A Mexican subsidiary of Canadian mining giant Goldcorp has been denied an injunction challenging the constitutionality of federal tax reforms that were brought into effect on January 1, 2014. The reforms established a special duty of 7.5 percent to net income on the disposal or sale of extraction activities, with an additional 0.5 percent tax on income from the sale of gold, silver and platinum.
|Goldcorp's vision, values, and "six pillars".|
The Goldcorp subsidiary, Minas de la Alta Pimeria, put forth an extraordinary challenge. According to Mexico’s Federal Judiciary Council (Consejo de la Judicatura Federal, or “CJF”), the mining company wanted to pay per unit of measure, and not by the value of gold extracted. In effect, it would pay the equivalent taxes on a kilo of coal as on a kilo of gold.
In its legal claim, the company stated that the “constituent does not have powers to establish these rights and added that the amounts are not proportional or equitable.” How Goldcorp felt it could challenge the powers of the federal government of Mexico to establish its own tax laws is hard to understand.
Judge José Francisco Pérez Mier of the Seventh District Court in Sinaloa ordered Goldcorp “to pay the rights pertaining to the use and exploitation of public property.” The judge concluded that the income obtained from Goldcorp’s activities will be used to support indigenous communities in areas near where the company’s mines are located. It was also noted that the payment of fees for mineral extraction is justified by the damage caused to the environment.
Goldcorp is the second-largest gold mining company in the world. Minas de la Alta Pimeria was founded in 1986. The Sinaloa operations are headquartered in Los Mochis, the same town where the leader of the Sinaloa drug cartel, Joaquin "El Chapo" Guzmán was recently captured.
The company has an aversion to political risk, and sees Mexico as being a jurisdiction that is friendly to mining companies, though it does operate in the state of Guerrero, which is prone to violence. Last year, four Goldcorp workers were kidnapped from the company's Los Filos mine in Guerrero – one was freed, the other three were killed.
Last year, Goldcorp sold its 26 percent stake in Tahoe Resources Inc., which has been bogged down by allegations of human rights abuses in Guatemala. For years Goldcorp was also embroiled in controversy related to the severe environmental damage caused by its San Martin mine in Honduras.
(TE Wilson is the author of Mezcalero, a Detective Sánchez novel.)