Emilio Varela
Director
Mines of Zacatecas
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View from the Top

Mining Framework Modification Should Consider Ramifications

Wed, 10/16/2019 - 12:06

Q: What major changes would you like to see reflected in the Mining Law?
A: The indigenous consultancy is not contemplated in the current framework. The Mining Law went through some modifications in October 2014, with some changes made two years later that were aligned with the objectives of the Energy Reform. The application for a mining concession does not have a section to determine if the land in question is an ejido, a private property or a natural reserve. If the new administration modifies the law, possible repercussions should be taken into consideration. Even when the indigenous consultancy was discussed as a measure to regulate mining activities in the country, the stock market shares of many mining companies suffered.
The country’s preferred activities listed by order of priority are the exploration and production of hydrocarbons, electricity transmission and mining. After the Energy Reform took place, many concessions were influenced by the new framework. For instance, if a transmission line passes through a mine, this territory has to be divided and a right of way must be sacrificed on both sides of the project. Hence, if there is an ongoing subterranean activity, other preferred activities like energy transmission should not be given greater importance over the mining concession.
In my former position as Deputy Director of Mining at the Ministry of Economy, I became very familiar with this situation. During the modification of the Mining Law in 2012, a period of time was designated to issue consultancy criteria hand in hand with the Ministry of Energy. At the moment, when a request of this nature takes place, best practices are involved to reach a common agreement regarding the rights of way. Nevertheless, it would be better to have a regulation defining this criterion.
Q: What elements should be taken in consideration to define a correct distribution of the Mining Fund?
A: Since December 2018, the Ministry of Economy has managed and defined the scheme to distribute these resources but the disposition and operation of this new scheme has not been regulated. In fact, there is a document issued by CAMIMEX, known as the Integral Proposal for the Mining Fund, which reflects the industry’s view on how to distribute the resources collected in 2018, which total MX$5 billion. I worked under the model where mining companies delivered these resources directly to the communities. Through the administration’s new scheme, the essence of the Mining Fund is diminished because there will be no long-term social impact. The intention is to execute the process with transparency through CAMIMEX’s “base zero budget” proposal. In this sense, presenting projects before the resource is available is a practical solution. However, concluding a project in the same year it is budgeted, hence during the same fiscal period, suggests that these will be small-sized projects. Even projects such as developing a road rehabilitation program, providing clean water or developing sewage services could not be finished on time. If the period was flexible in terms of resource availability, this would be an extraordinary idea. The General Directorate of Mines captures CAMIMEX’S previous statistical data and productivity reports from mines during the first 30 business days of each year. Every mine in operation for more than six years must provide this information, on which the coefficient for each municipality and state is determined.
Q:  What short-term actions will the Directorate of Mines of Zacatecas develop to cope with industry needs?
A: Our main priority is to support the development of junior mining companies. The Ministry of Economy provides economic support through the Public Trust of Mining Promotion and Development. With this in mind, our plan is to ensure the availability of these resources so small mining companies can execute analysis and sampling of the mineral composition of their concessions. In Zacatecas, there are close to 2,400 valid mining concessions. This is close to 1.7 million hectares. By executing these analyses in a certified laboratory, further development could be supported by demonstrating the untapped potential of these mines.