed an umbrella group called Movement for a Sustainable Uruguay to oppose “large-scale open-pit metals mining in the country.”

In May, the opposition groups staged a protest in Montevideo involving 2,500 people.

The mining company says that in the absence of formal notification that the project will be put to a public referendum, it will continue to conduct its government-permitted exploration work at the project site and to develop a definitive environmental-impact report.

Company executives argue that environmental concerns—which touch on groundwater contamination, excessive use of the agricultural region’s water supplies and tarnishing of Uruguay’s image in tourism markets, among other worries—are overblown.

“Open-pit mining like this is taking place in Sweden, which is higher than Uruguay in the [world] environmental rankings,” Fernando Puntigliano, manager of the Valentines project, said in a radio interview. “If they can do it correctly, why can’t we? The Dinama staff found deficiencies in the environmental-impact report and we are working on that. That is a good sign for Uruguayans.”

Project organizers reject concerns of contamination from runoff containing ammonium nitrate used in blasting, pointing out that ammonium nitrate is used extensively in the agricultural sector in fertilizer.

And responding to complaints about the mining operation putting a major dent in the region’s water supplies, executives assert that the mine will use less water than the region’s rice plantations.

Opponents accuse project organizers of soft-pedaling potentially destructive environmental impacts.

Multiple concerns

They cite the extensive blasting that will have to occur and question its effect on the local land contours and on nearby wildlife and agricultural operations.

They also raise concerns about pollution caused by runoff from the mine site; habitat disturbance as the pipeline is built through internationally recognized wetlands; and coastal contamination that occurs when water that is pumped with the iron ore through the pipeline is discharged into the Atlantic Ocean.

With Uruguay’s beaches the prime magnet for its important tourism industry, the prospect of a port in the picturesque coastal department of Rocha and fears of ocean pollution have raised a strong combination of environmental and economic worries.

More broadly, critics question whether large-scale open-pit mining of whatever kind is compatible with the image of Uruguay, which markets itself to tourists with the Spanish slogan “Uruguay Natural.”

“The initiation of iron-ore mining in Uruguay represents a drastic change in the direction of the country’s development,” says Eduardo Gudynas, head of the Latin American Center for Social Ecology (Claes), a nonprofit based in Montevideo.

Adds Gudynas: “Observation of open-pit mines in other countries indicates that the original natural environment is lost, soils are destroyed, water courses are altered and the fauna and flora are affected.”