- The Washington Times - Tuesday, July 29, 2008

CERRO DE SAN PEDRO, Mexico | The past of this old mining town is again reverberating through its narrow stone-paved streets, as global mining interests blast away with dynamite the mineral-rich mountain that has loomed above the town for centuries.

Plumes of dust arise from explosions just a few dozen yards away from the old domed church in the main square of San Pedro, founded in 1592 in central Mexico. Residents say the force of the blasts reverberates through the old stone walls, destroying their hopes of reviving the town and its ancient mine tunnels through tourism.

Armando Mendoza wakes every morning to see enormous trucks and bulldozers scrape the mountain a little bit lower.

“It’s always on top of you. You see how the destruction is progressing, minute by minute,” said Mr. Mendoza, 64, who runs a small museum of artifacts illustrating the town’s history. “When there are explosions, you can feel the whole town shake.”

Soaring prices for precious metals and high exploration costs are drawing foreign companies back to Mexico’s old mining towns, where new techniques are making long-abandoned deposits profitable again.

But today’s new, massive and more intrusive mines may endanger the picturesque old towns that stand atop the deposits, threatening centuries-old buildings that many Mexicans would like to see preserved as historical or tourism sites.

In the race between mining - which offers quick investments and lots of blue-collar jobs - and the slow, arduous task of luring tourism, mining often wins.

Mines that were shuttered in the 1920s and ‘30s because of labor unrest, violence, anti-foreigner sentiment and low metal prices are being revisited.

Colonial-era miners used mostly hand tools to carve a labyrinth of narrow, twisting tunnels into the rock to get at large veins of silver and gold. Today, the entire mountain is being leveled by a modern open-pit mine, where huge vehicles cart away thousands of truckloads of crushed rock. Cyanide solutions are then used to leech out tiny particles of precious metals.

It is a blow to many towns that have been half-abandoned for decades and that have only recently started to gain popularity among visitors. Foreign investment in precious metals mining in Mexico has meanwhile soared to more than $695 million in 2007 from $800,000 in 2000.

Modern mining companies can process entire mountains for relatively low concentrations of ore.

Such advances - as well as gold prices over $920 per ounce and silver prices at about $18 an ounce - have led to renewed and often unwelcome interest in towns such as El Cerro de San Pedro, home to churches, houses and mine shafts built as long as 400 years ago.

Canada’s Metallica Resources Inc. - now merged with New Gold Inc. - has created an open-pit mine that swallowed one end of the town and is gnawing away the hill that stands just a few dozen yards above the main square.

New Gold Director Robert Gallagher, whose company expects to make about $300 million in profit over the 12-year life of the San Pedro mine, notes that “this particular project at $300 gold would be very marginal.”

“The issue with exploration and development projects right now is the risk involved in finding mineralization,” Mr. Gallagher says. Investors are increasingly loath to risk drilling shafts that fail to find ore, in part because rising fuel, equipment and labor costs have dramatically boosted the price of exploration work.

“What’s interesting about the old-timers is that they took meticulous records, and they’ve been preserved, so a lot of your exploration has been done, so your risk profile is very, very much lower,” he said. “And generally in old mining areas, there’s a culture of mines. People understand somewhat what you’re doing.”

Not only is it easier to find workers who have experience in mining, Mr. Gallagher says, it is easier to gain acceptance for the project.

But some San Pedro residents - mainly those who want to preserve the town for tourism or recreation - oppose the mine.

Rafael Flores opened a restaurant here several years ago to serve weekend visitors who come to run, bike, hike and see the old town. He notes ruefully: “If we made this a place for tourism, we would have a lot more good jobs, and we would all win, not just the few” that have jobs at the new mine.

As if on cue, a gaggle of teenagers from the nearby city of San Luis Potosi show up, eager to see a mine tunnel that Mr. Flores has preserved on his property.

Others who lack the money or expertise to join a tourism-based economy support the mine, drawn by paychecks of $20 or $30 per day that the area hasn’t seen in decades.

Bernardino Solis Ojeda, a stooped, 73-year-old municipal employee in San Pedro, calls the company “a treasure for us poor people” because it has renewed jobs lost when the old mine closed amid labor unrest in the 1940s.

In the intervening decades, San Pedro residents tried to eke out a living with small, wildcat mines. Others just left.

Although the mining company has restored two local churches and promises not to affect structures listed on the historical register, opponents say it has demolished an 18th-century home, outbuildings and old mine works.

Bulldozers also frequently encounter old mine tunnels and galleries, which are destroyed. An old train right of way used by mountain bikers has already been swallowed up, as have countless footpaths through the cactus-covered hills.

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