Market Overview

Deadly Central American Earthquake Puts Mines and Fracking in Play

A major earthquake, with a reported magnitude of 6.9,  shook the west coast of Mexico near the Guatemalan border Monday morning, killing at least three people. The tremblor has also sparked concerns regarding the immediate future of several major industries in the region.

Mines

Mexico and Guatemala are rich with metals, and home to several major mining operations. There are two-publicly traded companies listed on U.S. exchanges with operations in the earthquake-affected areas.

Tahoe Resources’ (NYSE: TAHO) Escobal mine is a silver deposit in southeast Guatemala, from which all of the company’s production occurs. Fortunately for Tahoe, the mine is in the southeast of the country, while the quake was most felt on the other side of Guatemala. The company told Benzinga its operations were not at all affected by the earthquake and that just a few tremors were felt.

Goldcorp’s (NYSE: GG) Marlin mine, which produces gold, is much closer to the earthquake than Tahoe’s. The mine made up 7.6 percent of Goldcorp’s 2013 production, but that figure is expected to drop in 2014. It is uncertain if operations are affected by the strike. If so, impact on the stock will be small, because only a small portion of production comes from the Marlin mine. Benzinga reached out to the company for comment and is awaiting response.

Related: 6 Companies That Stand To Benefit From Fracking

Fracking

Fracking, or hydraulic fracturing operations for oil and gas, may be another victim to the earthquake.

Mexico recently ended the government's 75-year control of the oil industry, which is largely credited to the quickly expanding hydraulic fracturing industry. While there is no fracking in the country currently, political action suggests this may be changing soon.

Studies have shown fracking and earthquakes may be related. According to research from Cornell and the University of Colorado just last week, an onslaught of earthquakes in Oklahoma are likely the result of fracking disposal wells.

Mexico has only had three earthquakes above a magnitude of seven in the past decade. Although this quake is not the result of fracturing, fatalities near the Mexican border in Guatemala are likely to generate a dialogue on best practices to avoid natural disaster deaths. Possible risks of fracking are likely to be mentioned in this conversation.

Companies that stand to benefit direclty from fracking include Anadarko Petroleum (NYSE: APC), Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL).

Posted-In: EarthquakeNews Commodities Events Top Stories Markets Trading Ideas General Best of Benzinga

 

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