Mariano Calderón
Partner
Santamarina y Steta
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View from the Top

Legal Certainty Needed for Mining Future

Wed, 10/16/2019 - 18:13

Q: What is the priority for a potential reform of the Mining Law?
A: First and foremost, the reform must provide certainty. It is crucial that the concessions that have already been granted are fully respected, and that transitional provisions, if enacted, expressly recognize any previously acquired rights. Also, clear rules must be established for assigning new concessions. It is crucial that during the reform process that will eventually take place in congress, the signal is clear: new concessions will be granted.
There are no legal or material grounds for not doing so. It is erroneous to think there is overexploitation of Mexico’s mineral resources, or even that there is an excessive environmental impact. If activities are carried out according to existing regulations and authorities supervise the whole process, and given the industry’s commitment to high standards, risk is considerably mitigated.
Another erroneous perception is that communities close to the mine are impacted negatively. There are already enough legal mechanisms for making sure this does not happen — previous consultations, signed agreements concerning land ownership, and other mechanisms that protect communities. If mining projects are done responsibly and in compliance with the law, they have a positive impact on communities. All groundless messages that could discourage investment should be avoided.
Q: Given Mexico’s political and economic circumstances, what advise do you give to your clients about acquiring land for a mining project?
A: Painstakingly go through every possible detail concerning land ownership. For instance, be sure to comply with every legal caveat concerning agrarian law to buy from people who actually have the right to sell the land. If there simply is an agreement for occupying the land, it has to be settled before the relevant assemblies, before the agrarian commissioner. Being rigorous about due legal processes is paramount to guaranteeing the final success of a mining project. If there already is a conflict, then the most advisable course of action would be to reach an agreement between the parties. The law stipulates they go to the agrarian court, which has the necessary arbitration mechanisms to seek an arrangement. In the event on a non-agreement, then subsequent legal steps must be taken. It is important to follow each step carefully because one omission may produce a larger problem.
Q: What is the best and the worst outcome the industry could face with a reform of the Mining Law?
A: The best scenario would be one where new concessions are granted under clear and precise rules. Investments in mining are initially quite steep, so having complete certainty that the government will do everything possible to guarantee them is key.
The worst case would be sending the opposite message; particularly, that current concessions will be revised. If there are enough reasons for reviewing an existing concession, then it must be done on a case by case basis. An overarching general revision of past concessions should not be carried out, and it should be clear that commitments entered into under the previous administration remain completely valid now. Legal certainty is of crucial importance for the sector’s future. Likewise, judicial independence is central for protecting the rights of all involved in a mining project.
A case in point is the reform to the Labor Law, which is an emphatic step toward providing the needed certainty that collective work contracts fulfill all requisites and that they effectively represent the will of unionized workers. While this area is regulated by the federal Labor Law, and not by the Mining Law, the legal certainty it has introduced will result in more and better jobs for the mining industry.