[Update] Excellon says Mexican union spreading misinformation

Feuding unions at Excellon Resources‘ (EXN-T, EXLLF-Q) Platosa polymetallic mine in Mexico’s Durango State have staged multiple demonstrations in recent months and caused seven days of lost production in September.

The Mexican union Sindicato Nacional de Trabajadores Mineros, Metalurgicos y Similares de la Republica Mexicana (or “Los Mineros”), and its North American affiliates, the United Steelworkers, have sent several letters to the media and Excellon shareholders alleging the company is trying to “break a democratic and independent union in Mexico.” Excellon, for its part, says the problems at its Platosa mine are mainly the result of a larger, ongoing battle for influence between two large Mexican unions, and claims the Steelworkers are spreading misinformation.

“This is a union fight, we’re just caught in the middle I guess,” Peter Crossgrove, Excellon’s executive chairman, told The Northern Miner in a recent telephone interview. “We’ve had a union there since 2008. There is a Steelworkers union that is trying to get in there, and it’s trying to get in there without a vote… Quite frankly, I hope the government sets the date for the vote soon. We don’t mind dealing with whoever the government tells us to deal with, but at the moment we’re not permitted to deal with anybody, other than the union that’s there, and that’s who we pay the dues to.”

In late September, the Steelworkers and Los Mineros unions claimed around 300 Mexican army troops, federal and state police surrounded and blocked the entrances to the Platosa underground silver-lead-zinc mine after Excellon refused to allow mine workers to enter the mine because they were members of Los Mineros. Excellon says the government actually only sent around 12 military personnel and six federal police officials to assist with crowd control, and that was only to prevent fights from breaking out between the Los Mineros union and a rival union, which had staged an illegal blockade at the mine to drum up support for its own group. Excellon asserts the Los Mineros union had sent three busloads of its supporters to confront the rival union, which is itself a long-standing breakaway faction of the Los Mineros group called Sindicato Nacional Minero, Metalúrgico Napoleón Gómez Sada.

“The stuff the Steelworkers has been putting out is just absolutely not true,” Crossgroves protests. “But how do you sue the Steelworkers? Do you think we want to spend the rest of our lives in court suing people?”

Crossgrove explained union recognition in Mexico is a rigid process strictly controlled by labour laws and the government. For a union to gain recognition when another union has a collective bargaining agreement in place, it must first apply to the Federal or State labour authority, which then conducts a government-run and controlled voting process by employees. The employer has no involvement in the voting process, and only once a union is voted in by employees does the employer become involved to negotiate a collective bargaining agreement.

The Los Mineros union first staged a large strike and demonstration at the mine in August, with several hundred people participating. The union claims at least 130 workers at Platosa mine are now part of its group. Excellon, however, claims this is only part of the union’s misinformation campaign, as the bulk of demonstrators in August were bused in by the union from as much as 400 km away. The company asserts only six of the demonstrators were Excellon employees, and no demands were made of the company. The government was ready to conduct an immediate employee vote at the time, says Excellon, but the Los Mineros union refused to participate. The union has since agreed to follow the legal process and has made a formal federal application for a recognition vote.

According to chairman Crossgrove, “My understanding is that the reason the Steelworkers are afraid to have the vote is that they’ll lose. But I don’t know, I just honestly don’t know where the support lies.” He went on to note this is all part of a wider problem in which the rival union group is taking control away from the Los Mineros union.

The Steelworkers, meanwhile, claim Excellon and the Los Mineros union signed a tentative agreement in August – with state government representatives as witnesses – to end a four-day strike at the mine in exchange for the company’s agreement to recognize Los Mineros as the workers’ representative and to negotiate a new work contract. The Steelworkers claim Excellon’s current union, a mouthful called Sindicato Nacional de Industria “Vicente Guerrero” de los Trabajadores de la Extracción, Fundición, Transformación, Distribución, Montaje y Transportación de Productos de Metal, Minerales Conexos, Derivados y Similares (or the Vicente Guerrero Union), is merely a token union entrenched by the company in order to deny more effective unions like Los Mineros the right to represent employees.

Crossgrove says production is now fully back on track but is cautious about future union-related issues until a vote is completed. Excellon produced around 1.3 million oz. silver, 5.7 million lbs. lead and 8 million lbs. zinc from the high-grade Platosa mine in 2010. Cash operating costs for the year after byproduct credits were US$7.18 per oz. silver. The mine produces about 150 to 200 tonnes of ore per day, which after crushing is sent to a wholly owned mill located 200 km away. The company recorded a loss for 2010 of $3.9 million, including exploration expenditures of $9 million. Income from mine operations was $11.5 million.

Shares of Excellon closed down 2¢ to 59¢ on 224,000 shares traded on Oct. 11. They are down from around 82¢ in August, when news of the union troubles first came to light. The company has a 52-week share price range of 55¢-$1.39.

*This article is an update to a Sept. 30 article in The Northern Miner titled, “Mexican army brought in to guard Excellon’s Platosa mine.”