New Reform Proposal Seeks to Ban Open-Pit Mining

López Obrador’s latest reform proposals expects that no concessions will be granted to open-pit mining companies. Although experts say they are not sure that these reforms can be approved, the measure is taken amid a political environment that is already unfavorable for mining companies.

On Feb. 5, the President presented a new package of reforms, including a ban on open-pit mining permits. The document was delivered to the Chamber of Deputies and will be presented to the plenary on Feb. 7. The president will no longer grant concessions for open-pit mining projects due to the negative impact on the environment and the adverse health effects on communities living nearby.  Of the approximately 250 mines operating in the country, 97 are open-pit projects and 152 are underground operations. 

Although Mexico has more underground mines, its main activities are focused on open-pit mines. Major open-pit projects in Mexico include Newmont's Peñasquito, Fresnilllo's Herradura, Torex Gold's El Limón-Guajes, and Agnico Eagle Mines' Pinos Altos.

Several experts argue that the government maintains misconceptions about the mining industry, which threatens the sector's performance and investment. Ralph Shearing, former Executive President, Altaley Mining, said the ban on open-pit mining is unnecessary and causes significant damage to the industry, as he sees plenty of value in a well-run open pit mining project. “All mining companies need to operate in a responsible manner these days. Therefore, the quantity of economic benefit from any mine is great for the communities and local areas,” said Shearing.

Germán Larrea, CEO, Grupo México, previously stressed that nowadays, most open pit mining projects are environmentally friendly since all plants are modern and use cutting-edge technology. He also stressed that if mining projects are carried out responsibly, the environment and wildlife can be restored after they are finished.

SEMARNAT has stressed that it has not granted any permits for open-pit mines since President López Obrador took office. So far, the Ministry has blocked four open pit mining projects: Los Cardones, owned by Invecture Group; San Antonio and Cerro del Gallo, owned by Argonaut Gold; and Ixtaca, owned by Almaden Minerals. However, it did approve a permit for the Camino Rojo project, owned by Orla Mining, in 2020. In addition, Southern Copper confirmed that it received environmental permits for its US$159 million open pit Pilares project.

The new reform is being adopted amid a political environment that is already considered unfavorable for mining companies, with President López Obrador freezing all new concessions and nationalizing the country's emerging lithium industry. As a result, experts believe that a new reform would pose a greater threat to investment and new emerging mining companies. "His policy of not granting new mining concessions has crippled mining exploration in Mexico and has caused the biggest negative impact on the industry. The effects of this decision will be felt for years to come," said Douglas Coleman, General Director, Mexican Mining Center.