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News Article

Prohibition of Open Pit Mines Poses Threat to Mining Industry

ByKarin Dilge |Fri, 06/03/2022 - 11:36

Mexico’s prohibition of new open-pit mining permits poses a threat to investment and new emerging mining companies, but industry insiders continue to voice the potential benefits of such projects.

This week, environmental ministry SEMARNAT reaffirmed its commitment to block all open-pit mine permitting requests, which the ministry said shows the determination of the government to protect mining communities and ecosystems from the adverse effects of environmental damage.

The measure is taken amid a political environment already said to be unfavorable for mining companies, with President Andrés Manuel López Obrador freezing all new concessions and nationalizing the country’s emerging lithium industry.

According to Ralph Shearing, Executive President, Altaley Mining, 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. Moreover, he accepted that there is a degree of environmental damage for small areas with an open pit nearby. Nonetheless, it is not an issue that threatens the communities if operated responsibly, he added.

“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.

Although Mexico has various underground mines, many of its major actives are mainly open-pit focused, including projects of leading gold producers such as Newmont’s Peñasquito, Fresnilllo’s Herradura, Torex Gold’s El Limón-Guajes and Agnico Eagle Mines' Pinos Altos.

Other key mining projects are also based on open pits, including Teck Resources' copper-zinc project in San Nicolás, valued at US$842 million, Chesapeake Gold's US$359 million Metates gold project and Southern Copper’s US$2.9 billion copper-gold project in El Arco, the biggest open pit mine still waiting on its SEMARNAT permits.

It is still unclear if SEMARNAT will comply with the open-pit mine permitting stop. Minister of the Environment María Luisa Albores said in 2021 that all open pit projects have been stopped in the country, arguing that the institution had not granted any permits for open pit mines since president López Obrador took power. Although SEMARNAT has blocked at least four of such projects since then, the ministry did approve a permit for the Camino Rojo project, owned by Orla Mining, in 2020. Furthermore, Southern Copper confirmed that it received the environmental permits for its US$159 million open-pit Pilares project.

Moreover, this April, Zacatecas Silver announced it had completed the acquisition of the advanced-stage Esperanza Gold Project from Alamos Gold, via a transaction valued over US$60 million. The company has projected an investment of US$500 million over 10 years and expects to foster the creation of 1,200 direct jobs and 6,000 indirect jobs. The company deems the project to be “amenable to open pit mining.”

The data used in this article was sourced from:  
Outlet minero, MBN
Photo by:   Jan Mallander
Karin Dilge Karin Dilge Journalist and Industry Analyst