Supreme Court Discusses Mining Law Reform

The Supreme Court (SCJN) is set to overturn 11 reforms issued by President López Obrador almost a year ago. One of the contested reforms is the Mining Law reform, viewed by industry insiders as a potential threat to the sector. 

Four SCJN ministers proposed the annulment of eleven reforms promoted on Apr. 28, 2023, referred to on media outlets as “Black Friday.” According to ministers, the promoted reforms present concerning violations of the legislative process. The four projects aimed to revert López Obrador’s reforms were presented by Ministers Juan González, Margarita Ríos-Farjat, Alberto Pérez, and Jorge Pardo, Reforma reported. 

Among the reforms planned to be reversed are the laws governing airports and civil aviation, the dissolution of the Health Institute for Well-Being (INSABI) and its replacement for IMSS-Bienestar, as well as the new Law of CONAHCYT. Other aspects under scrutiny include the dissolution of Financiera Rural, and the restructuring of units in the Ministry of Public Administration (SFP). Additionally, potential revisions involve changes within the Defense Ministry for airspace control, indefinite railway assignments to the military, rules governing credits for bureaucrats, the National Property Law concerning the sale and management of national assets, and control over chemical precursor substances.

The Mining Law Reform 

The Mining Law reform is set to be discussed in April 2024. The Mining Law reform and the changes in the National Water Law, General Law of Ecological Equilibrium and Protection of the Environment, and the General Law for the Prevention and Comprehensive Management of Waste regarding mining and water concessions, which were approved on May 9, 2023, marked a significant shift the Mexican mining sector's legal and operational landscape, as noted by Pablo Méndez, Managing Partner, EC Rubio. 

The primary modification introduced by the new regulation was a reduction in the duration of mining concessions, decreasing the maximum period from 100 years to 80 years. Additionally, the law specified that exploration would now be a state-exclusive activity conducted through SGM. “The model proposed in the Mining Law is not compatible with economic freedom. Labeling exploration as a state-exclusive activity puts the sector at risk since mining starts with exploration. Companies that want to enter Mexico are delaying their investments, waiting for a new political scenario, or looking at other countries,” said Gabriel Ruiz, CEO, CEO Strategos, in an interview with MBN, adding that no government in Latin America has enough resources to conduct exploration works by themselves. 

While the reform impacts both current and new projects, the College of Mining Engineers, Metallurgists, and Geologists of Mexico (CIMMGM) noted it could also hinder Mexico’s potential to enter the markets of other minerals like rare earths, a market dominated by China. According to Raúl García, President, CIMMGM, rare earths are present in Chihuahua, Coahuila, Zacatecas, Oaxaca, Guerrero, and Guanajuato. However, he said that despite the considerable geological potential in these areas, the current legislation impedes the development of projects.

More than 500 amparos have been filed by companies against the reform. According to AIMMGM, however, these do not represent the actual number of companies presenting them, as some companies filed several lawsuits to address different and specific elements the reform is impacting on their operations.  

Industry insiders said one of the main issues with the Mining Law reform was that stakeholders were not properly consulted, leading to a misunderstanding of how the sector works. “The new law causes uncertainty because it is very general, while mining is complex, creating several ambiguities,” said Héctor Ortiz, President, AMSAC, in an interview with MBN.

In the past, industry insiders noted the Mining Law reform followed a murky process. In an article written for MBN, Méndez highlighted arguments against the legislative process followed during the formulation of the reform. Méndez highlighted the continuation of "semi-face-to-face" sessions initially introduced during the COVID-19 pandemic. With the pandemic subsided, the persistence of this measure lacked a valid justification. Additionally, he mentioned the final draft discussion was not published in the Chamber of Representatives’ official Gazette, potentially leading to uninformed votes. Other issues included unauthorized attendance and voting by individuals lacking legal authority, as well as the retroactive application of specific law provisions.