Sunday, February 18, 2007

Chilpancingo, Guerrero, Mexico: Update on Louie Louies's mine


For yesterday's post where I mentioned a dispute between ejidatarios (dirt poor campesinos) and a gold mining company called Luismin (Louie Louie's Mine) comes new information. The campesinos, who are blocking the entrances to the mine and have been for some 40 days and 40 nights, are demanding a more just payment from the Louie Louie as well as the reair and reclamation of their damaged land once the mining company has moved on.

The campesinos are demanding 90,000 pesos per hectare per year for rent of the 700 hectareas the mining company is digging up. That is a pretty good chunk of change, be it pesos or whatever. That's a payment of a bit less than 6 million dollars annually for the extraction of gold from about 1400 acres. That does seem a bit excessive.

I cannot determine the value of the gold being extracted nor the cost per ounce to remove it. These numbers are very difficult to check. However, Louie Louie has threatened to pull up stakes and go elswhere unless the campesinos back off. The campesinos did have control of the mine itself, but were forcibly removed on January 20 by police. Now they block ingress and egress. The mining company is claiming a loss of 88 million pesos during the 40 day shutdown.

If that loss represented, say, a 50% profit margin (not unheard of in Mexico when exploiting the land and poor folk), that's a profit of 8 million dollars every 40 dys or, roughly 72 million dollars annually. The campesino's demand for 6 million dollars does not then look so excessive. If, however, the 40 day loss represents a profit potential of 15%, then Louie Louie would be looking a an annual profit of less than 16 million dollars. The 6 million dollars demand by the campesinos would then be usurious.

Since the numbers are almost impossible to pin down, who knows?

The company Luismin is a wholly owned subsidiary of Goldcorp. If you follow that link you can read about the company's wonderful relationship with the surrounding communities and about how 85% of the people view the company favorably and only 9% view it unfavorably. There is no mention of exactly how the process worked whereby the company got mining rights from the government to explore and drill on campesinos' land nor how much, if anything, the campesinos are being paid.

This article says that the campesinos are being paid 800,000 pesos annually, or less than 77,000 dollars. The article goes on the say that Luismin/Goldcorp/Louie Louie's expects to extract some 2 buillion 322 million pesos in gold each year from the land, or about 200 million dollars. At 30% profit, that's 60 million dollars. Again, who knows?

2 + 2 = 5.


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