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Mining investments? Oh, by the way…

28 August 2013

Via Inca Kola News, which manages to find the news from Cabacora, Sonora that might just be of impact to those of you north of the border with mining investments:

Last week the representatives of a 77 person strong landowner group (ejido) ‘El Bajío’ won an important court ruling again the La Herradura mine owned by the Penmont JV (Fresnillo/Peñoles 56% and Newmont 44%). The ejido owners filed their suit in 2009 that said the mining company had illegally occupied 3,025 hectares their land area, which has always been disputed by Penmont who said that their actions only affected 300 hectares of the disputed area and that they had obtained all permits to use that area.
The ruling last week came after appeal, is immediately actionable and upheld the argument of the ejido landholders who now have the legal right to evict Penmont from their property as of this week, as well as being awarded compensation. That eviction of all Penmont assets and operations may begin in some symbolic manner this week, but the landholders have already indicated that they prefer to come to a full financial compensation deal and not threaten the jobs of the 5,000 or so workforce at La Herradura than carry out their legal right of eviction. The bill may be eye-popping too, as in the words of the legal representative for the El Bajío ejido, the estimate for the damage already caused to the 3,025 hectares is around U$100m and that “Today the mining company is condemned to total eviction and the payment of damages”.
A deal needs to be reached and the likely size means that it’s one that neither Fresnillo or Newmont will be able to sweep under some regulatory carpet.

Inca Kola News (and the IKN Newsletter) come out of Peru, but are required reading for anyone investing or interested in Latin American commodities, especially in the mining sector*.

Lead_mining_Barber_1865p321croppedThe problem for investors is that they don’t read the local Spanish-language press (the original story appeared in the Mexican daily Reforma, but was picked up by the Inca from the Hermosillo, Sonora on-line news-site, Dossier Politico.com),,, not likely reading for the English-speaking investor.

The problem for those of us in Latin America is that English-speaking investors all too often don’t have a clue as to what their investments involve here.  They may, on some level, understand that  land theft, labor abuses and environmental degradation are by-products of their investments, and it might be an acceptable risk to them — or they may even justify it as “job creation” —  but they shouldn’t be surprised if sometimes there are consequences, or the jobs they’re creating aren’t appreciated, and they find themselves holding the bag.


* The Sonoran story was a freebie, reprinted in Inca Kola News.  The IKN Newsletter is only 400 USD a year… a bargain as these things go, and while there’s no guarantees the Inca’s advice will make you rich and handsome, it cuts through the bullshit found in most mining reports, and reports on those situations (like that in Sonora) conveniently overlooked by the companies.

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