Vulcan Materials Rejects “Illegal Expropriation” of its Assets

US company Vulcan Materials has rejected what it considers an "illegal expropriation" by the Mexican government of its investments in Quintana Roo. Despite the dispute, the company expressed its willingness to reach an agreement with the Mexican government.

Vulcan has been at odds with the Mexican government since 2022, when authorities halted its limestone extraction operation in Quintana Roo due to alleged environmental damage, which Vulcan denies. Last week, President López Obrador clarified that the government's actions are not an expropriation of the land, but simply a closure of the operations.

In a statement sent to Reuters, Vulcan stated that the suspension is an authoritarian move by the Mexican government aimed at pressuring the company to sell its assets in Mexico, as the government has prevented it from producing or selling materials. In 2023, President López Obrador offered Vulcan US$391 million to buy its concessions, but the company refused to sell.

“The truth is that at no time have we received a ‘generous offer’ to buy our property. We were given an informal appraisal, without signatures and without details, that substantially undervalues our assets, including the limestone reserves that we own under Mexican law, as well as the only deep draft port in the region,” the company said.

Vulcan Materials Case

Vulcan Materials is a leading producer of gravel, sand and crushed stone that has mined limestone in Quintana Roo since 1986. However, in 2018, the company initiated a legal arbitration case against Mexico under USMCA, due to the revocation of its port concessions. 

In May 2022, Vulcan Materials' activities were shut down by the Mexican government due to environmental concerns regarding its underwater limestone extraction. Vulcan stated that it has all the necessary permits to operate and is resorting to all legal means to defend its rights and restart its activities as soon as possible. Lopez Obrador had warned that if Vulcan does not accept the alternatives for the project, he would declare the land as a protected natural area.

Last week, US Congress members wrote a letter to Mexican Foreign Minister Alicia Bárcena, urging her to resolve the dispute. They accused the Mexican government of mistreating private companies and López Obrador's actions of being illegitimate under both Mexican and international law.  Republican Senator Katie Britt of Alabama expressed concern that key infrastructure projects in Alabama and the southeastern United States are in jeopardy due to the Mexican government's intention to close the country’s largest producer of construction aggregates.