Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
Canada’s Barrick Gold (TSX: ABX)(NYSE: GOLD), the world’s second largest producer of the precious metal, has warned that mining at its Pueblo Viejo operation in the Dominican Republic could finish this year and production in 2030 if a new tailings storage facility (TSF) doesn’t get approved.
The mine waste depository is part of a planned $1.3 billion expansion expected to extend the mine life beyond 2040. It will also enable the mining of lower grades in the existing deposit, supporting annual output of more than 800,000 ounces of gold.
Speaking at a local media briefing, Barrick president and chief executive Mark Bristow noted that so far this year the mine had paid $522 million in direct and indirect taxes, which brings its total tax payments since it went into commercial production in 2013 to just under $3 billion.
“The extension of its life means that it would continue to be a major creator of value for the Dominican Republic and its people far into the future,” Bristow added.
The decision to proceed with project, under study since May 2019, was made in March last year. The company has been working with nearby communities since then, which doesn’t mean it has not faced opposition.
In May, 87 environmental and aid groups signed a letter opposing the expansion and construction of the related tailings dam, citing risks posed by increased mine waste and threats to local communities’ rights.
The company agreed in August to independent environmental studies, led by the government of Dominican Republic, for the expansion.
Pueblo Viejo, a 60-40 joint venture between Barrick and Newmont (NYSE: NEM)(TSX: NGT), is forecast to produce between 470,000 and 510,000 ounces of gold this year at an all-in sustaining cost of $760-$810 per ounce.
