Canadian miners grapple with security risks in Mexico – by Ian Bickis (Canadian Press/Winnipeg Free Press – April 19, 2015)

http://www.winnipegfreepress.com/

OAXACA, Mexico – The recent theft of $10.7 million worth of gold from a mine in Mexico has cast a spotlight on the risks of operating in the country.

The armed robbery of McEwen Mining’s El Gallo mine in Sinaloa State follows several other large mine robberies in the past five years, including multimillion-dollar heists at Pan American Silver and First Majestic.

“That’s a part of doing business in Mexico,” says Andrew Kaip, a research analyst at BMO Capital Markets. “It happens a couple times a year; a couple of these producers get hit. In most cases it’s covered by insurance.”
But it’s not just theft that’s plaguing mining companies in Mexico.

They’re now dealing as well with kidnappings and murder. Last month, four employees from Canadian-based Goldcorp were kidnapped while heading home from the mine site in a personal vehicle. One was freed, but three were later found dead.

And in February, four workers at Torex Gold Resources, also a Canadian company, were among 13 people kidnapped near the company’s Morelos gold project. All of the victims in that case were eventually freed.

Also in February, Belgium-based Nyrstar closed its Campo Morado mine indefinitely, citing “systematic intimidation” of its workers. Last year that mine produced about $124 million worth of gold, silver, copper, and zinc.

Both the Goldcorp and Torex kidnappings happened in Guerrero state — the same jurisdiction where 43 students disappeared last year and are now presumed dead.

Organized crime is thought to be behind most of these incidents, spurring fears that the security issues in Mexico will worsen in light of changing dynamics within cartels.

Alejandro Schtulmann, head of research at the Mexican risk analysis firm EMPRA, says Mexico’s large cartels are fracturing, leading to the creation of hundreds of smaller organizations that are in conflict with each other.

“Where I see the most danger is where criminal groups are fighting each other and where they might extort mining projects in order to get cash to meet their objectives,” says Schtulmann.

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