Sonora as Mexico’s Mining AdvocateMon, 10/22/2018 - 12:29
Q: How can the Ministry of Economy promote more favorable fiscal and regulatory terms for investment?
A: The special and extraordinary royalties were established in 2014 and the state has now experienced four years of this tax burden that feeds the Mining Fund. Despite this factor, and the 10-year time frame that was established for the deductibility of exploration expenses, the hard numbers of Sonoran mining clearly highlight the state as the national leader in production. That being said, the industry has not experienced a marked growth in the wake of these expenses being established. Without doubt, the most important task of the public and private sector is recovering competitiveness, and if this cannot be done by reducing the tax burden, it can be done by establishing a public policy that involves direct and short-term solutions. The mining agenda has been dragging on for several years with problems related to its fragmentation. The industry is intricately linked with many dependencies of several different federal government ministries.
The state-level government bodies do what we can to support the official processing of permits for companies of different sizes located in the corresponding territories. But at the end of the day there is always a process under the strict remit of the federal government. Behind these processes is usually a team of public servants who are doing the best they can under critical staffing shortages and lack of technical knowledge. We are grateful that, through the establishment of the Directorate of Mines, we have already begun to overhaul and modernize these processes and should make significant strides before the end of this sexennial term.
Q: How do you expect the change of administration to affect the continuity of the mining sector?
A: Every change of government gives rise to the hope that things can change. In our specific case, we want to strengthen the relationship between federation and state and work in a more coordinated way for the good of the mining sector.
Q: What are the main incentives to invest in mining in Sonora, especially for smaller-scale miners?
A: The state government participates enthusiastically with programs that focus on the small-scale miner. We visit their concessions, evaluate them in a very preliminary way and provide recommendations as to the best step forward for that particular project. A possible strategy to detonate the progress of the small miner, and which certainly is not new, is to promote the establishment of processing plants, which can collectively receive ore from small projects, process it and in this way boost the economy and life quality of certain isolated regions.
Q: What is your perspective of the use and distribution of the Mining Fund and how can it catalyze growth in the state?
A: Regarding the Mining Fund, in Sonora, a total of MX$2.49 billion was received from the fiscal contributions over the course of 2014, 2015 and 2016, which substantially benefited the infrastructure of major mining municipalities in the state such as Cananea, Caborca, Nacozari, Alamos, Sahuaripa and Cucurpe. These were the main recipients of the resources from the Mining Fund due to their importance for mining operations, not only in Sonora but nationwide.
The recommendation of both municipalities and mining companies is that it is necessary to expedite the processing of these resources and have more regional influence in the decision-making process regarding where they will be allocated. This would bridge many existing gaps that may not be considered by those who are not present on the ground. For example, neighboring municipalities that do not have mining activities but do contribute to meeting the industry’s needs do not receive any resources. This could be revised in a fairer and more equitable way to ensure all those involved across the mining supply chain benefit from its activities.