The Senate Approves Reform to the Mining Law
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The Senate Approves Reform to the Mining Law

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Karin Dilge By Karin Dilge | Journalist and Industry Analyst - Tue, 05/02/2023 - 14:40

With 66 votes in favor, the Plenary of the Senate, composed only of MORENA, approved reforms to four laws to restrict mining in Mexico, reduce mining concession times and facilitate the cancellation of permits.

The joint committees on Mining and Regional Development, as well as Second Legislative Studies of the Senate, approved, without changes the bill that reforms the Mining Law, National Water Law, General Law of Ecological Balance and Protection of the Environment and the General Law for the Prevention and Comprehensive Management of Waste, regarding concessions for mining and water.

Article 15 of the aforementioned law orders that mining concessions are subject to the public domain regime of the Federation and confer the right to carry out the exploitation, benefit, and use of minerals or substances subject to the application of the law. 

Additionally, the new legislation, which was dispatched to the Executive and is awaiting promulgation in the Official Gazette, reduced the duration of mining concessions from a maximum of 100 to 80 years. The text also establishes that exploratory activities are reserved for the State through the Mexican Geological Service (SGM) or assignments to entities of the federal public administration.

Luis Humberto Vázquez, president of the Mexican Association of Mining, Metallurgical and Geological Engineers (AIMMGM), had anticipated in a recent interview with BNamericas that leaving exploration in the hands of the SGM was the "most serious" aspect of the original project due to its possible impact on the mining industry. He also emphasized that he did not see it as feasible because "the SGM does not even have the capital that such activity requires."

Moreover, Armando Ortega, president of the mining working group of the Canadian Chamber of Commerce in Mexico (CanCham), agreed with the president of the AIMMGM that the lack of resources will be the main limitation of the SGM. In addition, CAMIMEX warned that they might cost the nation up to 420,000 direct jobs and US$9 billion in lost investment over the next few years.

"We as the private sector have around US$700 million for exploration. In contrast, the Government has no budget. And that's assuming that Hacienda [the Mexican Treasury] provides the resources and that they are exercised," warned Ortega.

The changes also state that the ministry "will only grant mining concessions through a public bidding competition that guarantees the State the best economic and benefit conditions for the population, as well as the realization of actions to preserve, restore, and improve the environment, prevent and control air, water, soil, and subsoil pollution, in accordance with applicable provisions."

The concession title must be given to whoever obtains the corresponding competition ruling, after processing the environmental, labor, energy, social, and any other authorizations and permits that must be processed at the federal level, in addition to the corresponding water concession for industrial use in mining, in accordance with applicable regulations.

According to experts in the mining sector, the proposed changes to the Mining Law can also affect electromobility and the transition to green energies. 

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