After four long months of labor strikes, operations at Newmont’s (TSX: NGT) Penasquito gold mine in Mexico are set to resume. A deal has been successfully negotiated between the workers and the company, resulting in salary increases, according to official statements from the mine, the union, and Mexico’s labor ministry.
Mexico is a prominent player in the global gold mining industry, and the Penasquito mine has consistently been one of its most productive ventures. The negotiated agreement stipulates an 8% salary increase for the workers, a compromise reached after the initial union proposal had called for a more substantial hike of 10% to 20%.
The agreement made with the National Union of Mine, Metal, and Allied Workers of the Mexican Republic hopes to resolve the strike initiated by the union on June 7, 2023, at Minera Peñasquito in the Mexican state of Zacatecas.
This preliminary accord received ratification from the General Assembly of the Union on October 5, 2023. The intention behind this preliminary agreement is to transform it into a formal and definitive accord, which both parties will need to mutually agree upon, approve, sign, and submit to the Federal Labor Tribunal for Collective Affairs in Mexico City for the ultimate approval process.
“This process is expected to conclude in the coming days, which would bring the strike to an end and enable the company to start the execution of the return to work plan to ensure a safe restart of operations,” Newmont said in a statement.
The union’s statement specifies that the salary raise will be retroactive to August 1st, and employees can expect a 10% share of profits for the year. Notably, the mining company has also agreed to compensate workers with two months’ salary in the event that it fails to report profits for the year.
The labor strike was initiated in June by the union under the leadership of union president and ruling party Senator Napoleon Gomez, who is an ally of leftist President Andres Manuel Lopez Obrador. As part of the negotiated settlement, workers will also receive a bonus of 152 million pesos ($8.3 million), evenly distributed among them.
During the work stoppage, Penasquito, located in northern Zacatecas state, incurred significant financial setbacks, with operating costs bearing a $23 million burden and an additional $15 million in depreciation and amortization, as indicated by company data released after the second quarter. The mine’s gold production during the second quarter dropped by nearly 70% compared to the same period the previous year, with last year’s total gold production standing at approximately 566,000 ounces.
In addition to its precious metal output, Penasquito also contributes substantial volumes of base metals, including zinc and lead. Newmont had withdrawn its annual output guidance for this year in July due to the ongoing strike.
Newmont last traded at $51.69 on the TSX.
Information for this briefing was found via Reuters and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
