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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Goldcorp at Marlin, Guatemala

The BBC is running a report today entitled "Canadian mine accused of causing skin infections". The subject is Goldcorp's (GG) Marlin mine in Guatemala and the report contains the two photos of children you can see here. The BBC report is clearly a hit-piece, but that's not necessarily a bad thing, either. Sometimes the world needs a nasty photo and a story of mining hatred to get the real story out in the open...just ask the locals around Monterrico's Majaz /Rio Blanco project.

I'm telling you now that I'm not an expert on this mine and the ongoing controversy it has caused (today's BBC note is not new news in the enviro-world). There are always two sides to these issues and there's no way I'm going to ignore my own ignorance and rush to judgment on this. For a better idea of the story for the environmental protector's point of view (and with plenty of links) I found this post dated to 2007 that sums things up pretty concisely. As counterpoint there's a wealth of information, reports etc on Marlin and its operations (as well as the social spending projects that GG has sponsored) at this link on the GG company website.

What I will say is that those are really unpleasant photos for a father of two young girls who lives in mining country.

I'd be interested in getting a view from somebody at Goldcorp on this and I'll be writing to the company with a link to this post today.