TREND: Mexican cartels, a threat to mining businessWednesday, July 1, 2015 https://www.bnamericas.com/en/news/mining/kidnapped-goldcorp-workers-found-dead-in-mexico/
Worsening security linked to drug cartel activity in Mexico's Guerrero state is having a growing impact on mining business.
The first reported incident came in February when 13 people, including one employee and three subcontracted workers at Torex Gold'sUS$800mn Limón-Guajes gold project, were kidnapped.
Torex temporarily suspended construction at the project while local community members conducted a search for the missing people.
This was followed by Belgium-based Nyrstar's decision to suspend operations at its nearby Campo Morado mine, citing systematic intimidation of its workers. The mine produces zinc, copper, gold and silver.
In March, authorities reported an investigation into the kidnapping of four Goldcorp workers employed at the company's Los Filos operation in Guerrero state.
Three were found dead days later, with their bodies showing signs of torture, while a fourth was released, according to local press reports.
IMPACT
The recent kidnappings show drug cartels are not deterred from conducting activities around major international mining businesses that have strong federal support, Scotiabank head of gold and precious metals Trevor Turnbull told BNamericas previously.
The incidents also show authorities that have failed to bring the security situation under control, despite the high profile disappearance and presumed murder of 43 students in the state last year, Turnbull added.
As well as halting or disrupting production and construction, kidnappings and intimidation are having a major impact on recruitment for mining business, with the start-up of Limón-Guajes delayed after a contractor pulled out.
Security fears led Scotiabank to downgrade Torex' stock and will impact takeover demand for the company, according to Turnbull.
The situation will require that miners take extra security precautions at mines and projects in the state, which is likely to have a substantial effect on costs.
OUTLOOK
Whether security in Guerrero improves or worsens will hinge on efforts by the Mexican government to regain control of the country's fifth-biggest gold producing state.
The signs so far are not promising. Despite deploying federal security forces in towns across the state, authorities have so far been unable to significantly impede drug cartel activities, which include extortion and kidnappings.
More concerted efforts by the federal government, in collaboration with the communities and executives from the mining business, will be needed to bring order to Guerrero.
Pictured: Federal police reinforcements deployed in Acapulco, Guerrero state, Mexico. CREDIT: AFP