Mexico Mining Policy Framework Assessment and Legal Outlook

During President López Obrador’s administration, the sector has been mired in uncertainty, primarily due to the Mining Law and the advancing open-pit mining ban reform. Despite some established legal protections, experts emphasize that uncertainty will persist. To address this, they point out that the sector must ensure expert opinions are included in the reforms’ debate. Furthermore, a compelling message that resonates with both the public and the federal government is paramount, rather than letting the message remain confined to the mining sector.

In 2023, the Mining Law reform was approved, which proposes to reduce the duration of mining concessions from a maximum of 100 to 80 years. The text also establishes that exploration is reserved for the State through the Mexican Geological Survey (SGM) or through assignments to entities of the federal public administration. However, no clear guidelines have been established for its enforcement. José Jabalera, Vice President of Sustainability, Discovery Silver, highlights that this has significantly contributed to a new wave of uncertainty for companies. “The reform altered our reality, but it did not provide clear guidelines. These legal gaps hindered our progress. While we understand the importance of adhering to new norms, we cannot do so without knowing how to comply.”

According to CAMIMEX, the proposed reform, currently suspended by the Supreme Court (SCJN), is unviable as exploration demands significant investment and expertise, often taking years with no guarantee of success. This makes it impractical to allocate public funds for such activities. Additionally, experts argue that shortening concession durations reflects a lack of understanding of the long-term nature of mining projects, which would discourage site development.

In addition to the Mining Law, a proposal to ban open-pit mining was presented by President López Obrador on Feb. 5, 2024, further increasing the sector's risk. Pablo Mendez, Mining Partner, EC Rubio, notes that while the sector was becoming familiar with the Mining Law, the proposal to ban open-pit mining has reignited uncertainty. “We were previously confident that the unconstitutionality of the Mining Law would be declared. However, the open-pit mining proposal signals interesting times ahead, compelling us to rethink our strategies and determine how to defend ourselves.” Mendez emphasizes that the industry must wait until 2025 to understand the sector's future under a new government. In the meantime, legal tools should be utilized for protection.

Jabalera notes that the government's aim to propose new regulations is not necessarily negative, as these regulations address previously overlooked issues such as mine closures and water management. However, without complete information, these proposals may not be the best for companies, communities, or the country as a whole. “Reforms are needed, but instead of being reactive, let us be proactive. We should inform the government about what is needed and propose the changes ourselves. Otherwise, outsiders will set the rules. While it is important to consider diverse perspectives, we must prioritize the most knowledgeable ones.”

Experts recommend enhancing communication, emphasizing the need to inform both government officials and the general public about how mining is modern and responsible. While the next administration is expected to be more flexible and open to dialogue, it is crucial to know how to deliver a stronger message. Joel González, Senior Partner, ALN Abogados, points out that while industry insiders understand the message, “if the average person searches online for the impact of mining, only the negative aspects come up. There is still a significant need to communicate beyond people within the mining sector. We need to engage with the broader audience.”

Andrés Pérez-Howlet, Partner, Molina, Hanff & Pérez-Howlet, notes that concerns about new regulations should also be addressed within the sector, as many fear expropriations. However, he clarified that these proposals should not be retroactive, meaning companies with existing permits are protected by current law.

Pérez-Howlet highlights that a new challenge the sector must consider is the judicial reform, which aims to elect ministers and judges by direct vote. This could result in decisions influenced by ideology rather than law. "Since judges and magistrates handle industry cases, there is a risk of biased rulings. Therefore, we must protect ourselves as much as possible. If national institutions fall short, we should also explore international avenues for protection.”