For over three decades, Mexico has been a veritable paradise for global mining conglomerates, serving up some of the laxest regulations in Latin America. That is now changing.
Mexico’s outgoing President, Andrés Manuel Lopéz Obrador (aka AMLO), may only have a little over a month left in office, but he is by no means a lame duck. Quite the contrary: During the 30 days of September he will have more legislative power backing him up that at any other time during his six-year term. And he plans to make full use of it.
This is the result of meticulous timing and cunning on AMLO’s part. After subtle tweaks to the political calendar, the new legislature begins on September 1. However, AMLO’s presidential successor, Claudia Shienbaum, does not start her term until October 1, giving AMLO a whole month with the new legislature. And in Mexico’s June elections AMLO’s party, MORENA, had won by a landslide, grabbing a “super majority” — i.e. more than two-thirds of the seats — in the lower house and falling just two seats shy of winning another in the senate.
A super majority allows for constitutional changes that have so far eluded the AMLO administration. They include a proposed root-and-branch restructuring of Mexico’s judicial system, which is causing all manner of unease and consternation on both sides of the Rio Grande, as well as sweeping constitutional reforms to Mexico’s mining laws. These proposals all form part of a package of reforms presented in February that could be approved as early as next month.
Last week, the Constitutional Affairs Committee of the Chamber of Deputies approved by 30 votes to seven two constitutional reforms aimed at banning open-pit mining and fracking, as well as significantly restricting the use of genetically modified corn — an issue that is already the subject of an investor state dispute between Mexico and its North American trade partners, the United States and Canada.
The lower house’s Constitutional Affairs Committee also agreed to amend the Constitution to prevent the exploitation of water in areas with low availability, except for in high-population areas. As we reported a couple of years ago, large swathes of Mexico, including Mexico City, are grappling with acute water shortages. Last year, the civil association Water Advisory Council estimated that 21 million people do not have daily access to drinking water.
Although the AMLO government has issued no new open pit concessions and has passed a bill to prevent this type of mining activity, the current permits have not been cancelled. That could change if the proposed reforms are passed. AMLO’s administration opposes open pit mining for what the government sees as the method’s outsized environmental impact. It also argues that the sector offers meagre contributions to state coffers, with foreign companies pocketing the lion’s share of revenues and profits. AMLO himself said last year:
[M]ining activity is not contributing to overall economic development and the redistribution of wealth in the country, so the privileges it enjoys over other land or water uses is not justified. Its contribution to overall welfare pales in comparison with the damage caused by the extraction of minerals, such as environmental degradation, irrational use of water, the pollution of rivers, channels and deforestation, among other phenomena.
A Mining Paradise No More
One thing that has set Mexico apart from most, if not all, other resource-rich countries in Latin America over the past 30 years is the extreme preferential treatment it grants to the mining industry. In the 1992 Mining Law — the brainchild of Carlos Salinas de Gortari, whose presidency of Mexico (1988-1994) set the country’s economy upon a path of rampant privatisation, deregulation and trade liberalisation — 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 four-line paragraph, the claims of the mining industry on Mexican land have held greater weight than not just all other industries but all other human activity. For the following 31 years Mexico’s federal government was 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 was 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 news 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 allowed concessionaires to explore or exploit Mexican land for 50 years, and up to one century if the interested party requests an extension, without requiring an environmental impact report and without prior consultation with the communities that would be impacted.
For three decades, Mexico served as a veritable paradise for global mining conglomerates, serving up some of the laxest regulations in Latin America, all of it coinciding with the signing of NAFTA. As the Canadian independent journalist Yves Engler documents, Canadian mining companies were the biggest winners of the 1992 reforms.
Seventy per cent of foreign-owned mining companies operating in Mexico are Canadian-based. Two years ago, the front page of national daily La Jornada blared: “Poseen mineras canadienses 60% del oro mexicano” (Canadian mining companies own 60% of Mexican gold). Canadian firms have had many disputes with local communities over the impact of their operations on local water systems and ecosystems. Similarly, Canadian companies have been implicated in many rights violations including high-profile killings…
There were no Canadian mines operating in Mexico in 1994. By 2010 there were about 375 Canadian-run projects. Before the reforms that came with the North American Free Trade Agreement, Mexico’s constitution dictated that land, subsoil and its riches were the property of the state and recognized the collective right of communities to land through the ejido system. Constitutional changes in 1992 allowed for sale of lands to third parties, including multinational corporations. Combined with a new Law on Foreign Investment, the Mining Law of 1992 allowed for 100 percent foreign control in the exploration and production of mines.
That regime is now ending. Last year, the AMLO government began dismantling the preferential treatment for mining exploration and exploitation. As we reported at the time, the reforms, among other things, shortened the length of mining concessions, tightened the rules for water permits, expanded the grounds for cancelling licenses, banned the granting of mining concessions on protected parkland, and restricted licenses to a specific mineral instead of any type of mineral discovered within the boundaries of the licensed territory.
Global Repercussions?
Now, the government wants to go a step further, and introduce an almost total ban on open pit mining and fracking into the country’s constitution. In the package of reforms sent to the legislature, the president included a modification to Article 27 to “prohibit both the granting of concessions and the activities of exploration, exploitation, benefit, use or exploitation of minerals, metals or metalloids in the open air.”
If this package of reforms is approved, which is likely given the size of the government’s majorities in both houses, it could end up having an impact on mining not just in Mexico but also globally, especially if other national governments in the region and beyond are inspired to take similar steps…
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Nick Corbishley 