(Adds comments from company, local community, background)
SANTIAGO/TORONTO, Dec 7 (Reuters) - Chile has rejected an attempt by local communities to block modifications needed to keep Barrick Gold Corp's ABX.TO controversial Pascua Lama project alive, a resolution by the ministerial committee involved showed on Wednesday.
The Pascua Lama gold and silver project, which straddles the border of Argentina and Chile in the Andes Mountains, was put on hold in 2013 due to environmental issues, political opposition, labor unrest and development costs that ballooned to $8.5 billion.
Barrick, the world's largest gold miner, said in September it had brought back a former executive to advance a scaled-back development plan for the project that would focus on Argentina.
But the Canadian company faces fierce opposition from people on the Chilean side, who say the project will pollute and crimp already scarce water resources in the country's arid north.
"We will appeal with the environmental court, but it won't be the only action we take. We will do everything in our power to defend our lives, those of our neighbors and children and our territory," the Huasco Valley community said in a statement.
It said it will fight the project until it is "closed for good". The resolution can be appealed with Chile's environmental court within 30 days.
"The modifications in question related to the water monitoring system ... and had been approved by Chile's environmental regulators some time ago," a Barrick spokesman said, adding the company would give a more detailed update with its year-end results in February.