Preparation the Key to Crisis Management

Q: What key factors must be considered by the mining industry in terms of environmental regulation?

A: There has been a pattern wherein every six years environmental legislation becomes more aggressive toward all industries related to the use and exploitation of natural resources in Mexico, and mining is not an exception. This also implies more expenses given the unfriendly international business environment where metal prices are down and the drop in oil is impacting all industries. Despite this negative perspective the mining sector is still investing and complying, and legal advisors do their best to help clients comply with the legislation and with article four. The sector learned its lesson, and now it is impossible for mining companies to do business without considering the communities that might be affected. Public opinion paints the mining industry with unfavorable colors and refers constantly to the practices of the past century but the current sector is totally different and opinions must also evolve to reflect reality.

Q: To what extent do you agree with the contention that the Federal Environmental Responsibility Act does not go far enough?

A: The problem with that Act is that it cannot be enforced by itself since it is a complementary law of the environmental legislation. Its basic principle is that if a company does not comply then sanctions will be imposed. This sets forth a new right to file a lawsuit for damages to the environment,but limitations are placed on who is entitled to bring litigation. In this case, only communities that are affected, PROFEPA, NGOs, or State Environmental Agencies. The latter in conjunction with PROFEPA. Usually, failure to comply entails an administrative process with the environmental authorities, which follow certain procedures that might impose sanctions that can later be challenged. It follows the rules of a civil trial but the damages are solely focused on the environment and not on personal patrimony.

Q: What is the process a mining company has to undergo to successfully manage a crisis such as a spill?

A: We have to survey the whole operations, pinpoint all possible risks, and develop the worst case scenarios. This enables us to prepare our clients so they can face those situations in the most informed manner possible. Science and technology has pushed the industry forward, and it helps companies prevent and foresee possible scenarios and extreme situations. The sector has radically changed and the law has been heavily reinforced by authorities. In 2015, PROFEPA inspected 1,130 mining units in Mexico, and of those, 71 were closed due to lack of compliance. This shows that a minimal proportion of the sector was failing to fulfill the general environmental requirements. Most of those units were small and medium mining companies, and most of the closures occurred due to hazardous waste management and operations-related spills.

Q: How do you foresee the enforcement of the law, and what should be done to improve the fractured environmental regulations?

A: PROFEPA and CONAGUA, the most relevant regulators, do not have enough staff to inspect the whole industry in Mexico. In spite of that, PROFEPA has made an effort to practically supervise most of the mining units in the country because of the well-publicized spills that have caused concern among the population. The big challenge now is to enforce the environmental regulation in respect to the small and medium size mining companies because together they equal the negative environmental impact of large firms. We are currently providing environmental legal assistance for large companies, both Mexican and foreign. Rather than wait for the regulations to become more aggressive we urge them to be more proactive in their decision making. We expect improvements in greenhouse gas emissions, waste, and water management.