Alberto Vázquez
Partner
VHG Legal
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Insight

Beyond Austerity: Public Officers with Vision Needed  

Tue, 09/22/2020 - 15:16

The government of Mexico’s decision to axe the Undersecretariat of Mining is extremely unfortunate. The move instantiates the administration’s frail understanding of the mining industry and transmits an attitude that is inimical to business.

It seems that the López Obrador administration is equating the mining industry to opposition. That has led to lack of support and a low disposition to dialogue. Also, the government has appointed openly anti-mining people to key positions for the industry’s development. This last circumstance is undesirable if only because public officials are there to administer the law, not to take sides for or against particular cases.

With Francisco Quiroga at its helm, the Undersecretariat of Mining tried by all possible means to change the government’s vision of the industry. It insisted on explaining mining’s fundamental goodness and its vitality to the economic reactivation of Mexico’s rural areas during the pandemic.

Nevertheless, it has been hard to displace certain entrenched opinions that are not based on actual facts and are hurting the industry. For instance, the López Obrador administration has decided not to see the reality of Mexico’s mining concession system as it now currently stands. An objection that is bandied about is that a large percentage of Mexico’s territory is in private hands due to the granting of concessions.

But the actual concession panorama is actually more complex than that. There are concessions issued by previous governments, some of which are still in force today, while others have expired. There are concessions that are idle, others that host exploration stage projects, and a few that have reached the exploitation stage.

The mere fact that there is a mining concession registered in the government’s files does not necessarily mean that the concession is still in force. Many have been withdrawn and canceled or have simply expired. However, the cancellation procedure has not concluded simply because mining authorities has not carried out the procedure to publish the liberation of land in the Official Gazette of the Federation. As this publication is not duly carried out, there are many concessions that seem to be active but that have actually been inactive for over 10 years in some cases.

Revising and updating official concession files is an example of a step the government could take to boost the mining industry. That it has not done so indicates an alarming lack of interest in an industry that is part of the solution for Mexico’s problems. The country has a mining vocation that should make all Mexicans proud. Furthermore, the sector should be fostered with the aim of adding value to Mexican mined resources, stimulate Mexico’s overall industrial matrix and generate more income. 

The mining industry must remain united and strive to demonstrate that it works for the good of Mexico. The government has to adopt an attitude where it values the industry’s benefits and impacts from a scientific, objective perspective and not an ideological one. Mining projects can potentially generate productive relations with communities that no other industry can reach, due to their remote locations. Also, mining has the ability to train local workforces in state-of-the-art technologies.

Adducing austerity needs to justify the axing of a crucial role in Mexico’s mining industry is not satisfactory. The opportunity cost of not having an Undersecretariat of Mining will eventually be greater than the short term saving that can be achieved. The USMCA has just entered into force and Mexico must endeavor to send encouraging signals to national and global investors.