From November 19 "The Mex Files" blog:
NGD, a Canadian gold-mining company is “cooperating with Mexican government authorities and pursuing all legal appeals after the company was notified yesterday that it must suspend mining operations”, at Mineria San Xavier (called Cerro Cerro San Pedro in company press releases) in San Luis Potosí –
Otto at Inca Kola News – who posted about the closure this morning — wrote in his subscription-only Latin American commodities investor newsletter “IKN Weekly” had suggested there were problems with the Canadian firm’s investments last weekend:
It is up to the individual investor to decide whether NGD suits his or her portfolio, but in this case I’ll venture to say that I would not be a shareholder in New Gold for the forseeable future. That’s just me. Enough said.
The mine closure follows complaints from citizen groups and Greenpeace that the company was not just damaging the environment and illegally working in protected forest areas, but — according to an article in the 13 June 2009 La Jornada, NGD was involved in several corrupt schemes to illegally acquire land from “falsos ejidatarios” in the 1990s. In what was billed as a liberalization, collective farms (ejidos) were broken up into private ownership plots under the Salinas administration — the result being not that the owners of the small farms (which were only productive when cooperatively farmed) were often pressured or cheated into selling off valuable properties to outside investors. In NGD’s case — at least according to the complaints — this went one step further, sending in “ringers” to make claims on the land.
AND… in what’s an under-reported story even in Mexico … leaders of dissenting farmers and environmental activists, were assassinated. Since 1999 Pro San Luis Ecológico has been seeking to annul the company’s mining permits, thwarted (or so ) by the Fox Administration and various PAN officials in the state who assisted NGD in shopping for “friendly jurisdictions” to hear the legal claims.
IN June 2004, the Ninth Tribunal (equivalent in a U.S. system to the Federal District Court) ruled in favor of citizens and against NGD, on the grounds that the company’s land claims were flawed.
A separate October 2005 ruling — this time from the Federal Tribunal for Fiscal and Administrative Affairs (TJAFA, for its initials in Spanish) — based on complaints from SEMANAT, the Secretariat of the Environment — ordered the government to cancel NGD’s environmental impact statement.
According to Juan Carlos Ruiz Guadalajara, a researcher for the Colegio de San Luis who wrote the Jornada article, the mining company — actively colluding with the state and federal PAN administrations — went court shopping for a friendlier jurisdiction to fend off the inevitable. This latest ruling — from PROFEPA (Mexico’s Environmental Protection Agency) carries out the court order, annulling a re-issued Environmental Impact Statement. However, the company is telling investors that:
“This is a continuation of a decade of challenges from a group of individuals largely from outside the area who are opposed to the mining operations at Cerro San Pedro. We are taking all possible steps to respond to challenges to our legal ability to operate the mine, and believe that we will resume full operations” says New Gold CEO Robert Gallagher.
In other words, they’re still court shopping. Otto is the go-to guy for investments, and I’ll not comment on the feasibility of throwing more money at the problem. The larger issue seems to be that a very outside the area group (the Canadian company) is complaining about “challenges from a group of individuals largely from outside the area…” — which means basically scientists, environmentalists and water quality experts called in by the local farmers and residents opposed to the mine — having been thwarted by Mexican courts for so long, with the active collusion of the political leadership, is looking to change the rules of both the democratic and judicial process. |
