A Forward-Thinking Government Would Choose Mining: CANCHAM

Q: What is the potential impact of the Mining Law reform on Mexico’s performance as a mining investment destination? 
A: This is intended to be a reform to the Mining Law and other laws related to mining. However, in substance, it effectively constitutes a new mining law because it changes the paradigm of the private sector’s involvement in mining. A crucial aspect of this change in regulation is the restriction and imposition of a series of 
difficult-to-meet conditions. These act as a disincentive for exploration, which, under the reform, is reserved exclusively for the state. This is a delicate change and, if it is not fought in the courts or if a new government does not vet it, it could have detrimental effects on the future of Mexican mining. 

Q: Which sector of the mining industry could be most affected by the reform and why? 
A: Junior companies would take the worst of it. These companies are responsible for discovering or locating significant deposits that are later developed by larger companies with more capital and technology. The impact would also be evident on any company that, as part of its regular operations, engages in exploration activities to grow its reserves. In fact, we are seeing a phenomenon that is somewhat unjustified. The understanding is that these legislative amendments should only apply to future situations, which means any concession-holder today has the right to conduct exploration activities without any restrictions, as was stated in the law before the reform. However, we are now facing decisions from administrative authorities that are counter to the spirit of the new reform. In a nutshell, some administrative authorities in certain regions of the country are retroactively applying this law and attempting to impose restrictions on concession holders that should not apply to their current exploration projects. 

Q: How does CANCHAM collaborate with local mining clusters to develop a stronger and more resilient mining sector? 
A: According to the law of chambers and associations, CAMIMEX formally holds the representation and defense of the sector's interests. Therefore, our formal collaboration occurs through CAMIMEX. Having said that, we also have close partnerships with the mining clusters in Sonora, Guerrero and Zacatecas. We also collaborate with other organizations and with universities, both in Mexico and abroad, especially from Canada. We also have an open channel with the Ministry of Economy, through the Canadian government. The latter has facilitated this engagement and Minister Raquel Buenrostro has met with us a couple of times, attentively listening to the specific concerns we have presented. The Canadian government has also held various meetings, the latest being within the framework of the annual Trilateral USMCA Commission meeting. There have also been bilateral meetings between Canada and Mexico. Additionally, there have been a couple of trilateral meetings with the US Trade Representative, Katherine Tai, and her Mexican 
counterpart. 

Q: How can mining companies combat misinformation and provide lawmakers with accurate information regarding the true impact and benefits of the mining sector? 
A: At CANCHAM, we have been shaping a communication strategy to benefit the sector. This is a long-term endeavor that has represented more than six years of serious work to establish a new program of engagement, communication and narrative modification. 

However, we must be aware that changing the public perception of the mining sector is a difficult task. There is a deeply rooted perception that the extractive industry is environmentally destructive and indifferent to the needs of host communities. This cultural perspective has been ingrained for a long time and is linked to agendas like climate change awareness. Some advocates have exaggerated the potential impacts of the extractive industry in general, which includes areas other than mining. Consequently, what the industry does to mitigate or even compensate for these impacts becomes un-newsworthy. 

People, often driven by misinformation or manipulation, adhere to two contradictory paradigms: they say that mining should disappear, while simultaneously advocating for a green economy. This is fundamentally impossible because the second one cannot be achieved without mining. The industry has a great opportunity to convince the general public that it is indeed the most crucial ally of the green economy. Mining is the natural partner of the energy transition and, without it, there can be no energy transition. One of the clear pillars that CANCHAM has established and continues to advocate for, supported by its Energy Committee and in collaboration with CAMIMEX is to persuade the general public that mining is the strongest ally in the journey toward the energy transition and a green 
economy. 

Q: How does CANCHAM promote ESG standards and better practices in the mining sector, given the substantial Canadian investment in the industry? 
A: The Canadian-capital mining sector has been following ESG guidelines for many years. Through the Mining Association of Canada (MAC), which is the Canadian equivalent of CAMIMEX, companies have been implementing significant ESG protocols since 2004, using a series of standards known as "Towards Sustainable Mining" (TSM), which follow eight protocols that encompass eight substantial guidelines and undergo auditing, verification and reporting. CANCHAM has naturally been a promoter of robust ESG processes through the long-standing application of TSM protocols in CAMIMEX’s mining centers. 

CANCHAM pushed for a close collaboration between CAMIMEX and MAC. In March 2023 both organizations signed an agreement in Toronto, as 11 other countries have done, to encourage the rest of CAMIMEX’s membership to adopt these international standards. These will eventually align with other sector-specific requirements, such as those in the steel sector, which has its own equivalent standards, much like TSM. There is also the World Gold Council, with its well-known standards, like the Conflict-Free Gold standard. In essence, CANCHAM has been a natural advocate for ESG protocols, particularly MAC’s TSM framework. 

Q: What trends has CANCHAM identified in the Mexican mining industry? 
A: We anticipate an increasing presence of artificial intelligence (AI) in certain mining processes, together with the digitalization and the adoption of new energy processes. This transition to alternative energies is another milestone that we expect to witness soon. Several mines already have vehicles powered by electric batteries and these vehicles also communicate through networks. Additionally, we are witnessing an evolution in data mining, enabling real-time information and direct communication at various points in the production process. This is critical, especially in underground mining. 

The workforce must also adapt to these changes. While CAMIMEX, CANCHAM, individual companies and even universities have collaborated for many years with technical training centers like CONALEP, training is necessary to adequately prepare workers to smoothly integrate into companies with specific profile requirements. 
We will also encounter new sub-specialties that may be unfamiliar now. For example, there are ongoing projects that involve new techniques for geological resource detection and identification, such as renowned Chilean scientist Dr. Patricio Zavala's work with the spectral footprint of any minerals. Through satellite-based technologies and specific coordinates, he identifies mineral masses and other elements. These developments challenge traditional geologists’ paradigms that require dozens, if not hundreds, of boreholes to identify minerals. These advancements will unfold within the next few years and we need to be prepared. 

Q: From CANCHAM's perspective, what does the future of mining in Mexico look like? 
A: The mining sector is used to facing challenges, uncertainties and pitfalls. Mineral resources are typically located in remote areas, which make factors like security concerns, a deficient or fragile rule of law and, now, a legislative framework that in no way favors the natural and 
healthy development of the sector, more likely to happen.

However, the mining sector does not back down; it powers through all these challenges. At CANCHAM, we see two potential outcomes for these unfortunate legislative changes. First, they are being fought through legal challenges, specifically via a claim of unconstitutionality in the courts. Alternatively, a new government with a vision of the significant economic contribution of the mining sector could bring about change. In Mexico, we supply 70 economic sectors, employ over 417,000 people and economically impact more than 24 states and 200 municipalities. Furthermore, we often operate in areas where the alternative to mining is undesirable, 
including criminal activity. Without mining opportunities, young people might turn to such activities due to the lack of dignified work. Sensible governments aiming for community development would not choose this path.
 

The Canadian Chamber of Commerce (CANCHAM) is the voice of Canadian businesses in Mexico. It was founded in 1982 to represent Canadian interests in Mexico and to promote trade and investment between both countries.