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Buenavista copper mine The Buenavista copper mine.El economista

Losing its Cananea concession would be costly for Grupo Mexico

Mexico mining firm Grupo Mexico could lose up to 24% of its annual production if the federal government cancels its concession for the Buenavista copper mine in Cananea, Sonora, says a mining analyst.

The company would also lose 38% of its reserves, said Heber Longhurst of Grupo Financiero Interacciones, if the government acts on the proposal of Congress, which last week called for revoking the concession among several other demands.

The mine spilled 40,000 cubic meters of copper sulphate acid solution into the Sonora and Bacanuchi rivers on August 6, leaving some 22,000 people without drinking water in as many as seven area municipalities.

The National Water Commission has issued a prohibition against contact with the water due to unsafe levels of arsenic, cadmium, copper, chrome and mercury. The environmental protection agency is expected to conclude its investigation into the spill this week and decide on what sanctions will be imposed on the mine’s owner.

The environmental protection agency Profepa has indicated the mine could face fines of up to 40 million pesos, an amount that has received wide criticism for the fact that it represents a very small percentage of the company’s revenue from copper sales.

According to one report, those sales totaled 5.5 billion pesos in the second quarter of this year.

The Cananea copper deposit is the largest in Mexico, and the company is one of the world’s largest copper producers. The oldest mine in North America, its history dating back to about 1889, Buenavista produces 200,000 tonnes of refined copper a year and employs 9,000 people.

The mine’s production is estimated to increase to 510,000 tonnes annually with a billion-dollar investment this year in additional capacity.

The mine has had a rocky history, particularly in labor relations. In 1906 a labor dispute left more than 20 people dead, while another saw a miners’ strike that lasted from July 2007 until June 2010 when police broke it up.

A week later the Confederation of Mexican Workers was granted bargaining rights on behalf of miners, replacing the National Union of Mining and Metallurgical Workers, headed by the controversial Napoleón Gómez Urrutia.

Grupo Mexico has its detractors, among them activist Cristina Auerbach Benavides, who accuses the company of being “a serial assassin” for the deaths of miners over the years, beginning with 200 killed by a gas explosion at 3 Rosita in Coahuila in 1908, although the history of the company in its current form doesn’t go back that far.

Union leader Gómez Urrutia has charged the company with “industrial homicide” for the deaths of 65 miners who died at the Pasta de Conchos mine in Coahuila in 2006.

Many reports claim that the payment of fines imposed on the company for environmental infractions has not been enforced.

Grupo Mexico, the third largest copper producer in the world, is controlled by Germán Larrea Mota-Velasco, said to be Mexico’s second richest man after Carlos Slim of Telmex.

Sources: Dinero en Imagen (sp),  El Imparcial (sp), La Jornada (sp)

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