Shares in New Gold, Incorporated dropped 15 percent on November 18, in the wake of the Mexican government's closure of the Cerro de San Pedro mine in San Luis Polosi. The mine is run by Minera San Xavier, a subsidiary of New Gold, which is a Canadian company with operations in Mexico, the United States, Chile and Australia. PROFEPA, Mexico's environmental enforcement agency, closed down the mine following court orders from the Ninth Circuit Administrative Court and the Federal Tribunal of Fiscal and Administrative Justice (SEMARNAT), according to MiningWatch Canada. Spokesperson for PROFEPA Patricio Patron Laviada announced that the mine had been operating illegally for the last four years, after its permit was revoked by Mexican courts in 2005.

The closure marks a victory for Frente Amplio Opositor (FAO) (Broad Opposition Front in English), an umbrella organization for Mexican environmental groups, and for MiningWatch Canada, which have been working together for years to close down the mine. FAO argues that the "illegal work of New Gold - Minera San Xavier has created severe and irremediable consequences for the natural environment of the Valley of San Luis" and hailed the court ruling as "a historic triumph." Jamie Kneen of MiningWatch Canada said this case had no precedent, "I can't think of a single example internationally of a Canadian mining operation that has been shut down by the authorities for operating illegally - but then I can't think of another company that has fought so hard for so long to operate without all its permits in place." A survey sponsored by FAO in October 2006 found the local population resoundingly against the mining operation, although there were some claims that the survey's questions were biased against the mine.

New Gold denies the charges of illegal activity or environmental degradation and claims that its site in San Luis Polosi will be back in operation soon.  CEO Robert Gallagher stated in press release, "this is a continuation of a decade of challenges from a group of individuals largely from outside the area who are opposed to the mining operations at Cerro San Pedro. We are taking all possible steps to respond to challenges to our legal ability to operate the mine, and believe that we will resume full operations." The press release continues that New Gold "has an enviable record of meeting its environmental and social responsibilities," that it is in full compliance with all of its permits, and that the company is pursuing all available legal means to address the actions by SEMARNAT and PROFEPA. In an interview on the Business News Network, Executive Chair Randall Oliphant continued the defence of New Gold's operations in Mexico, claiming that the fight was between the Mexican government and NGOs, which were contesting the government's right to issue the permits. He argued that "these are largely groups that don't like mining" and that the Mexican government was actually very supportive of the company's operation.

PROFEPA's Laviada said that these statements were merely attempts by the company to retain investor confidence and that the court's decisions will be upheld. New Gold has continued to recover gold from the mined ore as it appeals the government action. The tide may have turned against the Canadian company in its battle with FAO and MiningWatch, but it appears that the fight will continue for the foreseeable future.

Related

• Website: New Gold
• Excerpt: Official Court Report
• From the PNA Library: "Canadian Mining Companies in Latin America: Community Rights and Corporate Responsibility"
• From the PNA Library: "Mexico and Canada - The Good, the Bad, the Ugly and the Pragmatic"
• PNA Teaching Resource: Trade and the Environment in North America

(Image Credit: Wikimedia User Jenny Mealing)