Newmont Goldcorp offered $25 million in social projects to end mine conflict

MEXICO CITY (Reuters) - The world’s top gold producer, Newmont Goldcorp, said on Wednesday it had offered $25 million in community investments and land rental fees to resolve a conflict at its Penasquito gold mine in Mexico, but activists said they are unsatisfied.

Operations at the open-pit mine located in northern Zacatecas state, which produced 272,000 ounces of gold last year, have been suspended since last weekend because of a blockade by protesters.

“We have made a very generous offer of social investment, but the blockade leaders are demanding hundreds of millions of dollars in cash for themselves,” said Michael Harvey, director of external relations for Newmont Goldcorp Mexico.

Felipe Pinedo, a local leader who has helped organize blockades of the mine in the past, denied Harvey’s allegation in a phone interview with Reuters.

“The problem isn’t an issue of money; it’s an issue of life,” said Pinedo. “The people here are clear: They will accept the projects but give us back our water.”

He argued that the company’s spending in the surrounding Cedros community was a fraction of the profits from the mine that leave Mexico.

The Newmont Goldcorp proposal put forward at negotiations with the community include a 30-year pledge to operate a water treatment plant, a 12-year deal to lease local land and the promise to invest in a production or infrastructure project, the company said in a statement.

The mine directly employs more than 6,500 people, including 315 local residents, the company added.

Penasquito accounts for about 17 percent of Newmont Goldcorp’s net asset value, according to a Scotiabank estimate from earlier this year.

Operations at the mine have been intermittent since March due to protests. Some protest leaders said they wanted payment to compensate for damage to the local water supply.

The mine was part of the portfolio of Goldcorp, whose acquisition by Newmont was completed in April to form the world’s biggest gold producer.

Reporting by Daina Beth Solomon, Noe Torres and Frank Jack Daniel; Editing by Anthony Esposito, Nick Zieminski and Cynthia Osterman