Mining Fund: Results Are on the Way

Q: What have been the main achievements of the Mining Trust Fund since 2014?

A: As part of the fiscal reforms introduced in 2014, three new taxes were created for participants in the mining sector. The Mining Trust Fund was then set up to collect the revenues from the new taxes and use them to fund infrastructure projects in targeted regions where there is mineral extraction. The idea was to ensure that the extra funds collected by SAT would be used to the benefit of communities living in mining regions. It grants these remote towns and villages, which are often left out of large-scale, city-focused public-sector initiatives, access to new services. Mining can bring new jobs, businesses and other benefits to far-flung regions but it is a finite industry. It is our job to ensure that communities do not become dependent on support from the extraction activities going on around them and to give them the tools to thrive once the mining projects have closed down.

The fund is an innovative public initiative, in which all three levels of government play a role. Of our total funding, 77.5 percent is constituted of the funds collected by the new taxes. From that total, the municipal government, which is closest to the communities, is in charge of distributing 62.5 percent, while the state government distributes 37.5 percent. The rest of the tax collection is distributed directly by the federal government. In each state where there is mining activity, a special five-person committee has been set up to decide how to invest the resources. One representative from a local mining company, one from an ejido or similar agrarian community, and three members of the public sector, a municipal governor from the region, a member of the state government and a SEDATU deputy. The five members of each committee discuss all the ideas for infrastructure projects and vote to decide on where to allocate the funds.

In 2014, over MX$2 billion was distributed in 25 different states, according to the percentage each state contributes to the country’s overall mineral production. This information is collected by INEGI and cross-referenced with the results mining companies provide the Ministry of Economy. In 2015, the figure rose to MX$2.1 billion and we expect to see this trend continue in the years to come.

Q: How do you respond to the mining companies that say that the Fund is ineffective in supporting communities?

A: The relationship between mining companies and the communities is well-established and the Mining Trust Fund should not do anything to negate that. They work with and live alongside each other on a daily basis and have done so for decades in some cases, so it is essential that this relationship continues to grow. Our job is to make sure that the funds received from the new taxes are reinvested into infrastructure projects. It is the government’s responsibility to improve public services, not the private sector’s, and that is what we are doing. I understand that the mining companies want to see results but I can assure them that results are on the way. A total of 812 projects have been started and more than 250 of those have been completed. We expect this number to increase year on year.

Q: What are the main goals for distribution of the Mining Trust Fund in 2017?

A: We are going to continue investing the funds we have collected over the past three years, focusing on regional development. We have compiled a social development plan for each region where there is mineral extraction and we will ensure that each project we authorize is in line with the plan for that community. During the first year, we focused primarily on community infrastructure projects, such as schools and hospitals but in the next couple of years we will be switching our attention toward regional projects that impact a larger number of people. We have already started work on a new highway in Sonora. This project will require an investment of MX$130 million but it will affect a number of communities in the state. This is an example of the kinds of projects we are going to focus on in the coming years.