Gabino Fraga Peña
Director General
Grupo GAP
View from the Top

Agrarian Law and the Mining Industry

Mon, 10/21/2013 - 12:08

Q: What are the implications of Mexico’s parallel legal system for agrarian issues in the mining industry?

A: Mining operators that enter into an agreement with an ejido or community must fully comply with the agrarian law, in particular with regards to temporary occupation agreements or land purchasing processes. An important change brought about by the 1992 constitutional amendment was the creation of the Agrarian Court, the purpose of which was to solve issues between ejidatarios, comuneros and private parties. If a problem arises companies have to go before the Agrarian Court to file a lawsuit and the Court will solve the problem based on agrarian law rather than civil law.

Q: A mining concession may be applied for together with a request for expropriation, temporary occupation or easement over the land in question. How does this process work when the land in question is communal or ejido property?

A: In these cases the mining law is applicable as a federal regulation; however, the agrarian law applies as well. Agrarian law permits agreements that allow third parties, whether corporations or individuals, to use land belonging to the ejidos or the communities. But if the communities or the ejidatarios do not want to make an agreement, the federal legislation can then be applied, and this is where a request for expropriation, temporary occupation or easement of the land can be applied.

It is established by Mexican Law that the exploration and exploitation of mineral resources will be prioritized over other uses of land, however at this moment, due to the authorities’ cautious attitude, a process of expropriation requires the acceptance of the community. There have been cases where land has been expropriated to start mining projects in the past 10 years, but those expropriation processes have always involved the explicit approval of the comuneros or ejidatarios.

Q: An alternative to expropriation is to enter into a leasing or social agreement with the community in exchange for the use of the land. What is the role of social licenses in these situations?

A: The agrarian law includes a chapter on expropriation which grants the holder of a mining concession, by means of an agreement, the temporary use of land until an expropriation decree has been issued. The problem sometimes arises when companies arrive at a mining location with a resolution of temporary occupation or easement over the requested surface area, without realizing that sometimes that kind of document is not enough. In order to avoid problems in the future it is important to combine that document with a social license. Companies need to take into account that, for the duration of their project, the comuneros and the ejidatarios are going to be their neighbors and for that reason it is important to maintain a good relationship with them.

Through the social license, when a company offers to create jobs or to provide health services or medical supplies to the community in exchange for their approval of the project, everything must be clearly specified and explained to the communities, and the relevant legal obligations must be complied with. In the case of leasing, payments have to be given to the legal representative of the community. It is important for the communities to understand that the company is not there to replace the municipal or state governments as a provider of basic services. Companies will usually end up offering some kind of social program, but they have to be very upfront about what those programs will entail, as well as maintaining a permanent relationship with the community.

Q: Are there any regulations that have been specifically designed to govern these kinds of deals?

A: Not specifically, but agrarian legislation does introduce the concept of social agreements, known in Spanish as Convenios de Colaboración Social. These agreements help the companies to diagnose what some of the most pressing needs of the communities are, so that the social programs that they offer will really help the communities. The way in which these agreements work is as follows: the community or ejido organizes itself and forms a committee called Comisión Auxiliar, the members of which are elected at an assembly. This committee serves as a contact point between the community or ejido and the company. Its members meet with the ejidatarios or the comuneros in order to decide what the community wants and needs, and they communicate those needs and priorities back to the company. The company then evaluates whether it is technically possible or financially feasible to offer the communities what they need, and if they have the necessary permits to do so. These committees also provide the benefit of helping to improve social organization in the community.

Q: What are the main concerns of ejidos and communities in negotiating land access with mining companies?

A: The main concern of the communities is setting the right price for their land. Transparent negotiation processes are very important and companies need to be very upfront about how much they can pay and how they are going to pay. The land in question will be used for mining purposes, not for agricultural processes, and that is something that needs to be taken into account. The negotiation processes of many of the existing mining projects only had the company’s best interests in mind, not the community’s; companies have been known to pay close to nothing when they could have paid more. Access to the land is very important, because without land their mining project is simply not feasible, since a mining project cannot simply be moved to a different location. Usually, when companies ask the community how much they want for their land, the answer they get is ‘a fair price’. But what is a fair price? Companies understand that the value of the project is not proportionately related to the value of the land, but they need to explain this to the communities. In the end, the ejidatarios and comuneros own the land; we should not forget that.

Q: What are the main priorities of mining companies when negotiating with ejidos and communities?

A: These change depending on the phase the project is at. For example, during exploration a company’s priority when negotiating with ejidos or communities is usually to obtain the approval to start drilling quickly. During the construction phase, the concerns of the companies are to obtain legal possession of the land, right of way, water and electricity rights, as well as the required environmental permits.

Q: Does the agrarian law include any chapters addressing environmental or cultural issues?

A: The agrarian law includes a chapter on the rights of these groups, which the Agrarian Court takes into consideration when communities and ejidos contest certain issues. Moreover, the judges study the cases that make it to the Agrarian Court with certain social criteria in mind, such as maintaining the environmental equilibrium, among other things. Companies must fulfill all legal requirements in order to show that they are not acting in bad faith against the interests of the comuneros or ejidatarios.

Q: What are the main opportunities for the Mexican mining industry to improve its community relationships?

A: I think that the mining industry needs to communicate better with the communities and the general public. It needs to push for a better communication strategy that will make the public more aware of the benefits the industry brings to the country, in order to change the negative perception that people often have of it.