Development of Goldcorp’s El Morro gold and copper mine was halted by Chile’s Supreme Court which ruled that the local indigenous groups opposed to the $3.9 billion project need to be better consulted.

The court ruled that an environmental permit awarded last year should be stopped until a fresh consultation, based on an International Labor Organization convention, has taken place with the local Diaguita community, Reuters reported.

It is yet another court ruling against mining companies in Chile, and Latin America. Chile is struggling to find a balance between mining-led growth and environmental protection.

Billions of dollars worth of projects have been halted altogether or delayed in recent years, snarled up in red tape and opposed by local communities.

The decision about El Morro overturns a local appeals court finding from last April, which dismissed an appeal lodged by the opposition group Diaguita.

The Diaguita - who also opposed the massive Barrick Gold Pascua-Lama project, stalled since last year - claimed that a previous consultation on El Morro was not properly conducted.

They also say the mine in northern Chile is planned on what they deem as sacred ancestral land, and that it could pollute a local river.

El Morro is a potentially large, low-cost copper and gold producer which had been due to begin operations in 2017.

But the project seems to have gone to the backburner for Goldcorp. It was absent from a list of organic growth opportunities mentioned by Chief Executive Chuck Jeannes at a gold conference in Denver, CO in September, with Jeannes pointing to the Camino Rojo project in Mexico as the company's biggest internal opportunity, Reuters reported.

El Morro is 70 percent owned by Goldcorp and 30 percent by New Gold. Goldcorp edged down 0.2 percent and New Gold fell 2.2 percent on the Toronto stock exchange at mid-afternoon, in line with other gold stocks.