Transparency Needed to Appease Anti-Mining Communities

Q: To what extent do you feel confidence is returning to the sector following the price downturn?

A: The depreciation of the peso against the US dollar has been a big boost for Mexico’s ability to compete in the international sphere because production and other operational expenses are coming down. After the royalty taxes were introduced in 2014, we saw many companies pulling out their investments from Mexico and putting them into other Latin American jurisdictions because mining in the country was becoming too expensive. Now, with strong reserves in Mexico and recovering prices, the international investor community and major mining companies are once again looking at Mexico as a viable destination. This is great to see but the country still has some improvements to make, particularly on the issue of security.

Q: What services do you provide your clients in the mining sector?

A: We have been working on issues surrounding land ownership legislation for more than 25 years, and we specialize entirely on the subject of land access. Torex Gold bought a project in the Cocula municipality in Guerrero in 2008, an area with a very complicated social structure. The previous owner of the concession was Kennecott, and was unable to develop the project for 12 years despite having all the equipment on the property ready to work. We were hired and immediately carried out an in-depth social and land due diligence to clearly establish the social, technical and legal situation. We needed to find out who were the local community leaders, and what they wanted to know and receive in return for approving the project. Following the inquiry, we realized that all the issues that had been impeding the project’s progress could be easily resolved. We reached resettlement agreements with a total of 190 families, and by 2010 Torex was able to start working. The mine entered into production in 2016 and is now a multimillion-dollar asset. We did a similar job for Alamos Gold on its Mulatos project in Sonora and for Agnico Eagle at its Pinos Altos project in Chihuahua.

Q: How do you approach communities that fundamentally oppose mining projects?

A: Mexico has been a mining country for 500 years, and many of those who oppose mining today come from mining families. States like Guerrero and Oaxaca prospered on the back of mining, but this has changed as the political and social environment have become more complicated. Mining companies have a duty to explain to these communities, as openly and transparently as possible, what the plan for the project is, and what impact this will have on the nearby communities. The companies, with our help, need to carry out their due diligence to understand exactly how each individual community functions, who its leaders are, and what is important in the region. If the homework is not done, the project cannot be successful. This is where Grupo GAP can add value.

Q: What do you hope to achieve over the next few years?

A: For the past 28 years, we have been working to ensure that the mining sector brings jobs, investment and development to the country and that objective has not changed. We believe we have an important role to play as the bridge between mining companies and communities and we want to continue working to improve this complex relationship step by step. I want to see the mining sector fulfill its potential and contribute more to the national economy. Mining pays higher salaries than most other industrial sectors and provides jobs in remote regions where there are no other options for employment, so it is vital that the public and private sector work together to support the ongoing development of the industry.