Almaden Minerals Concessions in Puebla are Insubsistent

Mexico’s Supreme Court (SCJN) declared as insubsistent two concessions granted to Almaden Minerals after the Ministry of Economy failed to organize a consultation with the Tecoltemi ejido, which possesses territory located within the concessioned land. The case sets a significant precedent and highlights the importance of a sound legal and social approach to gain licenses for mining companies.

The Tecoltemi case dates back to 2015, when the ejido realized that its territory was part of two concessions given to the Canadian mining company and filed for an amparo. Landowners felt pressed by the fear of losing water needed to cultivate their lands, since the mining project would require over 5 million L of water per day. This is a significant amount for a community that suffers from severe drought, researched Animal Político.

The community sought to cancel the concessions under the argument that the government did not consult the land owners before granting their license. The Mexican Constitution and signed international treaties protect the rights of indigenous communities and ratified the need to consult them about projects that affect them.

The declaration creates a “precedent for investment in the country and Puebla,” said Daniel Santamaría, Vice President of Gorrión Mining, a subsidiary of Almaden Minerals. He also referred to an investment of US$40 million during the 20 years that exploration works have been carried out in the Ixtacamaxtitlán municipality, before the company started to develop the project.

Santamaría explained that the concessions covered an area of 14,000ha. Nonetheless, the fraction rich in gold and silver is an area of around 133.86ha located more than 8km away from the Tecoltemi ejido.  A 2018 Feasibility Study conducted by the Canadian corporation demonstrated proven and probable reserves of 85,159,00oz of silver and 1.4Moz of gold.

“The draft [of the Supreme Court’s decision] orders the Ministry of the Economy to declare Almaden’s mineral titles ineffective and to re-issue them following the Ministry’s compliance with its obligation to carry out the necessary procedures to consult with indigenous communities. The final decision of the SCJN may be modified and differ from the draft described above,” reported the company. “Almaden intends to review the final decision when possible and hopes for dialog with Mexican government officials and local community officials to fully understand the impact of this decision on the company’s mineral claims prior to determining its next steps,” added the Canadian miner.

The Tecoltemi issue is key to understanding how to establish good relationships with authorities and communities, as well as carrying out strong due diligence on documentation and land rights. This way, companies can counter uncertainty and thrive in Mexico. Applying for a concession and drafting the related legal procedures may seem to be the first logical steps when deciding on a new investment project. However, local and indigenous communities play a key role in the success or failure of a project and must be considered, experts agree. “Companies must investigate the communities where they are planning to invest to know if they are welcoming to these kinds of projects. Mining, if done right, can bring great benefits to communities. However, it can also face rejection as social and environmental conditions are altered,” said Enrique Rodríguez del Bosque, Partner, RB Abogados, at Mexico Mining Forum 2022.  

“Carrying out a thorough consultation with indigenous communities, diligently and in compliance with legal requirements, could be key to understand if a project would be viable or simply impossible to carry out,” said Mariano Calderón, Partner, Santamarina y Steta, at the event.