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News Article

Mining Communities Lose Significant Investment

By Paloma Duran | Tue, 01/25/2022 - 15:51

The government's decision to disappear the Mining Fund two years ago aimed to have greater control and management of the resources delivered tomining communities has caused them to lose around US$30 million. This loss of income has placed the development of many of these communities at risk.

Currently, the sector pays annually around MX$400 million for social benefits. However, these no longer directly go to the communities where the minerals are extracted, instead, to where the government decides. By eliminating direct investment, mining communities have been left without MX$640 million (US$31 million), which were used mainly to implement projects that improved their quality of life, said Pablo Méndez, President of the Chihuahua Mining Cluster.

Méndez explained that since 2020, 85 percent of the economic resources obtained by mining companies have been allocated to the Ministry of Public Education, 5 percent to the Ministry of Economy, and 10 percent to government projects. Méndez said the new allocation has affected all communities in the country, especially those that contributed the most to the Mining Fund. He explained thatcommunities used to received 80 percent of this resource, making this revenue much higher than the federal budget allocation for communities.

“It was very difficult for these communities. Imagine that your main income is suddenly removed. It was a strong blow to the finances of each municipality, where projects could be presented but there were no more. Now all this budget goes to the Ministry of Public Education. We only hope that with this money schools will continue to be built for mining municipalities such as Parral, Ocampo, Guerrero, Madera, Ciudad Juárez, Chihuahua and the other 14 communities in the state,” said Méndez.

The mining sector and communities have said that eliminating the Mining Fund was a big mistake, as it was an important driver for marginalized communities. Bradford Cooke, Founder and CEO of Endeavor Silver, told MBN that the federal government's decision to introduce the mining tax as a way to return some taxes to states and local municipalities was never fully implemented.  “Returning the Mining Duties to the local states and municipalities for the benefit of the local communities would be a good way the federal government could help its own citizens.”

Since the dissapearence of the Mining Fund, many legislators and governors have proposed to reactivate it. If one of the many proposals is approved, it is expected that approximately 120 communities would benefit directly. The main arguments are that rural communities have been abandoned since their monetary loss is not replenished by the government and that the decision affected the communities at a critical moment due to the pandemic. For these resources, the reactivation of the Mining Fund is key to guaranteeing that the development of these communities continues without being affected.

The data used in this article was sourced from:  
MBN, Outlet Minero
Paloma Duran Paloma Duran Journalist and Industry Analyst