Goldcorp (GG), Guatemala, Marlin, Criminal Charges and general country risk

The following is excerpted from IKN75. We tend to excerpt from the 'Regional Politics' section of The IKN Weekly more than the other parts (Fundamental Analysis of Mining Stocks, Stocks to Follow, Copper Basket, Market Watching) because info contained in the other bits usually pertains to companies we cover or recommend, so it's only fair paying subbers to keep that from the blog. But 'Regional Politics' serves its purpose in the Weekly as well, trying to spot trends and anticipate actions taken by governments that affect the playing fields further down the line. So here are your author's thoughts about mining and Guatemala from last weekend's edition, starting with the current issues faced by Goldcorp and then expanding. DYODD.

Guatemala: Environment Ministry Files Criminal Charges Against Goldcorp

Strangely enough (!) it’s been hard to find a decent English language news report about the action taken against Goldcorp (GG) by Guatemala’s MARN Environmental Ministry last week, but here’s a link to a translation done of one of many Spanish language reports (6) and here’s an excerpt:

Luis Ferraté, Minister of the Environment, has presented a criminal accusation to the Public Ministry against Montana Exploradora [Goldcorp Inc], insisting on an investigation into the discharge of residual waters from the tailings pond at the Marlin mine in San Marcos, because it may contaminate the Quivichil river.

The accusation, received by the Ministry on September 28, states that on September 23, the Marlin mine, owned by Montana, a subsidiary of the Canadian company Goldcorp, discharged water from its tailings pond and that this water may cause heavy metal pollution.

 The commentary after the report above then descends into “You Lie!” “No, You Lie!” etc, with GG denying and MARN assuring that GG had no right to discharge waters from its near overflowing tailings pond (due to recent rains) in the dead of night. There are better reports available in Spanish language (7).

However, be clear that this is a significant move on the part of Guatemala. The Marlin mine has long made the more polemic headlines of course, but this bringing of formal charges against the company by a government ministry is a different level from NGO accusations and GG platitudes. Frankly, our concern is less with Goldcorp at Marlin and more the general political risk atmosphere in Guatemala. The country is attracting attention from both sides of the mining sector, with the companies now looking at the country and its prospective regions with fresh eyes (note Tahoe THO.to, note Radius (RDU.v) and also the anti-mining activists looking upon it as a battleground laid out. With the government suspension of all new concessions and permits still in place (it’s been there a long time and the debate is now on to allow mining or not), the move made by MARN last week will strengthen the hand of those who would make the permitting ban more permanent. Personally speaking, I wouldn’t touch a Guatemala exposed project with a barge pole, no matter how good the rocks might be.

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Argentina: Anti-mining feeling is now reaching into the most pro-mining of regions

Jujuy, up in the northern reaches of Argentina, has been mining country for generations. But even in the most traditional corner of miner-friendly communites the rejection of bad mining operations is gathering speed.

Yesterday 2,000 people (a lot for that sparsely populated neck of the woods, be in no doubt) marched to the small town of Tilcara to protest the ongoing pollution to water supply and land. Notable was the lack of protest about economic development that mining brings, as you're talking to families of generational miners here that know all the pros and cons of living around, with and for the mining industry. They're just fed up with the poisoning, folks. The arguments were dominated by complaints about land contamination (as just one example, Google "Minera El Aguilar" to find out what they're talking about) water pollution and health problems (plenty of witnesses saying that loved ones have died from classic mining-related illnesses).

So be warned, mining investment community; if you want to make a fair profit from the extraction industry, the just treatment of local peoples is not an optional extra any more, not even in the most miner-friendly parts of the world. "DYODD, dude" applies to a prospective company's environmental track record. Ignore it at your own peril.