Manuel Sáinz de la Hidalga
Partner
O’Gorman & Hagerman
/
View from the Top

Land is the Key to Mining Success

By Paloma Duran | Tue, 05/11/2021 - 16:36

Q: What services does O’Gorman&Hagerman offer the mining sector?

Our firm offers professional and consulting services related to the due diligence and acquisition of real estate rights across Mexico, either for greenfield or brownfield projects, including the privatization of ejido lands, releasing rights of way and acquiring ancillary rights for access roads, pipelines, transmission lines and all the infrastructure needed for the development, construction and operation of mining facilities.

We also have a solid litigation practice that focuses on conflicts over real estate rights, agrarian trials and amparo proceedings. Where necessary, we provide complementary services in the social (or community management) and technical (mainly surveys, GIS and maps) aspects of mining projects.

Our services cover all forms of real estate in Mexico: public, agrarian and private property, through a multidisciplinary approach, that involves not only lawyers, but engineers and social scientists, which allow us to have a deep knowledge of Mexican realities.

Q: What common challenges do you face in the industry?

A: Our first challenge is to have a common understanding of the complexities involved in real estate regulation in Mexico and set realistic expectations of what can be expected from our work. In the due diligence process, the main challenge is to obtain all relevant information on a timely matter, as some is not readily available or even concealed. Also, to locate with precision private properties and identify discrepancies between legal documents and physical reality.

In the acquisition process, we commonly face irregular land tenure. In some cases, they derive from acquisitions in which the legal regime applicable to social property was not considered, the special formalities provided by the Agrarian Law for their validity were ignored, and the background and traditions of communities weren’t considered. These irregularities eventually evolve into social and legal problems that jeopardize the projects' operation.

Q: What are your expectations regarding concessions and social permits in Mexico?

A: Although this is not our core practice area, it has definitely become a very relevant issue. Aside from land rights, now its crucial to have social license and indigenous consultation in place where needed, for the success of any mining project.

Also, there’s an ongoing legislative process to reform article 46 of the Environmental Protection Act (Ley General del Equilibrio Ecológico y la Protección al Ambiente), which would prohibit the authorization of mining activities in natural protected areas (federal, state or municipal). Should the reform be approved, companies that hold mining concessions and landowners, which surface area overlaps with a natural protected area, should file indirect amparo actions against the reform or else accept the new law.

Q: What is a recent success story for O’Gorman&Hagerman?

A: An important mining company that was looking to expand its tailing grounds and we helped them in acquiring the lands needed to reach that goal. We did this by having an open and direct dialog with the property’s owners. We served as translators between the mining companies and the communities. We take into consideration their interests and worries. It is important for a mining company to understand the community, to have an equal conversation between the two parties. This allows community members to understand the magnitude of the projects as well as the positive impact they could have on their lives.

When a mining company has detailed, properly documented and available information regarding a project, it helps to build trust based relationships with landowners and nearby communities.

Q: How can mining companies avoid land and social problems?

A: Our recommendation is to first make a thorough due diligence, that considers and allows the company to fully grasp not only the legal standing of the lands, but also assess any geographical and social risks and challenges. Fully understanding the origin, interests, history, traditions, leaders, needs and expectations of the lands and communities in the projects’ areas of influence is crucial to have a complete picture to design an adequate legal and social strategy. With a better understanding of the legal, social and technical risks and challenges, companies can face them, establish long-lasting, trust based relationships, and avoid future land and social problems.

Q: How can companies reach out to communities when there are mining road blocks?

A: There are many strategies, and it all depends on the circumstances. What is effective in one case, may worsen the problem in another. Before actually reaching out to communities, we recommend to get all information available to understand and assess the situation. To try and grasp who are the leaders, interests and people behind the road block. Their claims and expectations, both stated and real. If they are fair and reasonable, or if they are just trying to extort the company. If they have the support of all their community or not, and also of local and state authorities, or from some NGO or any social leader. And even to understand the company’s position, legal needs and willingness to reach a compromise, if it has all legal documents, rights and permits in place or not.

If the company is not able to reach an agreement in the first few days of the road block, we recommend to try and reach out to communities through a third party with the sensitivity to handle the situation, helped by some local person that knows the community leaders. Its also important to build and get support from relevant stakeholders, including workers, community leaders, neighbors and local authorities. The main goal is to build rapport and talk about the situation and possible solutions with the community representatives or leaders, without compromising the company nor worsening the confrontation, until some common ground of understanding has been reached. It is normally better to maintain one line of communication with the community, and be very consistent with how the company reacts and handles the situation through the whole process, avoiding actions that could permanently damage its reputation and community relationships.

Our job has shown us that everybody, along with their beliefs and traditions, must be considered. Once a reasonable agreement is reached, it is very important to execute the proper legal documents, and hold the necessary Ejido Meetings and other legal steps to formalize it. That can avoid future problems arising from the same issues.

Another recommendation is to have a broad perspective in regard to how people view their land. Land is history and has many emotional connotations, as landowners and communities have a sense of belonging to their lands. Both the land and its owners should be treated properly. 

There will always be issues when it comes to land tenure. It is a limited resource and it is heavily protected by the Constitution, specially regarding social property. At O’Gorman&Hagerman, we know how to handle these issues. 

O’Gorman&Hagerman is a law firm founded in 2008. It specializes in agrarian law, real estate and infrastructure projects.

 

Paloma Duran Paloma Duran Junior Journalist and Industry Analyst