Goldcorp

Last edited by Phil Mattera on November 13, 2009 - 4:54pm

Company Snapshot:

Through a series of aggressive mergers, Goldcorp has transformed itself into one of the world’s largest gold miners. Its operations are all in the Western Hemisphere, including northern Ontario, parts of the western United States, Mexico, Guatemala, Honduras and Argentina. Like other big mining companies, Goldcorp has been criticized by human rights groups for mistreatment of indigenous communities. It has also faced labor and environmental controversies in numerous countries.

Profile editor:

Phil Mattera

Ownership status:

Publicly traded

Number of employees worldwide:

6,000

Chief executive officer:

Charles A. Jeannes

Website:

http://www.goldcorp.com

Tel:

604-696-3000

Net Income:

US$1.5 billion

Total revenue:

US$2.4 billion

Corporate accountability

Accountability overview:

As Goldcorp has grown through mergers, the scope of the controversies over its operations has expanded as well. The company has faced its most intense criticism on human rights issues in connection with its activity in Guatemala, where environmental impacts have also been a matter of great concern. At home, Goldcorp has had tense relations with unions over a four-year strike in Ontario and a series of fatal workplace accidents.

Labor:

Goldcorp’s Red Lake Mine in Ontario was the scene of the longest work stoppage in Canadian history. Members of the Steelworkers union walked off the job in 1996 after the company demanded to completely overhaul the collective bargaining agreement and eliminate numerous employee protections. When the dispute ended four years later, the company rehired fewer than half of the strikers and the union gave up its role, thus allowing the mine to become non-union.

In the years after the strike ended, the mine was cited several times for health and safety violations. Goldcorp was fined more than C$200,000 for safety violations following the death of a worker at a crusher facility. In 2005 it was fined C$45,000 for other violations at Red Lake.

There have been a series of worker fatalities at Goldcorp’s Musselwhite mine in northwestern Ontario.

In November 2008 members of United Steelworkers Local 7580 at Goldcorp’s Porcupine Gold Mines in Ontario ratified a new three-year contract.

Environment and product safety:

Canada. In October 2005 Goldcorp pleaded guilty to three counts of violating the Ontario Water Resources Act at its Red Lake and Wilanour operations. The company was fined C$225,000.

Honduras. A 2007 public health study found dangerous levels of lead and arsenic in the blood of Honduran villagers living downstream from the company’s San Martin mine. In 2007 the government of Honduras fined the company about C$55,000 for cyanide-laced discharges from the operation.

Guatemala. Independent analysis of the company’s controversial Marlin Mine (see below) raised concerns that the company would release contaminated water from the tailings impoundment area into the Cuilco and Quivichil Rivers. In 2009 critics of the mine charged that its operations were responsible for an outbreak of skin infections among local residents. Since 2008, the diocesis of San Marcos in Guatemala does a monthly monitoring of the river water below the mine, stating in a spanish report the water contains high levels of heavy metals (zinc, iron, aluminium, magnesium and arsenic) and therefore is not adequate for human consumption.

United States. Goldcorp owns two-thirds of the Marigold mine in Humboldt County, Nevada. A 2007 report by the University of Nevada-Reno found high levels of airborne mercury near the Marigold mine and other gold mines in the state. In April 2008 the South Dakota Department of Environment and Natural Resources announced that Goldcorp’s Wharf Resources unit would pay $149,300 to settle charges that its Wharf gold mine violated water quality regulations.

Argentina. The Bajo de la Alumbrera mine, in which Goldcorp has a 37.5 percent stake, has been tied to a variety of environmental problems such as releases of arsenic and other toxic substances. The mine has been the subject of protests over spills and pollution of the Hondo River.

Human rights:

Guatemala. In taking over Glamis Gold, Goldcorp inherited the controversial Marlin gold-silver mining project in Guatemala. Responding to complaints about violence, lack of consultation with indigenous people and adverse environmental impacts, the Ombudsman office at the World Bank’s International Finance Corporation, which was providing financial support for the project, issued a report in 2005 raising questions about how diligent the IFC was in consulting with the local community, which was not given sufficient information to allow for an informed view of the possible negative impacts. But the project proceeded.

Goldcorp faced increased opposition when it announced plans to expand the operation, including an action in which a protester was killed by military police while helping to blockade a road. In 2007 members of indigenous communities living near the mine issued a declaration accusing the company of deceiving their communities, causing damage to their homes and harming livestock and drinking water supplies. The statement also condemned repressive tactics by the National Civil Police and company security agents against critics of the project.

In 2008 activist institutional investors including the Public Service Alliance of Canada and the First Swedish National Pension Fund successfully pressed Goldcorp to arrange for an independent human rights impact assessment of its operations in Guatemala. However, critics such as Rights Action and Mining Watch Canada have expressed concerns about the way the assessment has been conducted and have raised questions about its validity even before the report is issued. In March 2009 the Public Service Alliance of Canada withdrew its support for the assessment process.

