Ambiguous Decree on COVID-19 Confuses Mexico's Miners

Mexico’s government has yet again thrown the mining industry into confusion. On March 30, the country’s authorities decreed that the COVID-19 pandemic is a “sanitary force majeure emergency.” All non-essential activities must be suspended until April 30.

The government’s decree, however, is ambiguous. To this point, Fernando Treviño, head of COPARMEX, a national association of business leaders, said: “It is unclear which economic units have to suspend activities or which authority is to determine it. The decree has loopholes in it and it is hard to know which businesses are essential. Thousands of companies remain open.” Ricardo Barbosa, Head of Labor Affairs of the same association, elaborated further: “The Federal Labor Law separates ‘sanitary emergency’ and ‘force majeure’ as two distinct legal concepts. The former implies that business owners have to pay employees the minimum wage for up to one month during the emergency. But the latter concept forces the company to take the case to the Local Conciliation and Arbitration Office for it to make a decision on payments.” It is worth pointing out that many of these offices are officially closed due to the pandemic. One can see why Salvador Dalí refused to visit Mexico, arguing that he did not wish to set foot on a country more surreal than him.

Miners’ response to the ambiguous decree has varied. Some companies have declared a temporary suspension of operations, while others have just said they will enter into a process for orderly ramping down production.

For instance, Tom Palmer, President and CEO of Newmont Goldcorp, declared: “While Newmont currently has no confirmed cases of COVID-19, we are moving to ramp down operations at Peñasquito mine in Zacatecas. We will, of course, comply with Mexico’s latest directive while engaging with the government to gain further clarity regarding important activities that may continue at the mine.”

Argonaut Gold, a junior gold producer, said: “Argonaut will work toward an orderly suspension of mining, crushing and stacking activities. Given that Argonaut operates heap leach mines, the company expects metal production and metal sales to continue during the temporary suspension of mining activities.”

Fred Stanford, President and CEO of Torex Gold, stated: “A 72-hour planned maintenance outage in the processing plant started in the morning of March 31. Production will not be restarted at the conclusion of this planned maintenance. A care and maintenance team will be kept on-site to maintain protections for the environment and to keep facilities and equipment ready for production. We have done this before and are good at it.”

An encouraging note for miners with assets in Mexico was released by Reuters, pointing out that two unnamed government officials expressed that the mining sector “will be able to continue with some projects in an effort to avoid the paralysis of future operations as well as to promote mine safety."