Peñasquito blockade lifted, operations still suspended

Peñasquito is Mexico’s top gold mine. (Image courtesy of Newmont Goldcorp via Flickr.)

Newmont Goldcorp (NYSE: NEM) (TSX: NGT) confirmed on Wednesday the lifting of an almost four-week illegal blockade affecting its Peñasquito gold-silver mine in Mexico, which will cost the operation thousands of tonnes in terms of lost output.

The world’s No. 1 gold miner said operations remained temporarily halted at the northern Zacatecas mine, but noted it was working closely with the federal and state governments toward a sustainable, long-term solution.

The civil action, one of the many affecting the mine over the past three years, is expected to hinder production of 11,000 ounces of gold, 1.7 million silver ounces, 13.7 million pounds of lead and 22.8 million pounds of zinc from Peñasquito’s third-quarter production, the company said.

While the blockade has been lifted, operations remained temporarily halted

Truck drivers, landowners and residents have now returned to the negotiation table, demanding compensation from Newmont Goldcorp for alleged environmental damages caused by the mine. They are also requesting access to clean water for local communities.

Their protest come on the heels of an earlier 80-day blockade, lifted in June.

The Canadian company said Peñasquito has already improved water availability for the mine’s 25 neighbouring communities through a number of projects, including water treatment plants, new wells, pipelines and water trucks, along with 90 other infrastructure and community development projects. 

The operation directly employs more than 6,500 people and supports another 20,000 indirect jobs in the region, Newmont Goldcorp said.

The Vancouver-based miner said in September it had offered $25 million in community investments and land rental fees to resolve the conflict, but that the proposal was rejected.

Later the same month, Mexican President Andres Manuel López Obrador accused some of the protest leaders of seeking money rather than legitimate social goals. He asked the parties involved in the dispute to resolve their differences.

The open-pit mine produced 272,000 ounces of gold last year, accounting for about 17% of the combined company’s net asset value and 4.2% of the Newmont Goldcorp’s total projected 2019 gold output of 6.5 million ounces.

About 70% of foreign-owned mining companies operating in Mexico, the world’s No.1 silver producer, are based in Canada.

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