Why Mining Companies Struggle with Security in Mexico

7/3/15 Stratfor Global Intelligence 

MiningGuerrero state has a significant number of productive mines, many of which exploit the rich seam of gold that runs through the region. Unfortunately, as interim Guerrero state Gov. Rogelio Ortega emphasized June 26, the preponderance of mineral extraction companies provides numerous targets for rampant criminal activity, much of which goes unrecorded. The governor urged mining companies to report all crimes perpetrated against them and to invest in public security instead of making extortion payments, often as high as $100,000 per month.

Ortega’s statement highlights a common problem: large multinational firms operating in Mexico are hesitant to report security issues to authorities, particularly in regard to kidnapping and extortion. It also serves as a reminder of the weak rule of law throughout most of Guerrero state that continues to challenge multinational corporations operating there.

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Mexico: Trust to Pay for Spill Damage

9/11/14 The New York Times

MiningMexican federal officials say Grupo Mexico, a mining conglomerate, will set up a $151 million trust to pay for damage caused when one of its mines spilled acid-laced copper sulfate and heavy metals into two rivers in northern Mexico on Aug. 7. The company blamed heavy rains for the overflow of containment ponds on Aug. 7. Officials say lax supervision at the mine appeared to have caused the accident.

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Mexico: Mining Company Lied on Spill, Official Says

08/19/14 New York Times

MiningEnvironment Secretary Juan Jose Guerra Abud said Tuesday that a mining company lied about a spill of 10 million gallons of acids and heavy metals that contaminated two rivers and a dam downstream. Mr. Guerra Abud said the mine claimed the spill on Aug. 7 in the northern state of Sonora was caused by unusually heavy rain but called that “totally false.” He said the Buenavista del Cobre copper mine, owned by the Grupo Mexico consortium, could face fines of up to $3 million in safety and environmental violations.

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Grupo Mexico Faces Charges Over Acid Spill

08/19/14 The Wall Street Journal

MiningMexican environmental authorities are pressing charges against mining company Grupo Mexico S.A.B. de C.V. over an acid spill in northwestern Sonora state that contaminated two rivers and left thousands of people without drinking water.

The federal environmental protection agency Profepa said Monday it has filed charges with the Federal Attorney General’s Office against Grupo Mexico mining units Buenavista del Cobre and Minera Mexico for alleged violations of environmental laws, including possible negligence in the handling of dangerous substances.

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Mining in Mexico: The sovereign take

The Economist, 11/2/2013

mineThe government needs to raise revenue in a country where tax avoidance is rife. The mining levy—a royalty of up to 7.5% on profits, plus 0.5% on revenue from precious metals—makes sense in principle. But it comes just when metal prices have swooned.

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Mining in Mexico: The sovereign take

MiningThe Economist, 11/1/2013

Bradford Cook runs his finger along a vein of ore rich in silver and gold and comes as near to purring as a veteran Canadian miner can. “This place has been mined for 450 years yet this little treasure box has been hiding less than 25 metres below ground,” he says. He points to the mine’s British manager, scrambling excitedly across the newly blasted rocks, and chuckles: “This is what Dave calls ‘horny’.”

But the object of their affection is rapidly tarnishing before their eyes. On October 30th, the day that Mr Cooke brought the board of his Vancouver-based company, Endeavour Silver, on their annual inspection of one of its three mines in central Mexico, the upper house of Congress approved a new mining tax proposed by the government of Enrique Peña Nieto. “If it goes through as is, our fourth mine will not be in Mexico,” declared Mr Cooke.

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Mining groups go on the defensive over Mexico taxation plans

MiningFinancial Times, 10/27/2013

Mexico is poised to levy some of the world’s harshest royalties on mining companies potentially hurting its business-friendly image just as, paradoxically, it seeks to open its energy sector up to private investment.

The proposal before the Senate, which has a deadline for approval of October 31, would impose a 7.5 per cent flat tax on mining profits, levy an extra 0.5 per cent on profits from precious metals and stop exploration expenses from being immediately tax deductible.

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