New Gold’s 2008 Sustainability Report

In a New Gold press release dated Dec 14, 2009 that’s titled New Gold Granted Injunction to Temporarily Lift Shutdown Order at Cerro San Pedro Mine, you can find the following statement 1 :

New Gold Inc. (“New Gold”) (TSX and NYSE AMEX-NGD) today announces that it has been granted an injunction related to the suspension of operations at its Cerro San Pedro mine in Mexico. The court ruling temporarily overturns the Mexican environmental enforcement agency’s order to suspend mining operations at the Cerro San Pedro mine. New Gold’s wholly owned Mexican subsidiary, Minera San Xavier (“MSX”), filed the appeal seeking to overturn the suspension order on December 3, 2009. Mining operations will recommence at the Cerro San Pedro mine and are expected to continue through
the duration of the appeal trial.

New Gold is one of the companies that I mentioned in my second letter to the Prime Minister of Canada. Out of concern for the possibility that they might not be running their mine at Cerro de San Pedro responsibly, I recently read through New Gold’s 2008 Sustainability Report 2. My comments in this post are regarding that report.

In the report, you can find lots of positive statements about the importance of workplace safety and environmental and social responsibility. For example, on page 2 you can find reference to “a company-wide commitment to corporate social responsibility.” Given the data that they provide of zero lost-time injuries and zero fatalities for 2008, they do appear to have a good workplace safety record for their mine at Cerro de San Pedro. Their statements on environmental responsibility in particular are nonetheless extremely vague and unsatisfying to me, and some important concerns are not even addressed. Allow me to explain.

First of all, there’s a reference to ISO 14001:2004 which does nothing to allay my concerns for reasons that I discussed in a previous post. There is no mention in this report by New Gold that ISO 14001:2004 does not state specific environmental performance criteria, nor is there any mention of what specific environmental performance criteria their ISO 14001:2004 certification would entail.

Secondly, nowhere in New Gold’s 2008 Sustainability Report are the concepts of acid mine drainage or heavy metal pollution mentioned. As was explained in the video about Marcopper in the Philippines, some types of mining waste have been known to pollute local water with sulphuric acid and heavy metals. If a problem of acid mine drainage and heavy metal pollution were to develop at Cerro 3 de San Pedro, then it could persist for centuries, if not millennia, after the closure of the mine. The question of whether or not this problem could arise was not mentioned in New Gold’s 2008 Sustainability Report.

Another important question is the one of cyanide management. Cyanide heap leaching of gold typically involves soaking enormous amounts of crushed rock in a solution of sodium cyanide and water. Tonnes of sodium cyanide and millions of litres of water are used every day in the operation of a mine like the one at Cerro de San Pedro. Gold mining companies are of course aware of the public relations nightmare associated with soaking mountains in sodium cyanide. If the word cyanide on its own weren’t enough, then catastrophes such as the spills at the Baia Mare mine in Romania and the Omai mine in Guyana would be. So it’s clearly in the interest of gold mining companies to manage the cyanide responsibly, at least to the extent that doing so will provide for a maximal balance between the image of the company and the other benefits seen by the people, such as the shareholders, that each company answers to.

It’s also true that people deal every day with all kinds of dangerous substances, not just cyanide, and that within many developed countries regulations exist to ensure that hazardous operations are carried out properly. Towards the end of New Gold’s 2008 Sustainability Report, on p. 19, there’s mention of the International Cyanide Management Code. I quote directly from their report:

While cyanide has its inherent toxic properties, its safe transport, handling, use and destruction are well understood and manageable. New Gold mine operations use cyanide as part of the process of extracting gold from the ore using strictly controlled procedures for the safety of personnel and the environment alike. The International Cyanide Management Code (ICMC) provides an excellent international reference standard for transporting, storing and using cyanide. The ICMC is renowned as the international benchmark for cyanide management. For more information go to: http://www.cyanidecode.org/cyanide_use.

It’s interesting that they don’t state there whether or not they actually adhere to the ICMC guidelines that they mention. Take a look at the list of signatory companies of the ICMC. New Gold isn’t on that list 4.

Independent of anything to do with New Gold Inc., there’s a question in my mind of whether or not a company’s presence on that list indicates that it necessarily deals with cyanide responsibly in all of its operations. Two additional points come to mind however, as a result of New Gold’s statements regarding the ICMC:

  • If New Gold is implementing a “company-wide commitment to corporate responsibility,” then it would seem natural to assume that the “strictly controlled” cyanide management procedures that they refer to would be good ones. But if they are good ones, then why would they appear to not satisfy what New Gold itself describes as “an excellent international reference standard for transporting, storing and using cyanide”? If on the other hand their procedures do satisfy the ICMC criteria, then what’s holding them back from either explicitly saying so in their 2008 Sustainability Report, or from being a signatory member of the ICMC?
  • If New Gold is implementing a “company-wide commitment to corporate responsibility,” but did not see fit to become a signatory member of the ICMC, then why are they talking about how good the ICMC is?

Cerro de San Pedro is elevated above the city of San Luis Potosí, the latter being located at the bottom of the Tangamanga Valley. The outskirts of the San Luis Potosí urban area are about 10 kilometers from the leaching pad and about twelve kilometers from the extraction site. According to some 2005 data from the INEGI, Mexico’s federal agency specialising in the collection of statistical and geographical information, the neighbourhood of Cerro de San Pedro where the extraction occurs was at an altitude of 2040 meters and the neighbourhood of La Zapatilla where the cyanide leaching occurs was at an altitude of about 1950 meters 5. The municipality of Soledad de Graciano Sánchez, on the east side of the San Luis Potosí urban area, the side that is closest to the mine, has an elevation varying between 1740 meters and 1870 meters 6.

Including only the municipalities of San Luis Potosí and Soledad de Graciano Sánchez, the city of San Luis Potosí had just under a million inhabitants in 2005 and was growing at a rate of 2 % per year 7.

update May 2, 2010: One thing that also shouldn’t go unmentioned is the aquifer. I left out mentioning San Luis Potosí’s aquifer since it was harder to find details about it and I hoped to investigate it later, and assumed that the information that I’d presented was enough to explain why I was concerned. But it should go without saying that the aquifer is of extreme importance, not only due to the fact that the mine is dealing with a lot of toxic material, but also due to the fact that mines such as this one use immense amounts of water, and San Luís Potosí does not have an abundance of water to begin with.


[1] The press release is available at http://www.sedar.com or from New Gold’s home page at http://www.newgold.com.

[2] A link to New Gold’s 2008 Sustainability Report is currently prominent on their home page, so please go ahead and read that report along with any other information that they have to offer.

[3] In case you’re wondering what cerro means, it’s a Spanish word with a definition that would fall somewhere between the definitions of the English words hill and mountain. Cerro de San Pedro is in the Sierra Madre Oriental mountain range.

[4] At the time of writing, this list had been last updated on December 1st, 2009.

[5] Both neighbourhoods are in the municipality of Cerro de San Pedro. They’re referred to as localidades by the INEGI.

[6] The INEGI data can be found here (in Spanish).

[7] That census information is also available from the INEGI, and can be seen here (in Spanish).

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One Response to “New Gold’s 2008 Sustainability Report”

  1. operationwatch Says:

    I checked today and saw that according to today’s list, last updated on October 18, 2010, New Gold Inc. is now a signatory of the ICMC. This is clearly good news but other issues remain which were simply not addressed in the report such as whether they are going to be dealing with an issue of heavy metal pollution or what is happening to the emblem of the city of San Luis Potosí.

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