Newmont Corporation, a Colorado-based gold-mining corporation with over 14,000 employees and operations across the United States, Canada, the Dominican Republic, Mexico, Australia, Argentina, Ghana, Suriname, and Peru, recently announced that it came to an agreement with the National Union of Mine, Metal, and Allied Workers of the Mexican Republic to end the union’s strike. The strike began on June 7, 2023, when workers at Newmont’s Peñasquito mine in Mexico’s state of Zacatecas demanded increased compensation. Over the last four months, the labor strike has diminished mining operations at the Peñasquito mine, but the company has finally come to an agreement to increase worker salaries by 8%, despite the initial demand for a 10% to 20% increase.
The union initiated the strike to “demand additional profit sharing, equivalent to double the amount agreed upon one year ago, along with other alleged violations of the Collective Bargaining Agreement,” according to a recent company statement.
The Peñasquito mine is a top-ranking precious metal project in terms of its productivity, with Mexico being in the top 10 nations for its gold output. Any minor disruptions to the mine’s output can impact not only the company’s success but also the greater gold industry.
During this four-month period, the Peñasquito mine suffered a $23 million loss in operating costs. The work stoppage resulted in $15 million in amortization and depreciation, based on recent company data figures.
Last year alone, the mine contributed $1.9 billion in economic value to the nation of Mexico. This total included $643 million in wages and benefits for employees, taxes, and government royalty payments on federal, state, and local benefits. Newmont also invested in the community’s infrastructure with various projects.
The Peñasquito mine is Zacatecas’ second-largest employer, employing over 5,000 individuals in the area. The operation supports over 28,000 people, including families and neighboring communities around Mexico, who are involved in the Mine’s supply chain and overall operations.
When viewing the scale of the Peñasquito mine and its impacts on Mexico’s infrastructure and the gold industry, it’s clear why Newmont agreed to numerous conditions.
“This unnecessary strike has caused significant hardship for all of our employees, contractors, host communities, suppliers, and customers,” Tom Palmer, Newmont’s President and Chief Executive Officer, explained in the official statement. “We will continue to honor our commitments, comply with the law and the Collective Bargaining Agreement, and work to protect the long-term value of Peñasquito.”
The union president and ruling party, Senator Napoleon Gomez, led the strike movement in June and the negotiation movement. Gomez is an ally of the leftist President Andres Manuel Lopez Obrador.
Newmont included various agreement terms in its official definitive agreement, including raising worker salaries by 8% and providing an $8.3 million bonus, divided equally.
Newmont also stated that “If, as a consequence of the strike, the Peñasquito mine reports no profit in 2023, then Newmont agrees to pay an additional bonus in Q2 next year, equivalent to two months’ wages as the Company recognizes the hardship employees have experienced given the duration of the strike.”
The company plans to pay workers a percentage of their lost wages during the strike period as well. “Newmont will pay employees a fixed amount, roughly equivalent to 60% of wages lost, since the strike began on June 7, 2023. This payment is intended to mitigate the financial impact that the strike, initiated by the union, has had on the Company’s workforce,” the agreement statement explained.
With that being said, Newmont did not agree to “pay any additional incremental profit sharing for 2022.”
As of right now, the agreement is still in its preliminary stages. Newmont hopes the federal labor tribunal approves all agreement details so mining activities can resume again.
In other company news, Newmont finally announced its confirmed acquisition of Newcrest Mining Limited. This acquisition will make Newmont Corporation the world’s largest gold mining company.
Newmont now controls more than half of the world’s Tier-1 gold assets. Tier-1 assets produce over 500,000 gold equivalent ounces per year on average, have all-in sustained costs below the industry cost curve, have expected mining lifespans of over 10 years, and operate in nations that receive class A or B ratings from authorized sources.
“Today marks a historic milestone in our company and the industry with the successful completion of this transformational acquisition of Newcrest by Newmont,” Palmer stated in the press release. “Our attention now turns to safely, efficiently, and responsibly integrating Newcrest’s assets and people into Newmont’s proven operating model so we can accelerate the delivery of our value-focused strategy for all our stakeholders.”
