Mining in Mexico: Outlook of the proposed reform to the Mining Law

by – Lic. Alejandro Ceballos.

It is well known that Mexico is a prime mining destination. According to the Mexican Bank (“Banco de Mexico”), the mining industry is the fourth source of income of Mexico behind the automotive and petroleum industries, and the remittances of money by Mexicans living abroad.

Considering the above, the new government led by President Andres Manuel Lopez Obrador (“AMLO”), has included the mining industry in the list of top 25 high priority projects. However, the parliament group of the party of AMLO, “MORENA”, is proposing additional regulations relating to concessions in mining activities, considering to authorize the Ministry of Economy (“Secretaría de Economía”) to declare unviable zones for exploitation, thereby making it possible to cancel the concessions.

The proposed reform to the Mining Law, states that the concession shall be terminated in the event of noncompliance with the filing of the annual report with the Mexican Geological Service (“Servicio Geológico Mexicano”), same report that will include the identification, characterization, prediction and valuation of social impact, in addition to the risk mitigation of measures and management plans for the areas subject to such mining concessions and permits.

Furthermore, it provides that the beneficiaries of such mining concessions and permits may be sanctioned in the event that they do not ascertain the implementation of the risk mitigation measures and do not distribute the established minimum capital amounts for human and sustainable development for the corresponding mining communities.

The initiative aims to distribute the industry wealth to the mining regions; raise awareness for equal labor rights and protection of the environment, and the termination of mining concessions in the event of non-compliance.

It is important to mention that currently, the Mining Law establishes that in order to explore and benefit from substances and minerals, the mining companies are required to perform an evaluation of the environmental impact that must be authorized by the Ministry of Environmental and Natural Resources (“Secretaría del Medio Ambiente y Recursos Naturales”), but the social impact is not regulated.

As soon as the news of the proposed reform was made public, taking into consideration that “MORENA” and its allies have the majorities in the Senate and in the House, the value of mining companies shares suffered a loss in the Mexican Stock Exchange (“Bolsa Mexicana de Valores”). In view of this, the new government is working on forming a favorable investment environment that guarantees and improves the development of the industry in order that Mexico continues to offer international competitiveness conditions.

mining concessions and permits may be sanctioned in the event that they do not ascertain the implementation of the risk mitigation measures and for not distributing the established minimum capital amounts for human and sustainable development for the corresponding mining communities.

The initiative aims to distribute the industry wealth to the mining regions; raise awareness for equal labor rights and protection of the environment, and that in the event noncompliance, the mining concessions be terminated.

It is important to mention that currently, the Mining Law establishes that in order to explore and benefit from substances and minerals, the mining companies are required to perform an evaluation of the environmental impact that must be authorized by the Ministry of Environmental and Natural Resources (“Secretaría del Medio Ambiente y Recursos Naturales”). The social impact is not regulated.

As soon as the news of the proposed reform was made public, taking into consideration that “MORENA” and its allies have the majorities in the Senate and the House, the value of   mining companies shares suffered a loss in the Mexican Stock Exchange (“Bolsa Mexicana de Valores”); therefore, the new government is working on forming a favorable investment environment that guarantees and improves the development of the industry, in order that Mexico continues to offer international competitiveness conditions.

For any questions or comments, please do not hesitate to contact us.

Leobardo Tenorio-Malof   |   ltenorio@tplegal.net
Héctor Torres-López   |   htorres@tplegal.net
Alejandro Pedrín   |   apedrin@tplegal.net
Mauricio Tortolero   |   mtortolero@tplegal.net
Daniel Gancz-Kahan   |   dgancz@tplegal.net
Alejandro Ceballos   |   aceballos@tplegal.net

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