RPT-INSIGHT-Brutal cartels fight over Mexico's "conflict-free" gold revenues

(Repeating story first published on Sunday)
By Frank Jack Daniel, Anahi Rama and Lizbeth Diaz
CARRIZALILLO, Mexico, Dec 6 (Reuters) - Heroin traffickers
linked to the abduction and disappearance of 43 students a year
ago are battling over millions of dollars paid by Canadian
mining giant Goldcorp to a village in Mexico's southern gold
belt, leading to a wave of murders.
As a signatory to a Conflict-Free Gold Standard drawn up by
the World Gold Council industry group, Goldcorp G.TO commits
to extracting the precious metal in a manner that "does not fuel
unlawful armed conflict or contribute to serious human rights
abuses."
But residents of Carrizalillo in the impoverished state of
Guerrero say the some $3 million a year in rent paid by Goldcorp
for their land, which the mine is built on, is fuelling a bloody
feud between two rival cartels.
Village authorities say the company is not doing all it can
to protect them.
The violence highlights an ethical quagmire for industries
operating in Mexico's drug badlands and raises questions of
whether companies could do more to ensure safety for people
connected to their operations.
In response to Reuters' questions, Goldcorp said it has held
numerous meetings with authorities to seek better security
outside the mine's perimeters, in line with obligations under
the standard.
"Even though we can and do advocate with local authorities
for the respect of human rights in the vicinity of our
operations, we cannot take on the role of government," said
Michael Harvey, Goldcorp's Latin America director for corporate
affairs and security.
Authorities describe a struggle between two gangs -
"Guerreros Unidos" and "Los Rojos" - over the mineral wealth
that has split Carrizalillo into two factions, fanning chaos.
Each side accuses the other of supporting a rival cartel
with the alleged backing of different state and federal security
forces. At least 26 people have been killed since the feud
escalated in mid-2014.
Last month, within sight of Goldcorp's Los Filos pit in the
green hills and scrub around Carrizalillo, the remains of at
least eight alleged cartel victims were found in clandestine
graves.
Some homes in Carrizalillo are scarred with bullet holes and
broken windows after a series of assaults in the past year, some
involving dozens of masked men firing automatic weapons.
"The wealth Carrizalillo generates is fought over by these
two groups," Federal Police Commissioner Enrique Galindo told
Reuters, adding that the mine's riches have exacerbated a
struggle for control of drug trafficking routes.
Villagers describe systematic extortion by both cartels.
Initially, Los Rojos were dominant, "taxing" mine workers,
contractors and the landowners that Goldcorp pays rent to, as
well as exerting influence over mine unions, the village council
and a landowners' cooperative paid by the mine, former residents
say.
Last year, Guerreros Unidos gunmen blasted into the village,
killing four and terrorizing residents for months. That cartel's
rule was ended by a crackdown in October 2014 and since then the
factions have fought with a series of tit-for-tat killings.
"They want to take advantage of the fact there is money in
Carrizalillo. They want money that is ours," said Nelson
Figueroa, who heads the village council since July.
His faction blames Guerreros Unidos and villagers aligned
with the gang for the bloodletting, with the backing of members
of federal security forces.
Other sources say a member of Figueroa's faction, Ricardo
Lopez, the head of a cooperative that manages land revenues paid
by Goldcorp, is aligned with Los Rojos. Lopez and Figueroa deny
the claim.
Members of the gangs - both former subsidiaries of Joaquin
"El Chapo" Guzman's powerful Sinaloa cartel - face U.S. charges
of trafficking heroin from Guerrero, where poppy gum has
replaced the famed "Acapulco Gold" marijuana as a top export.
The Guerreros Unidos gang is the primary suspect in the
disappearance and apparent murder of 43 students last year,
although international experts differ with Mexican officials on
the degree of involvement of state and federal authorities.
The case drew international attention and fierce criticism
of President Enrique Pena Nieto's government.
It is less well-known that an hour's drive south from the
city of Iguala, where the students were abducted, the cartels
have turned their attention to gold.

CONFLICT-FREE?
Villagers welcome the wealth generated by the mine and have
negotiated to maximize their benefits. Protests closed the mine
for a month last year until Goldcorp agreed to more generous
terms.
Landholders say that under that May 2014 deal, Goldcorp pays
the equivalent of 4 ounces of gold per hectare in rent to 175
landholders and a communal land fund - an estimated $3 million a
year at today's prices.
That is a small fortune in a village of around 1,000 people.
Goldcorp declined to comment on payments. Under the conflict
standard, drawn up in 2012 to help members comply with U.N.
guidance on human rights, signatories commit to not making
payments that fuel unlawful armed conflict or serious rights
abuses.
Goldcorp recognizes that Los Filos is operating in a
"conflict-affected or high-risk" area.
"The violence carries both a terrible human cost to the
communities, and a financial cost to Goldcorp as we are obliged
to invest in additional security for our operations and
personnel," said Goldcorp's Harvey. "It is essential to protect
the jobs provided by legitimate investment so as to give
community members economic opportunities other than crime."
Goldcorp's gold mining activities have been certified as
conflict-free. Under the standard, companies operating in
conflict zones must use their influence to avoid abuses by
security forces and make them protect local populations.
"It is not enough for a company to simply say 'there are
risks but they are not our problem'," said Michael Gibb, who
leads advocacy group Global Witness' conflict-minerals campaign.
He said the standard was positive globally but some miners
in conflict-zones are not transparent about risks and corrective
actions.
Last month, dozens of soldiers moved into Carrizalillo's
winding streets to restore order but they soon left, leaving
villagers fearful and seeking help from the mine and
authorities.
"We want them to provide more security. That's what we've
always wanted, we don't want to live like this," said Figueroa.
Another Canadian miner, Torex Gold Resources TXG.TO ,
operates in the same area of Guerrero but has taken a different
approach.
In September, it agreed to pay for police check posts and
patrols in villages near its projects after violence including
the kidnapping, and later release, of 12 locals in February.
"The communities were vulnerable and in some ways the reason
they have something to steal is because we're there," Torex CEO
Fred Stanford told Reuters. "The activity we bring is disruptive
to the fabric of their society and they've welcomed us in. We
appreciate that and we can do our bit too to help them."
Some Carrizalillo villagers say they want Goldcorp to fund
police and military checkpoints and patrols along the short
stretch of road between the heavily guarded mine and the
unprotected village.
In letters seen by Reuters, villagers wrote to Goldcorp and
authorities on repeated occasions asking for security, including
just two days after the Guerreros Unidos occupation last year.
Goldcorp says it is doing as much as it can.
"Goldcorp is very concerned with the level of violence in
the communities surrounding the Filos mine. We continue to
encourage the Mexican authorities to do their utmost to combat
this violence," Harvey said.