The Mining Industry in Light of the New Political LandscapeBy Pablo Méndez | Thu, 06/24/2021 - 09:07
In the past week, Mexico experienced a historic moment for its democracy, with an evident social awakening to ideologies and the importance of citizen participation in elections. More than a victory attributed to a particular political party, it implies a triumph for the Mexican population and for national interests.
On June 6, 2021, the midterm elections – the most important federal elections in the history of Mexico – were held throughout the nation, deciding, among others, the elected members of the Chamber of Deputies in the National Congress. This chamber has always been fundamental for the country’s economic growth, given that, beyond being an organ comprised of social representatives, it is the power in charge of creating the laws that determine the path of the country, including, without any doubt, the laws that determine the future of mining in Mexico, as mining-related issues are constitutionally characterized as federal matters under the charge of the National Congress.
As a result of the last federal elections, held in 2018, the political party of President Andrés Manuel López Obrador and the leader of the Executive Branch in Mexico, usually referred to by its acronym “MORENA,” reached an absolute and qualified majority in the Chamber of Deputies, which at first implied an express submission of the legislative power to the initiatives made by the Executive Branch based on the president’s political agenda. This political panorama caused favoritism for the initiatives presented by the president and the lack of coherent legislative debate.
This has caused a disruption of the powers of the state, since the opposition was underrepresented in the National Congress, and therefore, the necessary counterweight did not exist to balance the operation of the federal government, especially the National Congress. Today, the judicial power has been catalogued as the only adversary of the legislative power. It has intervened in many of the Executive Branch’s efforts to amend the laws and make regulatory changes to push through projects such as mega construction developments that go against the country’s economic stability, among other laws and amendments that have changed the essence of the Mexican legislation. The judiciary’s constant intervention has led the Executive Branch to discredit the federal court’s work, under the premise that such jurisdictional organs are attempting to thwart the nation’s interests and the will of the Mexican people.
It is precisely for this reason that these midterm elections were so important to Mexican society. This event, beyond voting on public figures, was a representation of whether citizens were willing to consent to the same political ideology that has been governing Mexico in recent years, making it transcendental in that the government must prove that it is the best option for citizens, committing with Mexicans to obtain the best possible results.
This commitment has deteriorated in recent years, since the actual government contravenes the welfare of the nation, which in particular has left in abandonment the business sectors that promote the country’s economy. In particular, the current government has limited the issuance of mining licenses and has imposed additional burdens on the titleholders.
In this sense, the latest developments have re-awakened the population’s interest to participate in the election of their representatives, even more so when the nation’s economic sectors are in danger, as there is a lack of interest on the government’s part to continue promoting them. Let’s remember that citizen participation has shown on numerous occasions that the course of the policies of this country can be changed through the democratic and free choice to put capable candidates in these positions.
The midterm elections results were clear. Citizens demonstrated that they care about maintaining the country's economic stability, and that a counterweight continues to prevail among the powers of the nation to generate legal certainty in the decisions that are being taken in our country.
The mining sector can take a breath of air, but difficult decisions are coming as a result of the structural amendments submitted before the National Congress, especially regarding economic issues whose scope reaches the majority of Mexicans. These amendments should be very well planned and analyzed by the elected representatives before their approval because not only is there an effective balance in the legislature, but in these elections, it was clear that public scrutiny had the last word.
Fortunately, as of today, the eyes of the foreign mining sector are again on Mexico due to the rearrangement of the Chamber of Deputies, which represents a favorable economic recovery scenario for Mexico. Just look at the performance of the financial markets, which in the early hours of the day after the elections saw a rebound, which resulted in greater international economic confidence toward Mexico. Such a performance is a clear sign of life for the country after the plethora of wrong decisions that the authorities have been taking.
Now, it is our responsibility to demand the fulfillment of the campaign promises made by several legislators, that such promises become reality and, therefore, gain strength in the National Congress. More than one candidate, opponents of the political party in power, expressed their support for the mining sector, promising the return of the mining tax to the communities from which the mineral is extracted, the execution of a tax amendment to allow the deductibility of taxes in exploratory matters, and others. We hope this becomes a reality.
Therefore, we can expect great opposition from the Chamber of Representatives to amendments aimed at discrediting and diminishing mining activity, benefiting not only hundreds of national and foreign mining companies, but also the communities in which extractive practices are performed, which are vital for the development of Mexico.