AIMMGM Strengthening Ties to Public Sector

Q: How has the sector in Mexico reacted to the volatile geopolitical environment in the region and the world?

A: The prevailing sentiment is that factors such as the new presidential administration in the US and the Chinese economic rebound should have a positive effect on the mining industry. The aggressive and unpredictable foreign policy of President Trump in particular is generating economic instability on a global scale and this will encourage investors to look for less risky assets like precious metals and other commodities. The mining sector will always be volatile and difficult to predict but in terms of metal prices, 2017 is shaping up to be a strong year and we have already seen companies being more active in the sector.

Q: What have been your biggest achievements since you started your role in July 2016?

A: One of the main focuses has been to renovate and restructure the internal processes of the organization. This helps us offer a better service to our members. We also managed to secure more funding, much of which will be spent on the convention in Guadalajara in October 2017. Following the creation of the Undersecretariat of Mining, a decision we had been anticipating for more than 20 years, we will be doubling our efforts to increase our cooperation with the federal authorities and to strengthen this relationship. We have had several meetings with the Mining Commission, which gave us the opportunity to raise certain issues that we believe need to be tackled. We feel that our concerns are being heard by the authorities and we hope that we can work together to create a more sustainable and profitable industry going forward.

Q: Why did you decide to file an amparo against the Zacatecas Ecological Tax?

A: There are several reasons why we filed our amparo. Our first responsibility is to protect our members. Mining contributes 30 percent to the GDP of Zacatecas and mining companies already fulfill extensive obligations regarding environmental protection. But the tax will make mining in the state economically unfeasible. There are many communities in the state that continue to suffer from poverty and yet we are not convinced that the resources generated by the tax will be used either to fund environmental protection or socioeconomic development. The tax simply encourages mining companies to look elsewhere for their next investment so that is why we, along with a number of institutions working in the state filed for an amparo. We are still waiting for the decision from the Supreme Court of Justice of the Nation (SCJN) but we are hopeful of a positive outcome.

Q: How satisfied have you been with the application of funds generated by the Mining Trust Fund?

A: The money is taking too long to be spent and we know of municipalities across the country that are still waiting to receive funds for projects that have been approved. There needs to be more transparency because at this point we are still waiting to see the results we were promised. At the moment, the mining companies are still showing patience, despite the fact that the program has already been in place for three years. But their patience will run out eventually. The mining companies are capable of supporting local communities with their own resources but these expenses are not tax deductible. It is now up to the government to apply the resources from the Mining Trust Fund but it is not fulfilling this duty. The communities blame the companies for not doing enough, despite the fact that the companies no longer have the power to help. Another factor is that NGOs see this social unrest as an opportunity to pressure the mining industry. If left unresolved, this issue could create a very difficult situation.

The constant alteration and modification of regulations has meant that Mexico has lost its competitive edge. Foreign investors are not interested in investing their money in countries that chop and change regulation constantly and that is the primary factor behind the drop in investment in Mexico. We have to work hard to reverse this trend because the mineral potential in Mexico is unquestioned.