Silver miners struggle to keep up with demand
Silver demand has outstripped supply for three straight years and the Silver Institute projects another market deficit in 2024.
Workers at Mexico’s biggest gold mine have plenty of funds available to extend a strike as a dispute with owner Newmont Corp. enters a second week, a union official said Tuesday.
About 2,000 unionized workers at the Penasquito mine downed tools last week over a dispute regarding a profit-sharing agreement and alleged contract breaches, said Jorge Ramon Monsivais, labor secretary of the Sindicato Minero union.
The strike marks the third labor dispute since Newmont bought Penasquito from Goldcorp Inc in 2019. The mine, about 480 miles northwest of Mexico City, is Newmont’s third-largest by sales. It brought in $2.8 billion in sales in 2022, down 17% from the prior year because production lagged.
Striking workers at Penasquito have a so-called “resistance fund” to prolong the strike and would receive the support of associated members if those funds were to run out, Monsivais said. “They’re willing to continue the movement until this is cleared up,” he said in an interview.
Newmont shares were little changed at 10 a.m. in New York, as most gold-producing peers rose along with bullion prices.
UBS estimates Newmont’s earnings before interest, taxes, depreciation and amortization would decrease 3.6% in the second quarter if the suspension lasts for one month.
Even though the mine directly and indirectly employs 5,000 people, production has been suspended with a skeleton crew performing only basic tasks, Monsivais said.
While Newmont said workers are pushing for an increase in profit-sharing from an agreed 10% to 20%, Monsivais said demands are centered around a clarification on how the plan is calculated rather than a percentage increase. The union also alleges contractual breaches related to overtime payments and safety.
The mine is a major producer of silver and also churns out lead and zinc in addition to gold. According to Newmont’s latest quarterly report, output fell 38% in the first quarter.
“The company reiterates its interest in finding a solution that allows for the end of the strike, benefiting all parties involved,” Newmont said in a statement late Tuesday. “The company invites the union to engage in constructive dialogue and provides authorities with all requested information.”
(By James Attwood and Jacob Lorinc, with assistance from Alex Vasquez)
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