Grupo Mexico, the mining giant owned by German Larrea Mota Velasco, Mexico's second richest man, has been in the center of a political storm since one of its mines in northern Mexico caused the worst ecological disaster in Mexican history.
According to Mexico's federal environmental protection agency, Profepa, on August 6 Grupo Mexico's subsidiary Buenavista del Cobre mine spilled 10 million gallons (40,000 cubic meters) of copper sulfate acid into the Sonora and Bacanuchi rivers, 25 miles south of the border with Arizona.
The contamination turned the waterways orange and affected the water supply of 24,000 people in seven communities along the rivers, forcing schools to close for several weeks while environmental authorities clean up the mess; 322 wells were shut down and more than 3 million liters of water have been distributed in trucks and bottles. Authorities place the cost of the total cleanup in the "hundreds of millions or billions" of Mexican pesos.
"This is the worst natural disaster provoked by the mining industry in the modern history of Mexico," said Mexican Environment Minister Juan José Guerra Abud on August 26. Profepa said the mine's leach solution yard is where the spill originated and ordered it partially shut,citing "imminent risk to the environment."
The government has taken preliminary action to fine Grupo Mexico more than $3 million for the spill and Mexico's Attorney General's Office has opened a criminal investigation into top officials at the Buenavista mine, the world's fourth largest copper mine by output.
In full-page ads in the Mexican press, Grupo Mexico blamed the acid spill on heavy rains. But the federal and state governments, as well as environmental groups, dismissed the explanation. They believe it was provoked by maintenance problems in a tank containing the acid.
(Photo credit: Jesus Ballesteros/Expreso/Cuartoscuro.com)
It is not the first major disaster involving Grupo Mexico. In 2006, an explosion inside the Pasta de Conchos coal mine, a Grupo Mexico-owned mine 62 miles south of the Texas border, in the state of Coahuila, left 65 miners trapped underground. Only two bodies were recovered.
Yet despite increasing calls by the affected communities, environmental groups and the Mexican Congress, which has asked authorities to suspend operations at the Buenavista mine until all damages have been assessed, and also cancel the mine's concession, Larrea has not only not apologized but also so far has not said a word about the disaster.
Larrea, an enigmatic figure who is also Chairman of Southern Copper Corp. (NASDAQ:SCCO), recently acquired 45,000 shares of that company’s stock, WKRB News reported. They were purchased at a cost of $32.49 a share, for a total transaction of $1.46 million. Larrea now directly owns 664,367 shares in the company, valued at approximately $21.5 million. His stake in Grupo Mexico is worth nearly $14.6 billion.
In preparation for a possible lawsuit, Mexico's federal attorney general office searched the offices of the Buenavista mine on August 29. A spokesman declined to specify what authorities were searching for, but Grupo Mexico said operations where unaffected by the search. In a statement Monday, Grupo Mexico said that "At no point did (the search) affect the functioning of the mine complex, which continues operating normally."
With total revenues of $9.3 billion in 2013, Grupo Mexico, which also operates railroads, is in the midst of a $3.4 billion expansion project at Buenavista, which has the largest proven copper reserves in the world. The state of Sonora, where Buenavista mine is located, leads Mexico in mined production of gold, copper and graphite.
With a net worth that Forbes estimates in $16 billion, German Larrea is Mexico's second richest man, after Carlos Slim Helú, the world's wealthiest man. Larrea is currently the 60th richest billionaire in the world, according to Forbes.
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