Strike ends at major Mexican gold mine after workers pocket 8% raise

10:54 pm Thursday, October 05th, 2023

MEXICO CITY (Reuters) -A four-month-long labor strike has been lifted at Newmont’s Penasquito gold mine in Mexico after a deal was reached between workers and the firm to boost salaries, according to statements from the mine, union and Mexico’s labor ministry on Thursday.

Mexico is a top 10 gold miner, and Penasquito has ranked among its most productive precious metals projects.

Both parties agreed to an 8% salary increase for workers, the statements said, a figure below the 10%-20% hike proposed by the union initially.

The union’s statement said the salary raise is retroactive to Aug. 1, adding that employee profit sharing this year will stand at 10%.

The miner also agreed to pay two months salary to workers if it fails to report profits in the year, the union said.

In a brief statement, Newmont confirmed that a “preliminary” deal was reached and said it hoped it would be approved in a federal labor tribunal so that activities at the mine could restart, without providing further details.

The strike was launched in June by the National Union of Mine and Metal Workers of the Mexican Republic, led by union president and ruling party Sen. Napoleon Gomez, an ally of leftist President Andres Manuel Lopez Obrador.

The statements noted that workers will also receive a 152 million peso ($8.3 million) bonus, divided equally among them.

Penasquito, located in northern Zacatecas state, incurred a $23 million hit to operating costs, as well as $15 million in depreciation and amortization due to the work stoppage, according to company data released after the second quarter.

During the second quarter, the mine produced some 38,000 ounces of gold, down nearly 70% from the year-earlier period.

Last year, Penasquito produced around 566,000 ounces of gold.

In addition to precious metals, Penasquito also produces significant volumes of base metals zinc and lead.

Newmont withdrew in July its annual output guidance for the project’s production this year due to the strike.

($1 = 18.2971 Mexican pesos)

(Reporting by Daina Beth Solomon and Valentine Hilaire; Editing by David Alire Garcia and Stephen Coates)