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Canadian Mines Targeted by Mexican Cartels

Canadian Mines Targeted by Mexican Cartels

The Mexican mining industry is a lucrative source of additional income for the drug cartels.

Pan American Silver Corp. became the latest Canadian mining company to curtail operations in Mexico due to rising violence and crime, saying Monday it has faced attacks and theft along roads used to transport personnel and materials to its Dolores mine in the northern city of Madera.

The Mexican mining industry has been a frequent target of Mexican drug cartels for extortion attempts, theft, and kidnapping in recent years, along with the phenomenon of illegal mining operations managed by organized crime groups.

A 2016 report by the Global Initiative Against Transnational Organized Crime detailed the evolution of the phenomenon in Mexico and Latin America more generally. The authors estimated that 9 percent of Mexico’s multi-billion-dollar gold industry is the result of illegal production, while mining in five different states – Chihuahua, Guerrero, Michoacán, Morelos, and Tamaulipas – was controlled by criminal groups.

In response to the recent incidents, Pan American Silver Corp., which is headquartered in Vancouver, said it will maintain personnel at its open-pit Dolores silver mine in the state of Chihuahua at levels necessary for site security and reduced operating activities.

“We have been monitoring the situation, and with the recent incidents that have occurred along the access roads, we have determined the prudent course of action is to suspend personnel movements to and from the mine until the roads are safe for our employees,” Michael Steinmann, the mining company’s president and chief executive, said in a statement.

Shares in Pan American Silver, one of the world’s biggest silver producers, fell almost 4 percent on the Toronto Stock Exchange following the announcement, dropping 93 cents to close at $22.44.

Pan American Silver’s announcement follows decisions by several other multinational firms to scale back Mexican operations as a wave of gang violence has driven murders in Mexico to record highs.

Coca-Cola Femsa, the world’s largest Coke bottler, shut down its 160-employee distribution centre in Ciudad Altamirano in the southern state of Guerrero in March.

According to the Global Initiative Against Transnational Organized Crime report, criminal influence over mines comes in many different forms. Often, gangs will demand extortion payments from local and multinational mine operators in exchange for concessions. In other cases, criminal groups will take full control of a mining operation, using it as both a source of revenue and as a mechanism for laundering money.

Train and truck freight robbery have soared too as criminals employ ever more sophisticated methods to terrorize the nation’s network of railway lines and highways. Some truckers now hire armed escorts to travel alongside them, as attacks doubled in 2017 to nearly 3,000.

Last week, miner and infrastructure firm Grupo Mexico said seven deliberate freight train derailments between the key commercial port of Veracruz and central Mexico would cost the company U.S.$16 million.

Chihuahua’s long border with Texas and New Mexico is a primary entry point for drug smugglers entering the United States.