Americas > North America > Mexico > Mexico mining tax could win community support for projects

Mexico: Mexico mining tax could win community support for projects

2013/11/10

Planned mining taxes in Mexico may help win community support for new projects, Jason Reid, CEO of US-based precious metals miner Gold Resource (Amex: GORO) said in a call to discuss Q3 results.

While the 7.5% mining tax and additional 0.5% gross revenues charge for precious metals miners will "hurt" both Gold Resource and the mining industry in Mexico, one positive from the reforms is that it may "encourage" communities to support mine development in their areas, with 50% of the taxes to be directed to mining communities or states, Reid said.

People living close to projects or deposits may "want a piece" of the tax revenues and encourage companies to develop mines in their areas, he added.

Reid said the taxes could help the company make "better headway" at its El Rey project in Mexico's Oaxaca national which has been affected by community opposition.

Gold Resource said in August that it was continuing talks with local people the aim of winning support for the project.

The taxes, part of wider tax reforms in Mexico, were passed by the senate in October and are expected to become law at the start of 2014 next being signed into law by President Enrique Peña Nieto.

Mining companies have warned the taxes will see Mexico lose its competitiveness against rival jurisdictions such as Chile, Peru and Colombia, and harm investment , with major producers Grupo México (BMV: GMEXICOB) and Canada's Goldcorp (TSX: G, NYSE: GG) warning they may be forced to divert billions overseas.

Gold Resource has the El Águila gold mine in Mexico's Oaxaca national.

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