Goldcorp caught in middle of Mexican gang war

Goldcorp (TSX:G, NYSE:GG) Los Filos gold and silver mine in Mexico's Guerrero state, the same region where 43 students were kidnapped and massacred last year, is at the centre of a turf war between two criminal gangs.

Goldcorp, the world's most valuable listed gold mining company, has operated the mine near the town of Carrizalillo since 2007, but residents say the $3 million the community receives annually has seen rival gangs enter the area to extort workers, contractors and landowners.

Guerrero has the country's highest homicide rate and a police crackdown in mid-2014 on Los Rojos, the gang controlling the town of 1,000 at the time, opened the door for a rival gang, Guerreros Unidos, to move in. Both groups are offshoots of the Sinaloa cartel which was headed by infamous narco kingpin Joaquin "El Chapo" Guzman.

According to Reuters "at least 26 people" have been killed in the ensuing tit-for-tat feud over control. In March this year, three Goldcorp employees were kidnapped for ransom and later found dead.

Speaking to Reuters, Goldcorp’s Latin America director for corporate affairs and security, Michael Harvey, claimed the corporation is doing everything it can:

“Even though we can and do advocate with local authorities for the respect of human rights in the vicinity of our operations, we cannot take on the role of government.

“The violence carries both a terrible human cost to the communities, and a financial cost to Goldcorp as we are obliged to invest in additional security for our operations and personnel.

"It is essential to protect the jobs provided by legitimate investment so as to give community members economic opportunities other than crime."

Last year, Goldcorp had to suspend operations for about month, during negotiations with landowners that led to a deal where Goldcorp pays "the equivalent of 4 ounces of gold per hectare in rent to 175 landholders and a communal land fund," according to Reuters.