Vulcan Materials Takes Mexico to International Court

Vulcan Materials is claiming US$1.5 billion from the Mexican State for allegedly not complying with a mining concession in Playa del Carmen, Quintana Roo.

The company’s subsidiary Calica started an international trial process for a supposed violation of the United States-Mexico-Canada Agreement (USMCA). The mine extracts thousands of tons of limestone near the port of Punta Venado in Playa del Carmen. Nevertheless, the Mexican government accused the company of illegally extracting the resource, which caused it to halt Calica’s operations.

The International Center for Settlement of Investment Disputes (ICSID) will be in charge to issue a resolution by 2H22. Albert Jan van der Berg, Court President, ICSID, will determine if the Mexican State violated or its obligations under the USMCA. If the court decides this is the case, the judge will establish the compensation.

The legal dispute with the American company started during Enrique Peña Nieto’s administration but escalated during the López Obrador administration. On May 5, 2022, environmental ministry SEMARNAT shut the company’s operation down completely, arguing that the mine was causing serious environmental damage.

However, Vulcan Materials argued that in March 2022, it received its routine three-year customs permit, which allowed it to continue operating. Vulcan Materials is the biggest producer of construction aggregates in the US. Its Mexican subsidiary focuses on the extraction and commercialization of limestone.

The US corporation has two concessions to manage two deepwater ports in Quintana Roo, one of which is used for the limestone operation while the second is open for public use, enabling the travel of ferries and tourist cruises.  

President López Obrador proposed the US company withdraw a lawsuit against the Mexican government in exchange for resources to convert its limestone mine into a tourism project. Moreover, López Obrador said that if an agreement was not reached in the short term, the government would ask the UN for help.

“If they say no and want to continue exploiting without authorization or continue suing the country for taking care of its environment, we are going to take our case to the UN. This is not a threat or a warning, we are simply stating that impunity is no longer allowed. I am sure that the [company’s] main shareholders are not aware that we are talking about the destruction of 500ha of the environment. This is not going to happen during our government,” said the president, as he stressed that the concession is not being revoked but merely must be used for other purposes.