Union files complaint against Orla Mining, alleging violation of worker rights in Mexico
The complaint is only the second of its kind made from Canada using CUSMA’s RRM process since the trade deal came into force in 2020.
Canada’s silver producer Primero Mining (TSX:P)(NYSE:PPP) could throw a wrench into the North American Leaders’ Summit next week, as the miner wants Ottawa to intervene in its tax dispute with Mexico.
The Toronto-based company, which owns the San Dimas gold-silver mine in Durango, Mexico, launched earlier this month a NAFTA challenge against the Mexican government arguing that local tax authorities were trying to improperly collect more taxes from them.
The dispute between Primero Mining and Mexico centres on how it is taxed on the sale of its silver, which the company has called it “neither fair nor equitable.”
The dispute centres on how the Mexican government taxes the foreigner miner on the sale of its silver.
In 2012, a Mexican court ruled Primero should be taxed based on what’s known as the “realized price” of the metal, which is a slightly over $4 an ounce. This price is much lower than the market value for silver, which is currently trading above $17 per ounce.
The Canadian firm had argued it should be taxed at the lower rate because it is contractually required to sell a large portion of its output to another company, Vancouver-based Silver Wheaton (TSX, NYSE:SLW), at the lower realized price.
But in February, the Mexican tax authority — SAT — decided to retroactively overturn that 2012 deal.
In its latest statement, Primero accused SAT of being “neither fair nor equitable” in its actions towards the company.
The silver miner says Ottawa needs to press Mexican authorities to ensure Canadian investors are treated fairly.
“The company believes that the SAT’s actions are discriminatory against Primero as a foreign investor,” it said. “As a consequence, Primero believes the government of Mexico has failed to uphold the core values of NAFTA, including its obligation to protect Primero’s foreign investment under NAFTA Chapter 11, and therefore the company is entitled to full compensation.”
The office of Primer Minister Justin Trudeau, who will meet the leaders of the US and Mexico in Ottawa on June 29, has indicated it doesn’t plan to get involved.
In an e-mail sent to Ottawa Citizen, Global Affairs Canada spokesman Austin Jean said the government was following the case closely, but it considered it to be a private matter between an investor and the Mexican government.
Primero chief executive Ernest Mast disagrees and says Ottawa needs to press Mexican authorities to ensure Canadian investors are treated fairly — or there could be more such disputes in the future, the paper reported.
The San Dimas silver-gold mine is located in Durango, Mexico. (Image courtesy of Primero Mining)
Primero inherited the Silver Wheaton obligation when it acquired the San Dimas mine from Goldcorp (TSX:G), (NYSE:GG) in 2010.
San Dimas mine is considered one of Mexico’s most significant precious metal deposits. Situated within in a very large (15 square kilometres) mining district, the area’s historic production has been estimated to total 11 million ounces of gold and 582 million ounces of silver.
