Mining Law Reform Halts Rare Earth Minerals Production: CIMMGM

The Mining Law keeps Mexico from emerging as a global player in rare earth mineral production, warns the College of Mining Engineers, Metallurgists, and Geologists of Mexico (CIMMGM). Unless Mexico initiates exploration of rare earth minerals, the country will be dependent on Chinese supply, rendering nearshoring more susceptible to disruptions, says the institution.

Raúl García, President, CIMMGM, warned that the Mining law reform prevents Mexico from playing a more relevant role in the production of rare earth minerals, which have become crucial in the production of electronics and the production of energy transition-linked technologies, like electric vehicles and windmills. 

According to García, rare earth minerals are found in Chihuahua, Coahuila, Zacatecas, Oaxaca, Guerrero, and Guanajuato. However, he noted that despite the geological potential in these areas, existing legislation hinders project advancement, as exploration has been designated as a state-exclusive activity conducted by SGM. He said that this situation puts Mexico at risk as it makes the country dependent on Chinese imports of such minerals. 

China produced over 210,000t of rare earth minerals in 2022, which represents over 80% of the world’s total supply, making the country the largest supplier in the world, as reported by MBN. While technology requires more of these minerals, prices have increased between 200% and 600%, depending on the mineral. "We could have a slice of that pie, but SGM has not yet started the exploration of rare earths, which will be crucial for nearshoring and the supply chain of which Mexico will be a part," García added. 

García considers that the main issue is the Mining Law not providing enough legal certainty and said that while Mexico does not resolve this issue, it will be an importer of rare earth minerals. He added that Mexico is losing a big opportunity to make a profit and must accelerate initiatives to start exploring.

Industry experts have warned that SGM might not have enough resources to conduct exploration by itself as private budgets for exploration surpass SGM’s budget. “SGM has many talented geologists and manages the most comprehensive database in Mexico. Yet, its infrastructure will never compare to that owned by the many exploration companies in the country. The geological service has an annual budget of about US$50 million, while the exploration mining industry invests around US$800 million annually,” Ramón Luna, Director General, SPM, said in an interview with MBN. 

In this context, Héctor Alba, Director of Geological Operations, SGM, stated that the survey aims to commence the exploration of rare earth minerals in 2024. However, he emphasized its dependency on resources allocated by the Ministry of Finance (SHCP). Alba mentioned that securing additional resources would be challenging, making it more feasible to pursue project development in collaboration with the private sector. 

Monumental Mineral is the only private company with a rare earth minerals exploration project. The Jemi project, located in Coahuila, hosts numerous rare earth element occurrences in the form of dikes and dikelets containing potentially economic concentrations of high-value magnetic minerals including neodymium (Nd), praseodymium (Pr), dysprosium (Dy) and terbium (Tb) with associated tantalum (Ta), niobium (Nb), and zirconium (Zr). According to Monumental, it has evaluated only 5% of the project. However, the company is optimistic about the future of this project. 

Despite the positive perspective of the Jemi project, experts see Mexico reaching production in 15 years, meaning that it will produce these minerals between 2035 to 2038.