Across Latin America, Quest for Gold Brings Riches, Conflict Tim Johnson - McClatchy Newspapers
go to original October 1, 2012

Gold has been a significant staple of Mexican culture and history since its discovery. Today, gold mining projects in Mexico are expanding at a high rate. (MexicoToday.com)

MEXICO CITY - Steadily high prices for gold are having a dramatic impact on parts of Latin America, bringing a flood of foreign investment and stirring a gold bug among wildcat miners in the jungles.

Some of Latin America’s poorest nations – Bolivia, Honduras and Nicaragua – have seen their balance sheets strengthened by gold production, while major producers Peru and Mexico reap billions in foreign exports.

But even as miners unearth deposits of gold, they also open up veins of social discontent. Protests over gold mining have become the coin of the day in areas where villagers complain of water pollution, a lack of jobs and environmental devastation.

U.S. and Canadian mining companies can be lightning rods for the discontent. But watchdog groups say global mining companies have grown more responsible in their dealings abroad. As often as not, it is small companies, and even independent miners, who generate the frictions and pollution.

The average price of gold has risen more than sixfold since 2001, when it stood around $270 an ounce. Now, spot gold prices hover above $1,700 an ounce. Some analysts see prices heading higher amid global economic uncertainty.

The result has been a flood of mining companies heading south of the border.

“In Sonora, you can’t move without bumping into a Canadian miner,” said Christopher Ecclestone, a strategist at Hallgarten & Co., a London consultancy focused on mining in Latin America.

Mexico, known for centuries for its silver mines, recently saw gold surpass silver to become its No. 1 mineral export, partly because gold production has more than tripled since 2004 to more than 84 metric tons a year. And new mines are in the offing.

“We’ve found an area that is extremely concentrated in gold... It’s quite staggering,” said Richard Whittall, chief executive of a Vancouver exploration company, Newstrike Capital Inc., which is hunting in the Guerrero Gold Belt, an area southwest of Mexico’s capital.

Whittall’s enthusiasm for his company’s Ana Paula deposit is understandable given prices these days. The deposit lies close to Los Filos, the largest gold mine in Mexico, which is the property of another Vancouver company, Goldcorp. Los Filos expects to yield 335,000 ounces this year at a production cost of $600 an ounce.

“You do the math,” Whittall says, referring to the more than $1,100 profit per ounce at current prices.

Read more at The Modest Bee

Email: tjohnson@mcclatchydc.com; Twitter: @timjohnson4

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