Mexican community fights the biggest gold producer in the world

On Monday, Newmont Goldcorp Corp announced it plans to suspend operations at its Peñasquito mine in Mexico , due to a blockade by a trucking contractor and some members of the Cedros community .

The open-pit mine, in the state of Zacatecas , 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.

In a statement, the company said the blockade began on March 27, adding that it was working with Mexican authorities to solve the issue.

Newmont Goldcorp shares

were down 2.7% to $30.61 by mid-afternoon in New York trading.

“This increases uncertainty surrounding 2019 operating outlook, and the company has not provided guidance on potential timing for a restart of normal operations or expected impact on 2019 production,” Stephen Walker, head of global mining research at RBC Dominion Securities , said.

Peñasquito

also accounts for 13% of the asset value of streaming company Wheaton Precious Metals , according to Scotiabank.

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

On the company’s first-quarter results call last week, Newmont Goldcorp Chief Operating Officer, Tom Palmer said the blockade stemmed from concerns in the local community about water supply and “some issues around a trucking contractor.”

Felipe Pinedo

, a leader of the blockade, told Reuters residents were determined that the mine “should go” if the local water supply was not restored and guaranteed .

Around 1,000 people and 200 trucks were taking turns to enforce the blockade , Pinedo said.

“We expect this to grow,” he added.

Last June, Goldcorp faced a protest led by local truck drivers who blocked the entrance to the Peñasquito mine . They said Goldcorp had reneged on promises to hire locally, but lifted the blockade two weeks later, saying they would negotiate with the company.

In 2017, a group of local residents blocked access to the mine for over a week, demanding the company make good on a commitment to supply nearby communities with water . Goldcorp later said it was able to resume operations without a hit to production.

Peñasquito

is the second of Newmont Goldcorp ’s mines to have its operations suspended, with the Musselwhite mine in Ontario, which accounts for 7% of production, shut after a fire in March.

Zoé Robledo

, the Undersecretary of the Interior and a Morena lawmaker, José Narro Céspedes , will meet with the affected community to solve the issue.

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