Odyssey Marine Exploration Continues Lawsuit Against Mexico
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Odyssey Marine Exploration Continues Lawsuit Against Mexico

Photo by:   Maksym Kaharlyskyi
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Karin Dilge By Karin Dilge | Journalist and Industry Analyst - Thu, 06/16/2022 - 17:51

The American company Odyssey Marine Exploration will continue with its international arbitration claim against the Mexican state for rejecting its seabed mining project proposal.

The Oceanica project is developed for the extraction of phosphate sands off the shore of Baja California. Following the authorities’ denial to grant the environmental permit, the company requested compensation of more than US$2 billion. Odyssey already obtained a US$15 million net value through a direct offering of equity securities.

“We expect this financing to carry Odyssey through a decision on our NAFTA arbitration and provide the cash to self-fund a portion of the NAFTA litigation,” CEO Mark Gordon said in a press release.

The company said it is confident the dispute can be resolved. Part of the company’s obtained funds will be used to cover the debt the company has with Minera del Norte, a subsidiary of the Mexican steel company Ahmsa, as well as to invest in mining projects in South America and the Pacific Islands.

In 2011, the American company identified the Don Diego deposit and in 2012 it encountered ExO. A subsidiary of Odyssey Marine received a 50-year exclusive exploration concession to develop the phosphate project. Then, in 2014, ExO received two additional adjacent concessions. Odyssey applied for environmental permits, providing information about wildlife following a request from the environmental ministry, SEMARNAT. Nonetheless, SEMARNAT rejected the project.

The lawsuit adds to the ones the country already received from First Majestic Silver and Vulcan Materials. Since the beginning of López Obrador’s term, mining companies have been subjected to legal uncertainty due to concession cancellations and stricter environmental permitting processes. Companies have appealed to international courts, citing tenuous argumentations toward the cancellation of their operations.

One example is Vulcan Materials, which was suing the Mexican government for US$1.5 billion after the state shut down a project in Playa del Carmen, Quintana Roo. A settlement is reportedly still under negotiation.

In Sept. 2020, First Majestic explained that the Federal Court ordered the annulment of the Advance Price Agreement (APA), which since 2012 has allowed First Majestic to pay taxes at a lower rate in Mexico. However, Mexico’s revenue service SAT claimed that the Canadian company owes a debt of at least US$180.3 million due to missing taxes from 2010 to 2018, reported La Jornada. Consequently, the company started legal proceedings against the Mexican government.

 

Photo by:   Maksym Kaharlyskyi

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