Mexico orders Canadian company to end mining

MEXICO CITY - The Mexican government has ordered a Canadian-owned gold miner to halt operations in a colonial-era hamlet where residents say blasting has damaged the landscape and chemical runoff threatens to contaminate the water supply with cyanide.

New Gold Inc. of Vancouver vowed Thursday to appeal the order, which caps a three-year battle by activists against the open-pit mine in San Pedro, in north-central San Luis Potosi state.

Authorities revoked the mine's environmental permit last week in accordance with an October court ruling that the license was improperly granted. But operations apparently continued until the government sent an inspection team to the mine on Wednesday and explicitly ordered a shutdown.

"We are going to apply the law so that this company ceases its activities," said Rene Carmona, a spokesman for environmental prosecutors.

Since beginning operations in 2007, New Gold subsidiary Minera San Xavier has blasted apart hills that loom over the village of San Pedro, founded in 1592. Workers destroyed old mine works and tunnels to get at low-grade ore left behind by colonial-era miners, then trucked the rubble to giant beds and doused it with cyanide-laced water to leach out flecks of gold. The town's centuries-old stone church and houses are just a few dozen yards (meters) from the blasting sites.

New Gold said Thursday that mining activity has been halted for the time being, although "gold recovery operations of existing inventory on the leach pads are continuing."

"New Gold Inc. is cooperating with Mexican government authorities and pursuing all legal appeals after the company was notified yesterday that it must suspend mining operations at its Cerro San Pedro Mine," the company said in a statement.

New Gold, which has said it recovers or reuses most of the cyanide and takes measures to protect historic structures in the town center, expressed optimism that it will win on appeal and be allowed to resume full operations.

But Carmona said the shutdown order means the mine is finished, and the company will now have just weeks to present a closure and cleanup plan.

"This would basically be a closure, a gradual closure," he said.

Anti-mine activists sad they were happy about the closure but angry the mine was allowed to operate as long as it did. They pledged to use civil disobedience to prevent it from ever reopening.

Juan Carlos Ruiz Guadalajara of the Broad Opposition Front, a group of residents and environmentalists, estimated it will cost at least $300 million to recover leaked cyanide, close the leach heaps and start restoring some natural covering to blasted hills.

"The damage is irreversible, but they have to remediate the cyanide," Ruiz Guadalajara said.

Activists say the old mine shafts, miners' houses and surrounding high-desert landscape could draw tourists as a replacement for mining income.

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