Newmont subsidiary estimates US$562mn losses due to Mexican strike

Mexican miner Minera Peñasquito, owned by US-based gold giant Newmont, estimates that it has racked up a loss of US$562mn due to an ongoing three-month strike at its Zacatecas mine.

The industrial action will reduce the mine's projected annual production by 25%, leading the company to reiterate that that it will not report a profit this year. At the beginning of the year, the company had projected a profit of US$340mn.

On June 7, some 2,000 members of the union of mining, metallurgical and steel workers led by Napoleón Gómez Urrutia, also a senator, voted to go on strike after denouncing breaches of the collective agreement and failures to make profit-sharing payments to workers, demanding that the share outlined in the collective agreement be raised to 20% from the previous 10%.

“Due to the strike ... Peñasquito stopped producing, selling and earning income. However, many fixed costs remain and these are equivalent to approximately US$1mn per day, US$90mn in three months," Minera Peñasquito stated in an infographic published on social media.

These fixed costs include salaries and benefits of non-union workers, payments to contractors for maintaining the facilities, expenses related to operational safety and costs of keeping water and power plants operating, the firm explained.

“As of September 7, we will have stopped operating and producing for three full months. This has caused us to lose approximately 25% of annual production, 398,000 ounces equivalent, which is equivalent to approximately US$472mn less in revenue," the company said, adding that the fixed costs and lost production reach a total of US$562mn.

The strike at the mine has obliged Newmont to review its investments in Mexico, the CEO of the Denver-based company, Tom Palmer, stated recently.

In 2022, Peñasquito produced 566,000oz of gold, 29.7Moz of silver, 171,000t of zinc and 66,000t of lead, according to the Mexican mining chamber (Camimex). These figures make the mine the leading producer of these four metals in the country.