Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold giant Newmont (NYSE: NEM) (TSX: NGT) has declared force majeure on deliveries of some metal products from its Peñasquito mine in Mexico, as a strike drags on.
The US-based miner has had operations suspended since June 8, a day after nearly 2,000 unionized workers downed tools at the mine over a dispute regarding profit-sharing and alleged contract breaches.
The world’s no. 1 bullion producer’s decision, first reported by Reuters, comes as labour action at Peñasquito enters a third week.
The precious metals mine, located in the state of Zacatecas about 770km (480 miles) northwest of Mexico City, is the country’s largest gold operation and the world’s second largest silver mine.
The main bone of contention is a profit-sharing agreement between employees who are members of the National Union of Mine and Metal Workers of the Mexican Republic and Newmont.
Workers are demanding a larger share of the mine’s profit, from the 10% agreed in 2022 to 20%, the company says. The union’s secretary, Jorge Ramon Monsivais, said in an emailed statement that part of their demands are centred around a clarification on how the plan is calculated rather than a percentage increase.
The Colorado-based firm said it remained in a “constructive dialogue” with the union and the authorities participating in the mediation process.
The ongoing strike marks the third labour dispute at the asset since Newmont acquired Goldcorp, the mine’s previous owner, in 2019.
The operation had been the target of protests of landowners, truck drivers and residents of nearby towns in previous years.
Peñasquito has become Newmont’s third-largest mine by sales, bringing in $2.8 billion to the company’s coffers last year.
It is also relevant to Mexico’s economy, contributing $1.9 billion in economic value in 2022. The figure includes $643 million in employee wages and benefits, tax and royalty payments to federal, state and local governments, and investments in community infrastructure and water projects.
