Mexico’s Mining Environment Raises Concerns in the US and Canada

During the first meeting of the United States-Mexico-Canada Agreement (USMCA) Free Trade Commission, US and Canadian authorities shared their concerns regarding foreign investments in Mexico, especially in the energy and mining sector due to government enacted policies and union disputes

The meeting was attended by Mexico’s Minister of Economy Tatiana Clouthier, US Trade Representative Katherine Tai, and Canadian Minister of Small Business Export Promotion and International Trade Mary Ng, reported Reuters.

Mexican  and Canadian stakeholders reaffirmed their commitment to continue working together to improve the business and investment environment in Mexico, especially since large Canadian mining companies have been operating in Mexico for many years.

Ng highlighted the need to create an effective framework to provide long-term stability and economic certainty to investors, workers and the industry. Recently, the government has had many conflicts with Canadian companies such as Americas Gold and Silver, First Majestic, Advance Gold Corporation, among others, over many issues which include:  union disputes, taxes, concessions and previous agreements.

President´s López Obrador's political stance of not granting more concessions in Mexico has been described as one of the main challenges facing the sector. According to the Mexican Chamber of Mining (CAMIMEX), in 2020 the Mexican mining sector only captured US$2.5 billion in investment, the lowest figure in the last 13 years, reported MBN.

Due to the increasing instability and uncertainty in the sector, many companies have sought the support of the Canadian government to resolve disputes and continue to operate smoothly.

Both the Mexican and Canadian governments have met several times to discuss possible solutions to the uncertain investment situation in the country. In March, during the virtual convention of the Canadian Association of Prospectors and Developers, Ng and Clouthier agreed to strengthen alliances between the two countries and the importance of fostering a stable business environment for Canadians to promote investments and projects in the mining sector.

Last week, Head of the Ministry of Interior (SEGOB) Olga Sánchez Cordero, highlighted the important contributions that the Ministry has achieved in the resolution of six mining conflicts in Mexico. Sánchez Cordero emphasized that the positions and concerns of interest groups have been listened and catered aiming to reach beneficial agreements between all parties.

In addition, Sánchez Cordero asked Americas Gold and Silver and its workers to continue working together to reopen the San Rafael mine that has been blocked for more than 14 months. Yesterday, the company announced in a press release that it expects to reach soon a resolution to resume activities at Cosalá Operations and achieve full production in 3Q21. Americas explained that the resolution was mainly achieved thanks to the commitment and first-time support from the state and federal government.

In addition to investment in the mining sector, US, Canadian and Mexican representatives discussed Mexico´s  situation regarding the renegotiation of energy contracts agreed in past governments, the rules of origin for the automotive sector, labor reform, environmental issues, and agricultural trading products.