Miners Are Falling Behind Regarding Environmental Efforts

While environmental practices have become a priority for mining executives around the world, Mexico has been unable to make significant progress on key issues. The main challenge the industry is facing in its green transition are President López Obrador's reforms, which aim to alter the energy industry and review mining concessions.

For the first time in 12 years, the commodity price risk is not a top concern for mining executives around the world, said consultancy firm KPMG. In 2022, the main issue is environmental risk, followed by commodity price risk and community relations, which include the social license required to operate. KPMG explained that the change in priorities is related to the promotion of more climate change initiatives and a stricter market focus on ESG practices. However, the firm stressed that this does not mean that the other risks disappeared or became less precarious.

"The pressure to take social and environmental responsibility seriously began with a push from environmental groups and local communities to minimize the negative environmental, social, and economic impacts associated with mining and processing activities. This pressure has intensified exponentially. Mining companies that do not embrace ESG practices will struggle to survive,” Ralph Shearing, CEO, Altaley Mining, told MBN.

While the efforts of miners around the world to achieve environmental goals have multiplied in recent years, miners in Mexico continue to struggle on key issues due to the country’s political instability. Under President López Obrador’s government, mining has often been accused of deteriorating the air quality, causing pollution and destroying the ecosystem. The accusations have intensified, even though mining is currently one of the most heavily regulated activities in the country, since companies require various permits and certifications to carry out their activities. Sourcing clean energy has also become more difficult because the president has hampered private energy developments to be able to bolster state utility CFE instead.

Karina Rodríguez Matus, Partner, Rodríguez, Matus & Feregrino, told MBN that the government must understand that "past mining practices are not the same as current practices and laws and circumstances have also changed. It is time to acknowledge that Mexico is a mining country with a mineral wealth that must be recognized and utilized to achieve the required development."

These efforts have severely affected investment and environmental progress in the sector. According to BNamericas, of the seven main mining companies operating in Mexico, being Fresnillo, Newmont, Torex Gold, Alamos Gold, Equinox Gold, Pan American Silver and Endeavor Silver, only four achieved minor reductions in greenhouse gas emissions in 2021 compared to 2020. Meanwhile, two reported small variations or increases.