In November 2009, after two years of monitoring the damaged houses around the open pit, an engineering team of the Unitarian Universalist Service Committee (UUSC) and the Pastoral Commission for Peace and Ecology of the San Marcos Catholic Diocese published a report finding that blasting and heavy traffic from the mine appear to have caused cracks and splits in more than 100 houses in the municipalities of Sipacapa and San Miguel Ixtahuacán.

Mexico. In 2007 communal landowners blocked roads leading to Goldcorp’s Los Filos mine in the Mexican state of Guerrero for 83 days to protest the failure of the company to provide adequate compensation for land it was using. The company agreed to make additional payments.

History

Goldcorp was formed in 1983 by Donald McEwen to serve as a holding company for gold-mining shares and bullion. McEwen, who also ran a small securities firm called McEwen Easson that specialized in mining companies, died three years later, and the business was taken over by his son Rob McEwen, who set out to transform it from an investment vehicle to an operating company.

In 1989 McEwen won a takeover battle for Dickenson Mines and its prime property: Red Lake Mine in northwestern Ontario. Red Lake was a high-cost gold mining operation, and there were indications that it was played out. But McEwen’s gamble paid off. Several years later, a large new deposit was found at the mine, which became one of the world’s leading sources of gold. When the mine was hit with a strike by members of the Steelworkers union, McEwen took the opportunity to upgrade the facilities.

In 2004 Goldcorp was seeking to acquire Vancouver-based Wheaton River Minerals when the U.S. company Glamis Gold Ltd. made a hostile bid for Goldcorp. After a drawn-out battle, Goldcorp’s shareholders rebuffed Glamis and decided to support the Wheaton River deal. When that merger was completed, Goldcorp became one of the world’s largest gold producers. It enhanced its position in 2006 with the purchase of Virginia Gold Mines and its Éléonore gold project in Quebec. Then Goldcorp made a bid to take over its onetime hostile suitor, Glamis. As a result of the US$21 billion deal, which was completed in November 2006, Goldcorp became the third largest gold producer in North America.

In the past three years the company has sold some properties while also building its gold holdings with deals such as the purchase of the 49 percent it did not already own in the Porcupine mines in northeastern Ontario.

Financial information

Stock ticker symbol:

G (Toronto)

Fiscal year:

2008

Fiscal year:

2008

Major lines of business/segments:

The company describes its operations as follows: “Goldcorp is engaged in the acquisition, exploration, development and operation of precious metal properties in Canada, the United States, Mexico and Central and South America. The principal products and sources of cash flow for Goldcorp are derived from the sale of gold, silver and copper, however, in the future, it is expected that the sale of lead and zinc will be a source of cash flow for Goldcorp.” The company then summarizes its holdings as follows:

Canada and the United States

• a 100% interest in the Red Lake gold mines (the “Red Lake Gold Mines”) in Canada, a 72% interest held by Goldcorp and a 28% interest held by Goldcorp Canada Ltd., a wholly-owned subsidiary of the Corporation (the Red Lake Gold Mines are considered to be a material mineral project to Goldcorp), including a 100% interest in the Bruce Channel deposit in Canada;

• a 100% interest in the Porcupine gold mine in Canada, a 49% interest held by Goldcorp and a 51% interest held by Goldcorp Canada;

• a 100% interest in the Musselwhite gold mine in Canada, a 32% interest held by Goldcorp and a 68% interest held by Goldcorp Canada;

• a 66 ⅔% interest in the Marigold gold mine in the United States;

• a 100% interest in the Wharf gold mine in the United States;

• a 100% interest in the Éléonore gold project in Canada;

• a 40% interest in the South Arturo gold exploration project in the United States; and

• a 100% interest in the Imperial gold exploration project in the United States.

Mexico

• a 100% interest in the Los Filos gold-silver mine in Mexico (the Los Filos Mine is considered to be a material mineral project to Goldcorp) including a 100% interest in the Nukay gold mine in Mexico;

• a 100% interest in the El Sauzal gold mine in Mexico;

• a 100% interest in the San Dimas gold-silver mines in Mexico;

• a 100% interest in the Peñasquito gold-silver-lead-zinc project in Mexico (the Peñasquito Project is considered to be a material mineral project to Goldcorp), including a 100% interest in the Noche Buena gold-silver project in Mexico;

• a 100% interest in the El Limon gold exploration project in Mexico; and

• a 35% interest in the San Nicolas gold-silver-copper-zinc exploration project in Mexico.

Central and South America

• a 37.5% interest in the Bajo de la Alumbrera gold-copper mine in Argentina (the Alumbrera Mine is considered to be a material mineral project to Goldcorp);

• a 100% interest in the Marlin gold-silver mine in Guatemala (the Marlin Mine is considered to be a material mineral project to Goldcorp);

• a 100% interest in the San Martin gold mine in Honduras (in reclamation);

• a 40% interest in the Pueblo Viejo gold-silver-copper development stage project in the Dominican Republic (the Pueblo Viejo Project is considered to be a material mineral project to Goldcorp);

• a 100% interest in the Cerro Blanco gold-silver project in Guatemala; and

• a 100% interest in the Escobal silver-gold-silver project in Guatemala.

Additional descriptive data

Link to full list of subsidiaries:

Annual Information Form page 5