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Mine, or ours? Or… the fortunes of Fortuna

16 November 2021

High. ho, High Ho… Fortuna stock is low.

Investors think it’s great, I know…

But, SEMANAT is on their tail

And they may have to go…

I know absolutely nothing about investing… in mining stocks, or anything else for that matter, but IKN does, and, from Lima, has been following the travails of Fortuna Silver’s stock dump following news that the Mexican Secretariat of Natural Resurces and the Environment (SEMARNAT) was not about to isue another 10 year waiver on its environmental permit.

The coverage in the mining and investment media has been swift, based on the assumption that something… anything… will change the Mexicans’ minds as to the operations of the San José Oaxaca site. As IKN writes, “… we got the inevitable pushback from the arrogant end of the mining commentariat, fuelled by the equally arrogant attitude of those at Fortuna Silver.” Among those “commentariati”, on “Seeking Alpha”, one “vozmozhno” wrote (13 November): “They knew about the Mexican permit issue before it became common knowledge. It was reported on a mining news website. Anyway it provided a juicy buying opportunity. I jumped in at 3.84 on the assumption that they will get it worked out and the price rebounds. We shall see.”

We shall, indeed, though I suspect vozozhno may be losing a chunk of change on the deal. “They” being Fortuna Silver, a Canadian corporation, which was a month late in applying for its environmental permit, despite strong opposition from local communities , where a growing movement, “Sí a la vida, no a la minería” (Yes to life, No to mining) has been organizing against foreign mining concessions since at least May of 2019. While the mining companies have always used the “job creation” argument in these communities (well known to any small town reporter or official, whether the job creator is a big box store, a prison, or an open pit mine), they have been known to resort to:

… provoking violent social conflict, displacing entire communities, threats, assassinations, forced disappearances, and persecuting activists and journalists. They promote, for their own benefit, tensions within communities, so that the state can later “resolve” in favor of the miners, by way of coopting the opposition, bribery, or police and military repression of dissidents.

Tryno Maldonado, in Guerrero Sur (9 November 2021) My translation.

What makes this more than just another “locals fight outside corporate interests” story is what it says about Mexico, andt the “new paradigm” in foreign relations. And, moving foreward in the era of climate change abatement. It’s been assumed for a very long time that Mexico wants foreign investments, and that it’s meant to be a resource exporting nation… something it’s been since Cortés first looted the Aztec capital. Ok… maybe… reluctantly… in the new paradigm it’s to be expected that the extractor actually pay for those resources, at least nominally, but… we’re seeing a rejection of the simplistic “job creator” market in favor of exploiting what the community sees as the gifts of their Creator: the forests, fields and clean water on which they have always depended. As a manifesto coming out of the May meeting of local Zapotec, Mixtec Chontal, Cuicateco, Ikoots and Mix communities states:

… various extractive projects … violate our community way of life, our bodies, our relationship: with the land, with our corn, with our water, with our spirituality and with our sacred territories.

… things they find more important than mere “jobs” (as if timbering, farming, fishing, livestock raising weren’t jobs enough). No different, really, than a small town in the United States or Canada turning down a new factory, or glitzy resort projcct on the grounds that it would bring in new and unwanted people and their strange “lifestyles”.

And, as it is, Fortuna dumped 1,516.000 liters of toxic waste in the Rio Coyote back in 2018, which is blamed, among other things for a hepititis outbreak in the region, so it’s not like the locals don’t have a point about wanting to protect their water. They can live without mining, they can’t live without water.

But what about Mexico? Since 1993, when a new mining law went into effect, over 200 million hectares of Mexican territory have been parceled out as mining concessions, about half (98,000,000) to foreign companies, mostly Canadian. In the last administration (Enrique Peña Nieto, 2012-2018) alone, more mining concessions were granted than during the 300 years of colonial rule. That despite a requirement (more honored in the breach than in the practice) that local communities be “consulted” before mining operations can commence. Which is what set off the “hoo-hah” in investment circles. Last Thursday (11 November):

The environment ministry… issued a statement saying it would work to organize the consultation of nearby indigenous Zapotec communities as part of the mine’s requested environmental authorization. That would let these communities decide “over their territory,” boosting environmental protection by involving all stakeholders, it added.

Reuters

That the state is likely… more than likely… to come down on the side of the “stakeholders” and not the shareholders (don’t you love how the foreign business press refers to local indigenous people’s land being in quote-marks, as if they actually were silly enough to think of the place they live as “their territory”?). Something Reuters seems to want to blame on “Lopez Obrador, a leftist resource nationalist who has repeatedly clashed with foreign mining companies, has said his government will not approve any new mining concessions, arguing past governments doled out too many.”

When you’re talking about nearly half the actual land in the country (those 200,000,000 plus hectares), yeah.. it probably is too many. The term, “resource nationalist” (let along “leftist resource nationalist”) is something Mexfiles hasn’t seen before, but how national resources are to be utilized, and who is to profit… shareholders, “stakeholders”, or just not worth the environmental cost, is going to be, if it isn’t already, one of the thornier international issues as we adjust to the new climate realities. Mexico is the world’s largest silver producer, and one of the “top ten” sources for several minerals essential to new energy efficient technology (like lithium). As of now, much (and a “leftist resource nationalist” might say too damn many) are controlled by outsiders in the already rich global north. Do they “belong” by divine right to the corporate interests, to the people of Mexico, or… are there other, more important things in life: our relations with our bodies, our corn, our water, our spirituality, our sacred territories.

That sounds less “leftist” than “traditionalist”.

SOURCES:

IKN “Fortuna Silver (FSM) (FVI.to) EIA permits, part deux (from IKN561)” 15 November 2021

Reuters, “Fortuna’s San Jose silver mine in Mexico faces closure due to expired permit” 11 November 2021

Seeking Alpha, “Fortuna Silver Mines misses on revenue” 11 November 2021

Consejo Civil Mexicano para la Silvicultura Sostenible: “Sí a la vida, no a la minería: comunidades oaxaqueñas” 21 May 2019

Maldonaldo, Tyno: “Oaxaca, Sí a la vida, no a la minería” Guerrero Sur, 9 November 2021

One Comment leave one →
  1. norm permalink
    16 November 2021 3:29 pm

    When a drilling company wants to drill a well here in Northeast Ohio, the oil/gas contract costs runs about 5 grand an acre for the right to drill, it takes 40 acres for each Clinton formation well, 600 acres for a Utica formation shale well that is drilled on the horizonal. The production company pays a 20% of the gross royalty or a 20% of the net after expenses and refinement. The second option pays better in most cases with the Utica wells, the Clinton wells pay better on the gross-different Hydrocarbon makeup . My point is that the locals get to eat, some very well.
    Policy matters: In Mexico, the government owns the mineral rights, in the US the landowners own their mineral rights.
    The reason you see no oil and gas wells on the North European Plain, is that the government owns those mineral rights, it being very much a democratic area, those land owners are not going to let their governments tear up their farms and forests for nothing. The oil and gas formations are similar to eastern Ohio. Politics.
    Mexico follows the European model but for much of my life, democracy was only a word, mining industries just bought what they wanted from the Mexican government. From what you wrote above, maybe that is changing a little.

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