Home > Mining > View from the Top

New Concessions a Top Priority for Miners

Juan Manuel González - DBR Abogados
Senior Counsel

STORY INLINE POST

Andrea Villar By Andrea Villar | Journalist and Industry Analyst - Wed, 04/08/2020 - 12:29

share it

Q: Almost one year and a half after President López Obrador took office, what areas are of most concern for your clients?

A: I would have to say obtaining new mining concessions, despite the fact the government has decided against issuing further concessions. To some degree this is understandable in certain cases, in others, this is not the case due to a lack of proper information. There are new projects that are being developed and companies want to submit mining concession applications. In situations like these, there has not been a declaration of land freedom and, therefore, the land is not free.

This situation leads us to a series of issues that must be legally resolved. A while ago the government announced that there would be amendments to the Mining Law or that it could even introduce a new mining law. Fortunately, nothing has happened and that is a good sign.

Q: What is the risk of granting a new concession without an indigenous consultation?

A: This represents a risk because the communities affected can obtain the cancellation of a concession that has already been granted if they challenge the decision. There has been great progress in regard to the indigenous consultation, but the reality is that we have had an international treaty for a long time and it has had little effect on decisions that have taken place in Mexico.

It is currently a risk to grant a concession without consulting the indigenous community. This raises two problems: that the land has not been released, which means it is not available for a concession, and the indigenous consultation needs to be regulated.

Q: What do you tell your clients if they want to obtain a new concession?

A: In certain cases, the authority is forced to release new concessions. The Mining Law provides deadlines for issuing the land freedom resolution and if the government does not, it is an error, an omission. There are legal means to solve this issue and a trial would be necessary. Concessions that have not been released are mainly due to administrative overload. There are not enough staff or resources to implement these administrative measures. Although large portions of these lands have already been released, the accumulation of issues that remain pending cannot be solved right away. I propose the creation of a joint commission to coordinate mining concessions between the government and companies to speed up the concession process. With the indigenous consultation, it is necessary to create competent organisms and have an existing correlation between them. The commission that I have in mind would be a kind of one-stop-shop to get all permits quickly and ideally with just one procedure.

Q: What advances have been made in this matter in other mining countries?

A: In Canada and Latin America, mainly in countries like Peru and Chile, there have been great breakthroughs. The challenge that we have is that we should not let those countries gain ground. Brazil, for example, has taken firm steps to develop various industries by investing great amounts of capital. We already are working on new projects with them and the same goes for Peru.

In Mexico, we have everything we need to succeed. Nevertheless, we are falling behind. This is due to overregulation, which bolsters the need for a joint department. This is something other Mexican laws have taken into account. For example, the creation of the National Commission of Foreign Investment is made up of different governmental ministries. To solve the many administrative issues that we deal with on a daily basis, I believe it is important to have an agency that could manage or centralize this function.

Q: What precedent is being set by the environmental tax in Zacatecas and what implications does it have for the broader industry in Mexico?

A: It sets a serious precedent. Mining should not face such levies. What I fear is that other states will create this kind of tax levy and that will have an impact on the development of new or existing operations. I agree that the environmental issue must be regulated and that mining companies have an obligation to contribute fiscally, but that is the reason the Mining Fund exists.

Q: What impact is the tax refund process having on the mining industry?

A: The tax issue has reduced the country's competitiveness. We provide companies with legal support. We make sure the client is complying with the law and governmental requirements. We maintain the correlation and communication with the experts who handle the return procedures.

Q: How would you explain to a foreign company the Mexican tax system?

A: I would start by saying that the company has to be registered with the Federal Taxpayers Registry in order to operate and do business in Mexico. Once this step is completed, you have to comply with all tax provisions. We work closely with accountants and tax lawyers. However, you also have to be very honest and clear with foreign investors and advise them that the process is not as simple as waiting for a window to become available while standing in line. In Mexico, the process is far more complex.

DBR Abogados (DBR) specializes in providing comprehensive solutions for its clients. DBR provides personalized legal services that adhere to the highest standards of ethics and responsibility.

You May Like

Most popular

Newsletter