Last Wednesday the Mexican environmental enforcement agency closed the Canadian-owned New Gold mine in the town of Cerro de San Pedro. The government’s actions ratified decisions made last month by the Federal Tribunal of Fiscal Administration and Justice, as well as the Ninth Circuit Administrative Courts that deemed New Gold’s operating permits illegal.
The closure marks the end of a 10-year battle by the Frente Amplio Opositor (FAO), the international coalition that worked to close the mine on the basis of its environmental and social impacts on the nearby community of San Luis Potosi.
Cleve Higgins, of FAO Montreal, commented on the unprecedented importance of the closure. “It’s really significant for the people of Cerro de San Pedro, also for the people opposing mines in Latin America and all over the world…. This is the most high profile, widely known opposition to a mine of this kind.”
On November 14, the FAO filed complaints with the British Columbia Securities Commission and the Toronto Stock Exchange. The FAO accused these bodies of misrepresenting and withholding information that was of “central importance to shareholders.” Since the closure announcement, New Gold’s stock dropped by 18 per cent, though some analysts expect it to recover.
George Albino, an analyst with Macquarie Equities Research, expects the company’s shares to suffer, but only until the situation is resolved as he anticipates. “In our view, Mexico is a pro-mining country and will ultimately allow New Gold to resume mining operations at [Cerro de San Pedro] in spite of the current setback,” Albino said in a memo.
RBC Capital Markets analyst Michael Curran echoed the sentiment in a memo to clients. “We do not believe that the mine is an environmental liability that warrants permanent closure,” Curran wrote.
New Gold announced that it plans to appeal the decision, although it has made no mention of how it will conduct the appeal. The ruling that New Gold operated under null permits is unappealable under Mexico’s highest court.
According to a press release circulated by the FAO and Mining Watch Canada, FAO lawyers are currently pursuing charges against New Gold and its Mexican subsidiary. The coalition is also launching a “Mega-remediation project” to restore the mine’s detrimental effects on the historical and environmentally distinctive valley of Cerro de San Pedro.
“They are proactively taking steps to ensure mines of this kind don’t happen in the future,” Higgins elaborated.