Illegal Miners Could Benefit From Open-Pit Ban: Industry Experts

As Mexico's government advances a proposal to ban open-pit mining, coupled with the unresolved regulations from the 2023 Mining Law reform, experts are raising concerns about potential security risks in mining communities. One of the most significant challenges they foresee is the possibility of criminal organizations taking over mining sites, bypassing regulations, and endangering local communities.

The proposal to ban open-pit mining, presented by outgoing President López Obrador, has gained traction in the legislative process. In mid-August, the constitutional points committee of the Chamber of Deputies approved the ban, which is now expected to be discussed and potentially approved by both chambers of Congress in September 2024.

David Betancourt, Director General, Mining Risk Advisors (MRA) believes that the ban could exacerbate existing problems related to illegal mining, as prohibiting such kind of extraction could lead to illegal operations, especially small-scale and artisanal operations, which is already a significant issue in Mexico. With the current high prices of metals, illegal mining has become increasingly lucrative, attracting the attention of organized crime groups.

According to the Global Initiative Against Transnational Organized Crime (GI-TOC), organized criminals are drawn to illegal mining of gold and silver, with the main countries experiencing this trend being Mexico, Brazil, South Africa, China, Peru, Indonesia, Vietnam, and India. Betancourt also pointed out that the cessation of legal mining operations could leave certain regions more susceptible to criminal activities. "If legal mining is banned, criminal groups could exploit these abandoned areas, leading to serious social problems," he told BNAmericas. 

Betancourt advocates for improved regulation rather than an outright ban. He suggests that a more collaborative approach involving all stakeholders could result in more effective management of the sector. 

Gabriel Ruiz, CEO, CEO Strategos, emphasizes that legal mining operations contribute to improved living conditions for surrounding communities through a spillover effect. However, he warns that these benefits could be reduced if the trend of not granting concessions or the Mining Law reform continues. “If this dynamic continues, mines that were originally exploited by formal companies will be operated by criminal groups. If they lose (formal mining operations), they could turn to illegal activities (fuel theft, illegal logging, as well as, trafficking and production of drugs),” Ruiz added.

In an interview with MBN, Leonardo Taylor, Director of Mines, Government of Sonora, emphasized the importance of transitioning informal miners to formal status. While he did not explicitly label these operations as illegal, he highlighted the need to collaborate with local and federal authorities to ensure that most of these operations comply with the law, as it is estimated that over 20% of the gold produced in Sonora comes from such informal activities. “We are a facilitating government and work with support from federal agencies such as the Ministry of Environment and Natural Resources (SEMARNAT), the Federal Attorney for Environmental Protection (PROFEPA), the Ministry of Economy, and the Ministry of Labor (STPS). We aim to support investments and individuals who are committed to the state's development,” he added.

Betancourt emphasized that the ban could have significant impacts on the local population in states like Sonora, adding that the focus should be on stricter regulations, including environmental impact assessments and respect for indigenous rights, rather than a total ban. 

The mining sector has called for greater openness from the government, expressing their willingness to engage in dialogue and share information to create policies that benefit both the industry and the Mexican economy. Insiders stress that while they support regulations, these must be based on facts and science rather than being made without a proper understanding of the sector and its context.