These are the changes that will affect mining in Mexico

The arrival of a new government and the return of Napoleón Gómez Urrutia, leader of the National Union of Mineworkers and now a senator from Morena, have turned on the red lights among the mining companies since the aim is to reorder the entire sector and put an end to the flexibilization of last 30 years.

Image: Pixabay
Image: Pixabay

After five difficult years for the country's mining industry, due to low metal prices, new taxes and duties, and insecurity, the outlook for this sector that contributes 2.5% of the national GDP and generates almost 400,000 direct jobs, uncertain, especially for large national and foreign mining companies, which have benefited from the flexibilization of labor, mining and environmental laws, and the granting of concessions.

The arrival of Andrés López Obrador to the Presidency of the Republic and the return of Napoleón Gómez Urrutia, leader of the National Trade Union of Miners, which groups more than 250,000 workers, and Senator for Morena, have turned the red lights on the sector.

And it is that, although Tabasco has offered reconciliation to the great mining entrepreneurs of the country, we must not forget that four years ago, during a tour of Minatitlán, Colima, accused the mining companies of speculating and making money in the stock exchanges. values of Canada and the United States, with the more than 60 million hectares concessioned by the governments of Salinas, Zedillo, Fox and Calderón (today there is the talk of just over 90 million). "They are going to have to show us that they are working. All this we will order," he warned.

Even today, there is talk of the possibility that the government of López Obrador makes a consultation to ask the people what to do with the concessioned land that is not worked and that is used for other purposes, as it did with the project of the new airport of Mexico City, in Texcoco, which was finally canceled.

Everything seems to indicate that the relaxation of the laws that the mining industry enjoyed in the last 30 years and that allowed them to monopolize a third of the national territory through concessions of up to 100 years, without any restriction, came to an end.

And a clear example is the initiative to reform the Mining Law, presented last November in the Committee on Mining and Regional Development of the Senate of the Republic. The initiative, elaborated by Senator Angélica García, founder of Morena and who died last December, seeks to regulate the regulations that govern mining concessions and assignments, prioritizing the importance of protecting and respecting the human rights of the communities and towns where development takes place. activity.

Currently, the Mining Law does not consider the need to perform social impact analysis and the consequences for the granting of concessions. Neither consults the communities and peoples affected by them.

The purpose of the proposal is to empower the Mexican Geological Service to carry out studies of social impact with respect to the areas subject to mining concession and allocation.

It also seeks that the Ministry of Economy can declare unfeasible zones of exploitation or conflict due to negative social impact, as well as cancel concessions and mining assignments for this reason; and guarantee that any concession, allocation or zone that is incorporated into the mining reserves meets the principles of sustainability and respect for the human rights of the communities and peoples of the regions in which they intend to develop.

Another example of the changes that will have to face the mining groups that operate in the country, is the refusal of the President of the Republic to allow hydraulic fracturing (fracking) in Mexico and mining production in protected natural areas.

This initiative, says Dr. Aleida Azamar Alonso, a professor at the Department of Economic Production of the Xochimilco Unit of the Autonomous Metropolitan University (UAM), is positive to stop the devastation caused by the extraction of oil and gas, as well as to safeguard the protected areas, in 50% of which there were new mining projects that probably no longer have continuity.

But this is hardly the beginning of the new order that is sought in this sector. In an interview with High Level, Gómez Urrutia makes it clear that more changes will come and that companies must accept and adapt to the new winds.

But it will not be an easy task. The union leader recognizes that mining companies have the support of some opposition parties in the Senate and Chamber of Deputies, which could complicate the approval of these reforms.

"In the Committee on Mining and Regional Development of the Senate, of which I am a member, there are senators and senators from mining states, such as Coahuila, Sonora, Chihuahua, and Zacatecas, who sympathize with companies that have operations in those entities, but we have the arguments to convince them and take forward the reforms that are being promoted, "he says.

Last November, Fernando Alanís Ortega, president of the Mining Chamber of Mexico (Camimex), met with members of the Mining and Regional Development Commissions, and Legislative Studies, in the Senate, to analyze the initiative that reforms various provisions of the Mining Law.

There, the general director of Industrias Peñoles acknowledged that there are concern and concern for the initiative presented, and asked to participate in the in-depth analysis "of the consequences that could have the approval of a proposal of this nature."

"The reform proposes a series of additional options with which concessions could be lost, which causes us uncertainty. All the members are concerned about what will happen with the Mining Law and if the conditions in the country will continue to exist to continue investing, "he said.

In that sense, he said that Mexico has lost a lot of investment attraction. "In 2012 it occupied the number 11 in this matter. In the last study, from February of this year, he went down to 44th place. "

He stressed that the mining industry generates 371,500 direct jobs in the country and two million indirectly; pays 14,446 million pesos (mdp) for the mining right, established in 2014, and taxed 35,000 mdp in 2017.

To continue growing, stressed Alanis Ortega, mining needs certainty, as they are long-term investments with 10 years of maturity. It is very important to have legal certainty to continue generating investments, employment, and welfare in the communities where we operate.

Gómez Urrutia revolted: "It requires certainty for what ?: To continue the mining activity in the terms in which it has been given ?, In the large concentration of land ?, What will be the limit to land grabbing? Today, almost a third of the national territory is already granted. Therefore, it is necessary that there be a regulation of mining activities with great responsibility to guarantee the future and development of the sector, without abuse or contamination and in a peaceful manner ".

However, everything seems to indicate that mining companies would be willing to participate in the change proposed by the new government.

In that meeting, Jaime Lomelí Guillén, president of the Mining Cluster of Zacatecas, said that they are very interested in being part of the decisions that are taken in the legislative precinct (Senate) to promote a modern mining, compatible with the environment, with benefits shared with the communities and generator of legal certainty for companies.

And is not for less. The mining industry in Mexico is undoubtedly a great business. In 2017, the value of mining-metallurgical production in the country amounted to 12.72 billion dollars, which represented a growth of 1.8% compared to a year before (12.543 billion dollars). This year growth would remain at similar levels, according to the Camimex.

Today, Mexico is the leading producer of silver in the world, the third investment destination in exploration in Latin America and the sixth in the world; and the fifth country with the best environment to do mining business. Hence, the agency has sought an approach with various authorities of public administration.

"We want to work with the government to address those pending issues and strengthen international competitiveness that both benefits the development of the country, but above all bring more quality jobs that benefit communities and more Mexican families; today there are more than two million people who work directly and indirectly in Mexican mining, "says Sergio Almazán, general director of Camimex.

Even, estimates, Mexico could become the fifth mining country in the world, generate up to 20,000 new jobs a year and reach 4% of the country's GDP (today it represents 2.5%).

"We are very optimistic that this dialogue will translate into growth and benefits for workers, communities, the government and all those involved in the mining sector," says Almazán, in an interview.

However, the talks could be complicated, because the Chamber would put four priority issues on the negotiating table: achieving a competitive tax policy, legal certainty, certainty about land tenure and achieving effective security of assets.

For the time being, February and March will be key months for the new government, since the initiative to reform the Mining Law in the Senate and Chamber of Deputies would be approved.

Figures of the mining industry

Mexico occupies the 1st place in silver production worldwide.

3rd destination in investment in mining exploration in Latin America and 6th in the world.

4,302 million dollars invested in the mining sector in the country during 2017.

The 5th country with the best environment to do the mining business.

The value of mining-metallurgical production increased by 1.8% n 2017, going from 12,543 million dollars in 2016 to 12,772 million dollars.

Mining in Mexico occupies the 6th place as a generator of foreign currency.

The original text of this article was published by the Alto Nivel at the following address.

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