An agricultural community has blocked Fresnillo from mining for gold on its land for more than a decade—now the courts are tallying up the bill

One of the UK’s largest mining groups has been told it should pay as much as $630 million to a Mexican community whose land it illegally mined for gold, according to documents.

Fresnillo learned of the sum in January from a court-appointed independent review, which followed a court ruling that it should return gold it mined or pay people in the area the equivalent value.

The London-listed group, worth more than £8 billion and majority-owned by Mexico’s Baillères family, is yet to mention the review in stock market disclosures, prompting concerns that it is withholding market-sensitive information from shareholders.

Jesús Thomas, a leader of the affected community in Mexico, said shareholders should “have the real information”.

Fresnillo is one of the world’s largest miners of gold and silver. The FTSE 100 company has been engaged in a long-running legal dispute with an agricultural community in the desert of northwest Mexico’s Sonora state.

Since 2013 it has been blocked from mining gold from the Soledad-Dipolos open-pit mine after a court found that it did not have the legal authorisation. The following year, a Mexican agrarian court ruled that Fresnillo’s local wholly owned subsidiary should return the gold it had extracted or a sum of equal value.

Expert review

An independent review to establish the value of the gold was commissioned following this judgment. In January, the review concluded that the land was part of a commons, or ejido, granted to an agrarian community called El Bajío.

Its report, seen by The Times and SourceMaterial, sets the value of the gold at more than $630 million.

Fresnillo’s recent statements to investors do not disclose the purported liability.

The company says it is challenging the review. Octavio Alvídrez, the company’s chief executive, told Fresnillo’s annual meeting last week that the expert opinion containing the $630 million valuation was “grossly deficient in technical and legal aspects”, adding: “It is not a ruling issued by the court. It is merely an opinion that should aid the court.”

Alvídrez said that even if the court endorses the valuation, Fresnillo would still have “legal remedies available”, including appeals to federal courts. 

“Fresnillo PLC denies any and all accusations of wrongdoing and illegal activities,” he said. “The company has, and always will, act responsibly with a strict adherence to the law.” 

A court hearing will take place on Thursday to invite the two sides to reach a settlement over the payment.

The company insists that the court ruling ordering the return of minerals relates to separate individual parcels of land from which no gold has been mined.

The expert report states that the Mexican land registry and site visits had confirmed that the Soledad-Dipolos open-pit is on El Bajío’s land.

Sergio García Camacho, the Bajío community’s senior legal adviser, said he hoped that the independent review drew a line under protracted legal proceedings.

Thomas, the Bajío representative, said: “Shareholders won’t benefit in the future from our land. That’s impossible. This company is using them.

“Life and the community has changed totally. Before, they raise cattle, have some crops. Once the mine arrived they lost the right to have water, they lost the right to use their own land.”

Enforcement

El Bajío’s entitlement to the land derives from Mexico’s common-use ejido system, which has its origins in the Mexican revolution of the early 20th century. Since the early 1990s, disputes involving ejidos have been settled under agrarian courts like the one handling the Fresnillo case. 

But the rule of law is often loose, according to Gabriela Torres-Mazuera, an expert on land and resource disputes at Mexico’s Center for Research and Higher Education in Social Anthropology.

“The enforcement of agrarian rulings is a matter of significant difficulty in Mexico,” she said. “In many cases, the execution of sentences is impeded by various institutional incapacities and resistances.”

Fabian Hamilton, the British Labour MP who chairs the all-party parliamentary group on Latin America, said:

“Transparency for investors is the least one should expect, particularly in a volatile global market. It’s vital that firms which are included on the London Stock Exchange are clear as to whether they are in a dispute and whether they are being compelled to pay damages to communities impacted by its work. 

“I have met with the El Bajío community and was appalled by what has now been ruled as an illegal extraction of gold on the community’s land.”

The dispute has taken place against a violent backdrop. El Bajío say that in 2021, one community leader was found dead along with a list of names of other community activists, a message that was interpreted as a hitlist. 

In 2018, another opponent of the mining operations in the community, Raul Ibarra de la Paz, was murdered and his wife, Noemi Lopez, disappeared. 

There is no evidence tying Fresnillo or its subsidiary Penmont to these events. Activists opposing other large-scale multinational mining operations have also been targeted in Mexico. 

Headline picture: The Soledad-Dipolos mine in Mexico’s Sonora province (Fresnillo PLC)