Mexico’s government already faces the threat of international dispute settlements over its energy reforms and proposed ban of GM corn. It now wants to radically change the rules of the game for its huge mining sector.
Mexico is the world’s largest silver producer, accounting for roughly one out of every five metric tons of the precious metal mined in 2021. It is also among the top ten global producers of 15 other metals and minerals (bismuth, fluorite, celestite, wollastonite, cadmium, molybdenum, lead, zinc, diatomite, salt, barite, graphite, gypsum, gold, and copper). For the past 31 years the country has functioned as a veritable paradise for global mining conglomerates, serving up some of the laxest regulations in Latin America. But that could all be about to change.
The Mexican parliament’s lower chamber on Monday (April 17) began debating a proposed overhaul of the country’s mining law. Also under debate are proposed amendments to the National Water Law, the General Law of Ecological Equilibrium and Environmental Protection, and the General Law for the Prevention and Integral Management of Waste. This comes just two months after Mexican President Andrés Manuel Lopez Obrador (aka AMLO) signed a decree handing over responsibility for lithium reserves to the energy ministry, after nationalizing the country’s lithium deposits in April 2022.
The main objectives of the reforms are threefold, Mexico’s Economy Minister Raquel Buenrostro told a private meeting of legislators on Monday (April 17): to restore state control over Mexico’s mineral and water resources; to regulate the granting, maintenance, supervision and termination of mining concessions; and to protect human rights, the environment and human health.
What Makes (Made?) Mining in Mexico So Special?
One thing that sets Mexico apart from most, if not all, other resource-rich countries in Latin America is the extreme preferential treatment it grants to the mining industry. In the country’s 1992 Mining Law, mining activity took precedence over all other industries and activities. Article 6 of the law reads:
The exploration, exploitation and beneficiation of the minerals or substances referred to in this Law are public utilities and will have preference over any other use or utilization of the land, subject to the conditions established herein, and only by a Federal Law may taxes be assessed on these activities.
Thanks largely to this bizarre four-line paragraph, the claims of the mining industry on Mexican land have had greater import than not just all other industries but all other human activity. For the next 31 years Mexico’s federal government has been bound by law to act against the interests and rights of both private landlords and local communities in order to guarantee mining companies access to the lands upon which a concession is granted.
“No other mining law on the continent grants preferential access over any type of land use,” Jorge Peláez Padilla, a professor of law at the Autonomous University of Mexico (UNAM), told the investigative journalist website Contralinea in 2013. The result has been rampant expropriations of private — and in some cases communal or even protected park — land, for the sake of private mining operations.
The duration of the concessions granted can also be uncommonly long. The 1992 Mining Law allows concessionaires to explore or exploit Mexican land for 50 years, and up to one century if the interested party requests an extension.
The law was the brainchild of Carlos Salinas de Gortari, who served as president of Mexico between 1988 and 1994. As I wrote in my 2014 WOLF STREET piece, Slimlandia: Mexico in the Grip of Oligarchs, in those six years Salinas set Mexico’s economy upon a path of rampant privatisation, deregulation and liberalisation:
During his… presidency Salinas not only signed up to NAFTA, but he also embarked on a privatization spree, selling off mines, banks, railways, electricity networks and, of course, Telmex, the national telephone company. Salinas relied on a relatively small group of Mexico’s oligarchy to supply him with campaign (and perhaps personal) funds, in return for the sale of state assets at favorable rates and terms…
Just as happened in Yeltsin’s Russia, the “liberalization” and privatization of Mexican markets has given rise to a new über-caste of oligarchs. More than half of the 11 Mexican tycoons featured on Forbes’ 2012 Rich List (who between them controlled a total wealth of $129.7 billion) are or once were owners of former state-run enterprises. They include owners or important shareholders of mines (Germán Larrea and Alberto Bailleres), telecoms companies (Carlos Slim, Ricardo Salinas Pliego and Emilio Azcárraga) and banks (Roberto González Barrera, Alfredo Harp Helú and Roberto Hernández Ramírez).
Unhappy Miners
Unsurprisingly, mining companies, both Mexican and foreign, are not overly happy about the prospect of losing the preferential regulatory treatment to which they have grown accustomed. The Mexican association of mining engineers, metallurgists and geologists (AIMMGM) warned in a statement that the proposed reforms represent an existential threat to the industry by drastically altering the procedures for obtaining mining concessions, the exercise of investors’ rights and compliance with regulatory obligations, as well as the penalties for failing to do so…
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Nick Corbishley 