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Newmont Goldcorp suspends payments to villages near blockaded Penasquito mine

MEXICO CITY, April 30 (Reuters) - Newmont Goldcorp Corp said on Tuesday it had suspended payments and social programs to workers, suppliers, and villages around its Penasquito mine in Mexico in response to a blockade by a contractor and members of one of the 25 communities.

Newmont Goldcorp on Monday suspended operations at Penasquito, Mexico's largest goldmine, because of the month-long blockade.

The open-pit mine, in northern Zacatecas state, produced 272,000 ounces of gold in 2018, company figures show. It accounts for about 17 percent of Newmont Goldcorp's net asset value, according to Scotiabank.

Michael Harvey, director of corporate affairs in Mexico for the mining company said the suspension of payments, first announced in a newspaper advertisement on Monday, began to take effect on Tuesday.

"The blockade leaders are trying to extort us and our company will not give in to this extortion," Harvey said.

Among the programs being cut are grants, productive projects, trusts and social investments, the company said. Mining companies around the world seek to earn the support of villages and towns near their mines by contributing to local development projects.

The mine is part of the portfolio of Goldcorp, whose acquisition Newmont completed this month to become the world's biggest gold producer. It has faced similar problems in the past.

"Now being part of a larger company gives Penasquito greater strength to resist these extortion payments," Harvey told Reuters.

The company said the protest had blocked the mine's entrance and exit since March 27.

The miner alleges that a local trucking company and a group of people from San Juan de Cedros, one of the villages near the mine, demanded the company pay $442 million for the "presumed effects on a body of water in the said community."

On Monday, Felipe Pinedo, a leader of the blockade, told Reuters that residents were determined that the mine "should go" if the local water supply was not restored and guaranteed. Newmont said the protest leaders in private are more interested in demands for money than the water issue.

"This blockade affects the income of more than 20,000 people," the miner's statement Monday said, adding that more than 80 percent of the workers are from Zacatecas state, and more than 500 from nearby villages. (Reporting by Frank Jack Daniel and Delphine Schrank; editing by Diane Craft)