An Alternative Mining Approach López Obrador Should Consider
STORY INLINE POST
Recently, the Mining Association of Mexico (CAMIMEX) told mexicobusiness.news that potential mining investments are being delayed by the slow delivery of environmental and water permits by the federal government.
CAMIMEX watches over the interests of its associates, which are Mexican and foreign mining companies that generate jobs in rural areas of Mexico. Some Canadian companies, such as First Majestic Silver and Endeavour Silver Corp., that had previously focused all their resources on Mexico, have begun to take their investment to other countries, mainly to Nevada in the US. Although wages and taxes in the US are higher than in Mexico, political, social and legal conditions are stable and the costs associated with property security are much lower. These are called “stable and friendly jurisdictions.” Mexico, despite its prevalent insecurity, had been considered a friendly jurisdiction until the current federal administration arrived.
Investments with the potential to create jobs in rural areas should be considered matters of national interest for this administration, which should ensure that these opportunities are developed to generate safe and well-paid jobs. President Andrés Manuel López Obrador and the secretary of SEMARNAT have said (Kitko.com, on Sept. 17, 2021, by Reuters) that they have put the brakes on the delivery of environmental permits because of concerns about the pollution generated by mining; they want to evaluate projects with more care so that they are presented as “responsible projects.” They say they are concerned about the impact on local communities. Are they not worried about unemployment and poverty? Their hypothesis is that by stopping mining projects and “evaluating them carefully,” then “responsible projects” are achieved. The truth is that this only encourages corruption and slows down Mexico's economic development.
If the true spirit of the AMLO government is to minimize the pollution generated by mining and achieve "responsible projects" without affecting the generation of jobs for Mexicans, then the path is clear. There are several issues to address. Let's start with a few (among many).
Tailings Management: Tailings are the finely crushed rock residue that remains in some mining operations after extracting valuable metals, such as gold, silver, copper, lead, zinc and others. Tailings are usually transported with water to their storage place, for which rock dams that grow in height as the mining operation progresses, are built.
Some accidents have been reported with tailings dams that have resulted in deaths and material damage (some of the most recent are the 2015 collapse of the Samarco Dams owned by Vale and BHP, and Brumadihno in 2019, operated by Vale). This has been a cause of concern for investors, neighboring communities and governments. As a result the GISTM - Global Industry Standard for Tailings Management was launched, with the support of the world’s leading mining companies, United Nations Environmental Program(UNEP) and the organization Principles for Responsible Investment (PRI). The Church of England Pensions Board, representing 113 investors who manage US$21 trillion in assets, asked the mining associations around the World in 2020 to adopt this standard and to disclose implementation dates by each individual mine.
An alternative way to store the tailings is by filtering, removing the additional water and transporting it by belts or vehicles to specific sites, which can be the same mine to be used as backfill, or elsewhere. This type of dry waste management does not represent the level of risk involved in storing tailings with water. It is also a process that serves to make better use of the water, although it implies a greater investment to build the plant that filters the tailings.
In addition, mining processes are not 100 percent effective and, therefore, there is always a fraction (5-20 percent) of valuable metals in the tailings, which after some time, when technology advances, could be extracted.
SEMARNAT could generate a regulation that promotes the use of filtered or dry tailings in the mine, reducing the risks associated with dams and promoting a better use of water or that promotes the implementation of the GISTM standard that would have to be audited by an independent third party. In Chile, a mining country, they are talking about having mining without tailings deposits (smiicechile.cl, Sept 2021: Towards a Sustainable Management of Mining Tailings), a concept that requires operations to use tailings as a backfill in open pits or underground mines, finding other uses for tailings or extracting the metals without removing the ore from the ground.
Mine closure: When mines are depleted, the veins are finished and the area must be reclaimed to allow another productive use in the future. In several countries, mining companies are required to develop closure plans, quantifying the monetary cost of closing the mine so that a contractor can implement if the company cannot. SEMARNAT could also generate regulations that require mining companies to have an independent financial mechanism that covers the costs related to the rehabilitation and closure of the affected area, so that it does not represent an environmental and safety risk in the future.
Water consumption: Without water, there is no mining. The mines can establish management methods that allow them to reuse all the water; that is, not to discharge contaminated water into the environment, turning it into a closed cycle. SEMARNAT could also generate a regulation that encourages mines to have closed water use cycles.
With these arguments, I want to note that it is not about delaying approvals for environmental and water permits or “evaluating them carefully” to generate "responsible projects" but rather, establishing upfront, clear rules and regulations that provide a framework for those wanting to invest in Mexico, sending a clear signal about what is required to permit a mining project to go forward. This can be also achieved by requiring the mining companies to comply with international standards for tailings management, mine closure and, also, cyanide management. Clear regulations are better than discretionary decisions by government officials.