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Goldcorp Under Scrutiny for Mexican Mine Pollution

A leak that has been contaminating groundwater for several years at Goldcorp‘s (NYSE: GG) Penasquito gold mine in Mexico, but that remained unpublicized until Reuters recently revealed its existence, is now part of an investigation by authorities to see if the mining company broke any environmental laws.

According to the news report, Goldcorp first detected rising levels of selenium in the water in 2013, but didn’t report them to the government until October 2014. Thereafter, the level of contamination grew, and has now spread to other parts of the site. However, the neighboring communities were not notified of the situation because Goldcorp said its tests of groundwater found the contamination hadn’t moved beyond its property.

Reuters notes the Mexican government says that while it might have been better had Goldcorp notified nearby villagers, it wasn’t legally obligated to do so because the contamination was contained on its site. Reuters says the company met with government officials two weeks after receiving questions from the news agency about the leak, and submitted a presentation that had been prepared earlier this year, but had not been previously shown to officials.

Goldcorp records were apparently hacked and published online earlier this year, and one contained a risk assessment that “community knowledge and understanding of potential groundwater contamination may raise national and international attention.” Reuters reports that Mexico’s environmental prosecutor is now investigating “whether Goldcorp had downplayed or not fully disclosed relevant information.”

The company has come under scrutiny for groundwater contamination from its mines before. In 2009, Honduras opened an investigation into the miner’s San Martin opencast mine after it was accused of discharging acidic and metal-laden water that killed cattle and polluted the land and rivers nearby. Authorities eventually filed criminal charges against officials of the miner’s local subsidiary.

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In its second-quarter earnings report last month, Goldcorp said its gold production fell by a third, primarily because of lower ore grade and recovery, and a 10-day shutdown at a Penasquito mill for maintenance where it has approved an expansion of the mine. Penasquito is Goldcorp’s most important mine, accounting for a third of all the gold it produced in 2015 and 66% of its silver.

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Rich Duprey has no position in any stocks mentioned.

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