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News Article

Mining Companies in Mexico Struck by Insecurity

By Karin Dilge | Fri, 08/05/2022 - 18:27

Mexican mining operators end up losing around 30 percent of their products to petty thefts and robberies carried out by organized criminal groups, said Jaime Gutiérrez, President, CAMIMEX, as insecurity appears to be on the rise in the country.

Drug-related violence is commonplace in Mexico. In the past years, opium and heroin prices have decreased, which drove the so-called narcos to look for new illicit activities to obtain resources. "Mining is a great target for them to that end,” said Mario Salomón, Country Manager, Multisitemas de Seguridad Industrial, adding that criminals already have their own clandestine distribution channels to sell mining products. To mitigate these threats, security companies should hire security personnel from outside the community to avoid infiltration.

“The mining sector faces traditional risks like extortion, robbery and kidnapping, as well as dynamic risks like faulty relations with local communities and infiltration of organized crime,” said James Sinclair, Partner, Control Risks to MBN. Despite a relatively calmer 2021, extortion levels have increased in recent times as one of the rackets used by organized crime to infiltrate mining companies and receive relevant information.

Mining operations are vulnerable to organized crime and attacks because they are usually located in remote areas. Moreover, the value of the products they produce is high, which makes them an attractive target. Salomón pointed out the importance of hiring a capable, qualified leader for the security department to tackle these problems.

Gutiérrez said that mining companies are constantly under pressure from criminal gangs to pay bribes, while cartels target their workers and service providers and steal vehicles. Moreover, he added that mining companies have to pay elevated security costs, equating to an additional tax on the industry.

CAMIMEX has met with public security authorities to come up with a strategy to help address the problem in zones of higher risk. “Across the country the mining industry is punished by organized criminal groups,” Gutiérrez said. 

Security issues are recurrent problems for miners. On April 8, 2021, Alamos Gold’s Mulatos mine in Sonora was robbed. According to the company, an armed group entered the facilities, captured employees and stole silver and gold ingots, using an airplane to escape. Similarly, on Nov. 16, 2021, a group of armed bandits entered Consolidated Zinc’s Plomosas mine to capture a security guard and employees. The group subsequently stole approximately 90 tons of zinc and lead concentrates worth US$90,000.

According to the Fraser Institute's Investment Attraction Index, Mexico ranked 38th among 84 countries in 2019, 42nd in 2020 and 34th in 2021. Experts argue that the drop in investment has not only been due to changes in the laws and President López Obrador's position against mining, but also due to increased insecurity concerns. In both the 2020 and 2021 indexes, Mexico ranked 73rd out of 88 countries in the security section, lowering the country’s score significantly.

“My experience in the past 10 years in Mexico has allowed me to realize the country's potential, which is phenomenal. However, the main problems in the Mexican mining sector are the lack of security and political uncertainty,” Jorge Ramiro Monroy, CEO, Reyna Silver, told MBN.

According to figures from the federal government, from March 2021 to February 2022, 9,037 extortions were registered, which represents an increase of 16.8 percent compared to the same period last year. In addition, authorities warned that these figures are expected to grow throughout 2022. Meanwhile, regarding kidnapping, from February 2021 to February 2022, 627 cases were reported, showing a year-on-year decrease of 18 percent.

The data used in this article was sourced from:  
MBN, Bnamericas
Photo by:   pixabay
Karin Dilge Karin Dilge Journalist and Industry Analyst