Newmont Goldcorp to suspend Peñasquito operations in Mexico due to blockade

(Reuters) - Newmont Goldcorp Corp said on Monday it plans to suspend operations at its Peñasquito mine in Mexico due to a blockade by a trucking contractor and some members of the Cedros community.

The open-pit mine, in northern Zacatecas state, produced 272,000 ounces of gold in 2018, company figures show. It accounts for about 17 percent of Newmont Goldcorp’s net asset value, according to Scotiabank.

The blockade began on March 27, the company said in a statement, adding that it was working with Mexican authorities to resolve the issue.

Newmont Goldcorp shares were down 2.7 percent to $30.61 by mid-afternoon in New York trading.

“This increases uncertainty surrounding 2019 operating outlook, and the company has not provided guidance on potential timing for a restart of normal operations or expected impact on 2019 production,” Stephen Walker, head of global mining research at RBC Dominion Securities, said in a note.

Peñasquito also accounts for 13 percent of the asset value of streaming company Wheaton Precious Metals, according to Scotiabank.

The mine is part of the portfolio of Goldcorp, whose acquisition Newmont completed this month to become the world’s biggest gold producer.

On the company’s first-quarter results call last week, Newmont Goldcorp Chief Operating Officer Tom Palmer said the blockade stemmed from concerns in the local community about water supply and “some issues around a trucking contractor.”

Felipe Pinedo, a leader of the blockade, told Reuters residents were determined that the mine “should go” if the local water supply was not restored and guaranteed.

Around 1,000 people and 200 trucks were taking turns to enforce the blockade, Pinedo said.

“We expect this to grow,” he added.

Last June, Goldcorp faced a protest led by local truck drivers who blocked entry to the Peñasquito mine. They said Goldcorp had reneged on promises to hire locally, but lifted the blockade two weeks later, saying they would negotiate with the company.

In 2017, a group of local residents blocked access to the mine for more than a week, demanding the company make good on a commitment to supply nearby communities with water.

Goldcorp later said it was able to resume operations without a hit to production.

Peñasquito is the second of Newmont Goldcorp’s mines to have its operations suspended, with the Musselwhite mine in Ontario, which accounts for 7 percent of production, shut after a fire in March.

Reporting by Debroop Roy in Bengaluru and Noe Torres in Mexico City; Editing by Dan Grebler and Tom Brown