The mining industry in Mexico is at risk due to the federal government's proposal to change the laws, including reducing the time of concessions from 50 to 15 years, according to an alert from major business organizations.
Earlier this week, the President of Mexico sent to Congress an initiative to reform the mining law to reduce the mining concession from 50 to 15 years. If the initiative is approved, there will be grounds for the revocation of the concession.
The "initiative aims to recover the State's rectory over the mineral and water resources found in the Mexican subsoil and are the direct domain of the Nation," said the initiative sent to the Chamber of Deputies to reform various laws related to the mining industry.
Last week, the Bank of Mexico (Banxico) warned that the bureaucratic delay in granting permits for the mining industry was paralyzing the industry.
"The initiative to reform the Mining Law (...) could generate negative impacts on national mining activity and put the subsistence and continuity of this industry at risk," reported the Association of Mining Engineers, Metallurgists and Geologists of Mexico ( AIMMGM) in a press release.
Separately, the Mining Chamber of Mexico (Camimex) assured that if the reforms to the laws related to mining are approved, there will be "strong repercussions for the development of the mining sector (...) and consequences for the national economy."
On Tuesday, President Andrés Manuel López Obrador sent to Congress (Chamber of Deputies) an initiative to reform: 1) Mining Law, 2) National Water Law, 3) General Law of Ecological Balance and Environmental Protection, and 4) General Law for the Prevention and Integral Management of Waste, all in relation to mining concessions.
The mining-metallurgical industry, according to the Ministry of Economy, headed by Raquel Buenrostro Sánchez, in 2021 contributed 2.5 percent of the Gross Domestic Product (GDP). In 2022, it was the fifth most attractive industry for Foreign Direct Investment (FDI) with the receipt of $28.6 billion.
For the AIMMGM, if the changes to the laws are approved, "it could generate large-scale capital outflows and a decline in the mining industry that offers direct employment to more than 406,000 people and generates more than 2.5 million indirect jobs."
The government initiative seeks to reduce mining concessions from 50 to 15 years, and also establishes reasons for canceling the concession.
The communities will be able to decide on the mining projects. It is important to highlight that in 2020, the community of Mexicali, Baja California decided in a popular vote to stop the construction of the new beer plant of the American Constellation Brands, a company that had already invested $900 million. The pretext for the cancellation was related to the water supply.
The initiative to reform mining laws will also require requesting a concession for water supply and will not recognize the transfer (sale) of mining concessions, among other measures.