April 30, 2019 / 8:04 PM / a year ago

Newmont Goldcorp suspends payments to villages near Mexico's largest gold mine

MEXICO CITY (Reuters) - Newmont Goldcorp Corp said on Tuesday 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 contractor and members of one of the 25 communities.

Newmont Goldcorp on Monday suspended operations at the Penasquito mine because of the month-long blockade.

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

Mining companies around the world seek to earn the support of villages and towns near their mines by contributing to local development projects.

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

Michael Harvey, director of corporate affairs in Mexico for the company said the suspension of payments, first announced in a newspaper advertisement on Monday, began to take effect 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 Newmont completed this month to become the world’s biggest gold producer. It has faced similar problems in the past.

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

The company said the protest had 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 $442 million for the “presumed effects on a body of water in the said community.”

Newmont said the protest leaders in private 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 to a harm that they are inflicting on the communities,” Pinedo told Reuters on Tuesday.

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 on Monday said, adding that more than 80 percent of the workers are from Zacatecas, the northern state in which the mine is located, and more than 500 from nearby villages.

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

Reporting by Frank Jack Daniel and Delphine Schrank; editing by Diane Craft and Marguerita Choy

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