Grupo Mexico to set aside $150 Million for mine spill

September 12, 2014

Grupo Mexico has agreed to set aside at least $150 million to pay for damages after an acid spill from its Buenavista Mine in the northwestern state of Sonora led to the industry's worst environmental disaster on record in Mexico.

The company reached an agreement with Mexico's government to create a trust to pay for any environmental and human damage caused by the spill, government officials said Thursday. A special committee at the trust will define the exact amount to be paid by the company, which could go beyond the initial amount, The Wall Street Journal reported. 

The Aug. 6 spill of 40,000 cubic meters of copper sulfate acid solution from the Buenavista Mine in the northwestern state of Sonora contaminated two rivers and left thousands of residents without clean water. Mexican officials say it was the worst environmental disaster on record caused by the mining industry.

The Buenavista Mine, about 25 miles south of Mexico's border with Arizona, produces 200,000 tons of copper a year, making it the world's fourth largest copper mine by output. The company plans to invest $4 billion in the facility to raise production to 510,000 tons by 2016.

Grupo Mexico, controlled by Mexican billionaire German Larrea, produced 55 percent of Mexico's copper last year. The company also has operations in the U.S. and Peru.

The agreement comes after a special committee of Congress proposed closing the mine and withdrawing the concession after it determined that Grupo Mexico violated several laws at the mine over the years.

The company has said it reacted quickly to stem the spill, including undertaking construction of a retaining wall to reinforce a reservoir it said had overflowed. The company first blamed the incident on heavy rains, but later acknowledged that there were several maintenance flaws in the tank containing the acid. The company has said it would pay all cleanup costs and damages.

Officials ruled out the possibility of withdrawing the mining concession.

The spill affected an estimated 24,000 people in seven communities around the Sonora and Bacanuchi rivers. Authorities shut down hundreds water wells and distributed millions of liters of water in trucks and bottles in the aftermath. Dozens of farmers lacked water for their crops.


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