Excerpt from McClatchy Newspapers, by Tim Johnson. Click here to read article in its entirety.
Mexico, known for centuries for its silver mines, recently saw gold surpass silver to become its No. 1 mineral export, partly because gold production has more than tripled since 2004 to more than 84 metric tons a year. And new mines are in the offing.
“We’ve found an area that is extremely concentrated in gold. . . . It’s quite staggering,” said Richard Whittall, chief executive of a Vancouver exploration company, Newstrike Capital Inc., which is hunting in the Guerrero Gold Belt, an area southwest of Mexico’s capital.
Whittall’s enthusiasm for his company’s Ana Paula deposit is understandable given prices these days. The deposit lies close to Los Filos, the largest gold mine in Mexico, which is the property of another Vancouver company, Goldcorp. Los Filos expects to yield 335,000 ounces this year at a production cost of $600 an ounce.
“You do the math,” Whittall says, referring to the more than $1,100 profit per ounce at current prices.
“It is more complicated to open a restaurant than it is to get a gold mining concession,” said Agustin Bravo Gaxiola, a mining specialist at the Mexican Center for Environmental Law, an advocacy group.
“Mexican mining legislation is such that it would have been the envy of Queen Victoria under the British Empire,” he added.
Under President Felipe Calderon, Mexico has more than doubled the area of mineral concessions, often granting rights prior to consulting with indigenous people dwelling on the lands. In February, federal courts suspended one concession granted in San Luis Potosi after lawyers for Huichol Indians said it would desecrate a sacred site.
Whether social problems erupt near gold mines often depends on where they are. In Mexico’s arid north, few problems have been reported.
“Miners only move a few cacti,” said Ecclestone, the mining consultant. “They are not ravaging jungles and killing monkeys.”
In contrast, mining companies going into countries that were once torn by civil war face different and more severe challenges.
“In Guatemala, you’re working in post-conflict areas with indigenous communities. There’s a strong suspicion of outsiders coming in,” said Keith Slack, an adviser on oil and mining for Oxfam America, a humanitarian relief and development agency.
Whittall, the Newstrike chief, said his exploration company fosters good relations in communities where it works, viewing it as economic common sense.
“If you’re trying to sell a company . . . one of the highest and most important assets to have is a tranquil community that is onside with potential development,” he said.
Mining companies, he said, should hold to the precept that “you’re a guest in the country. It is not rocket science. It’s just being respectful.”