Crisis at Peñasquito mine after Goldcorp suspends all payments

300 mine workers protested outside the local Congress and asked local lawmakers to help solve the issue

Crisis at Peñasquito mine after Goldcorp suspends all payments
Newmont Goldcorp Corp is the biggest gold producer in the world – Photo: Sven Bachstroem/EL UNIVERSAL
English 02/05/2019 13:29 Reuters Mexico City Frank Jack Daniel and Delphine Schrank Actualizada 13:36
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On Tuesday, Newmont Goldcorp Corp said it had suspended payments and social programs to workers, suppliers, and villages around its Mexico’s largest gold mine in response to a blockade by a local contractor and members of one of the 25 communities, who are concerned about water supply.

On Monday, Newmont Goldcorp suspended operations at the Peñasquito mine because of the month-long blockade.

On Tuesday, 300 mine workers protested outside the local Congress and asked local lawmakers to help solve the issue so they can go back to work.

Among the programs affected are elementary and high school grants, productive projects, trusts, and social investments, the company said.

In recent years, mining companies around the world are seeking to earn the support of villages and towns near their mines by contributing to local development projects.

In 2017 alone, the operation of Goldcorp in Mexico generated operating costs, wages and benefits, community contributions and government payments of USD $837 million, from USD $1.4 billion in revenue, the company said in its most recent sustainability report.

Michael Harvey, director of Goldcorp's corporate affairs in Mexico, said the suspension of payments, first announced in a newspaper advertisement on Monday, would be effective on Tuesday.

“The blockade leaders are trying to extort us and our company will not give in to this extortion,” Harvey said.

The mine is part of the portfolio of Goldcorp, whose acquisition of Newmont was completed this month, becoming the world’s biggest gold producer.

“Now being part of a larger company gives Peñasquito greater strength to resist these extortion payments,” Harvey told Reuters.

The company said the protestors blocked the mine’s entrance and exit since March 27.

The miner alleges that a local trucking company and a group of people from San Juan de Cedros, one of the villages near the mine, demanded the company pay USD $442 million for the “presumed effects on a body of water in said community.”

Newmont Goldcorp said that in private, the protest leaders are more interested in demands for money than the water issue.

Felipe Pinedo, a leader of the blockade said allegations of extortion were a “smokescreen.”

“They don’t want to attend the harm that they are inflicting on the communities,” Pinedo said.

On Monday, Pinedo said residents were determined the mine “should go” if the local water supply was not restored and guaranteed.

“This blockade affects the income of more than 20,000 people,” the miner’s statement said, adding that more than 80% of the workers are from Zacatecas and over 500 come from nearby villages.

The open-pit mine produced 272,000 ounces of gold in 2018, company figures show. It accounts for about 17% of Newmont Goldcorp’s net asset value, according to Scotiabank.


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