Grupo México’s Shares Plunge

Grupo México’s shares plummeted on a Black Thursday that left the company with massive losses.

Following the reiteration of the Mexican government’s complaint regarding environmental damage, Grupo México’s shares took a nosedive.

In total, it is estimated that Grupo México lost 12,067 million Mexican pesos in market capitalization on the Mexican Stock Exchange (BMV) on Thursday, October 12.

The drop was in response to a criminal complaint filed by the federal government against the company for failing to remediate the damage caused by a chemical spill in the Sonora River in 2014.

As a result, the mining company’s stock fell by 1.98% during the trading session, closing at 76.84 pesos per share. It even dropped by 3.56% at one point during the day, reaching a low of 75.60 pesos.

María Luisa Albores, the head of the Ministry of Environment and Natural Resources (Semarnat), stated that the government had filed the complaint back in August because the company failed to fulfill the remediation contract following the spill.}

Grupo México’s shares: Problems

On August 6, 2014, 40,000 cubic meters of acidulated copper sulfate spilled into the Tinajas stream, which later flowed into the Sonora River. The toxic waste originated from the Buenavista del Cobre mine, owned by Grupo México.

Alejandra Vargas, a stock market analyst at Banco Ve Por Más (BX+), suggested that the drop in Grupo México’s shares could be related to the announced criminal complaint.

However, she clarified that the company has not yet provided any information on the matter. Vargas stated, “News like this tends to create uncertainty due to the impact it may have on the company and the strategy it will pursue, leading to volatility in the stock.”

The analyst assured that as more details about the complaint become available in the coming days, the stock may begin to stabilize, and the volatility could diminish.

At the end of September, Semarnat reported that over nine years after the spill, contamination still persists in the Sonora River, posing a health risk to people in the area. The estimated cost for the environmental, health, and economic impact is over 20,000 million pesos.

Grupo México, owned by Germán Larrea, denied the conclusion that contamination persists in the 420-kilometer-long river that flows through the state of Sonora.

Jacobo Rodríguez, a financial specialist at Roga Capital, also agreed that the drop in Grupo México’s stock on Thursday is partly explained by the criminal complaint.

He stated, “The impact of the news is immediate for one day, and then the stock moves in line with the market, and the impact on the company will be evaluated once more information is available. Right now, it’s pure speculation.”

The specialist at Roga Capital (an investment advisory firm) pointed out that in addition to the government’s complaint, there was a general decline in the markets and in the prices of raw materials on Thursday following the release of inflation data in the United States.

Also read: The stocks of Mexico’s three major airport groups plummeted.