Water and Mining: Legal Trends and Regulatory Transformation

(In collaboration with Carlos Suárez de Miguel and Alejandro Preciat Campos)

Water is a critical input for virtually all productive activities, including agriculture, electricity generation, and, in particular, mining.

However, the specific nature of its use in this context has given rise to numerous legal disputes, highlighting the need to establish a more robust and technically structured regulatory framework.

According to data compiled by EJAtlas, an initiative dedicated to documenting environmental justice cases, out of a total of 628 conflicts reported globally in connection with mineral exploration and/or extraction activities, 355 identify water as a central or secondary point of contention. 

In an industry increasingly oriented toward sustainable development, it is essential to take this dimension into account in order to prevent future disputes that could compromise the interests of communities near mining projects, the workers involved, or even the concession holders themselves. To that end, it is crucial to thoroughly understand and interpret the applicable legal framework, with the aim of anticipating legal and operational risks that may arise from the mismanagement of socio-environmental issues.

In Mexico, for example, as of 2003, only 0.35% of the total national water volume had been allocated to the mining sector through concessions.. 

The Mexican Legislative Landscape 

In Mexico, the legal provisions governing the relationship between water and the mining industry are primarily found in two legal frameworks: the  Mining Law and the National Water Law. However, this was not always the case.

From a historical standpoint, the National Water Law did not impose a differentiated regulatory burden on the mining sector, as it did not establish specific distinctions between mining and other industrial activities. In parallel, the Mining Law included only a single explicit provision related to water, set forth in Article 19, which stated that mining concessions granted their holders the right to:

"Use the water resulting from mine workings for the exploration, exploitation, and processing of the minerals or substances extracted, as well as for the domestic use of personnel employed in such operations."

As a result, under this legal framework, the relationship between water use and mining activity was considered incidental, limited to the rights inherent in the concession title. Obligations regarding water use were, for the most part, governed by the general regulatory framework applicable to the industrial sector, without a specific regulatory treatment for mining.

However, this landscape changed significantly in 2023 with the publication in the Official Gazette of the Federation of the decree amending the Mining Law, the National Water Law, the General Law of Ecological Balance and Environmental Protection, and the General Law for the Prevention and Integral Management of Waste.

Among other modifications, the reform introduced a specific regulatory framework on water use applicable to mining concessions. This paradigm shift is reflected in the current wording of Article 19 of the Mining Law, which, unlike its previous version, now subjects the right to use water resulting from mine workings to the fulfillment of certain conditions. Under the current text, this right may only be exercised when the concession holder: (i) notifies the National Water Commission (CONAGUA), and (ii) pays the corresponding water duties in accordance with applicable legislation.

Additionally, as a result of the reform, the Mining Law now establishes specific water-related obligations for concession holders, including: (i) the implementation of water reuse measures to achieve a minimum recycling rate of 60%, and (ii) the prevention and control of water pollution. These obligations are set forth in Articles 27, Section XXIII, and 39, respectively.

With regard to the National Water Law, the 2023 reform now expressly distinguishes water use in mining from that assigned to general industrial activities. This newly defined category of use is subject to a separate concession regime, which is governed by its own autonomous regulatory framework, as outlined in Chapter III Bis of the law.

This section establishes additional requirements for obtaining the concession, mandates that holders measure the volume of water extracted, prohibits its use for transporting mining materials, and limits its term to a maximum of 30 years. Furthermore, the law provides that if the water concession is not in force, the corresponding mining concession shall be canceled, resulting in the suspension of operations.

These changes reflect, at least in part, a broader global regulatory trend aimed at adopting more stringent standards for water management in the extractive sector, through the implementation of various comparative regulatory models. Analyzing the normative and technical content of these international instruments not only helps contextualize the Mexican reform within this evolving landscape but also facilitates the identification and adoption of best practices that are compatible with the national legal framework and that generate regulatory, operational, and social value for all stakeholders involved.

International Standards

Various public and private organizations and institutions have developed and promoted international standards, in the form of legal instruments, technical guidelines, or self-regulatory mechanisms, aimed at improving water resource management in the mining sector. These standards may be either binding or voluntary in nature, and share the common objective of establishing responsible, measurable, and verifiable practices related to water use.

What follows is a selection of the most relevant frameworks, based on their global recognition, degree of implementation, and potential to influence national regulatory systems, as seen in the recent Mexican reform,

1. United Nations Recommendations

Over the years, the United Nations, acting through its various subsidiary bodies, have proposed a wide range of industrial guidelines for member countries, and although most of the guidelines relevant to water management in mining are only recommendations, they have served as a basis for the adoption of subsequent enforceable regulations.

Some of these recommendations can be found in the United Nations Resource Management System (UNRMS), a comprehensive framework that is closely linked to the organization's 2030 Agenda. The UNRMS is based on the United Nations Framework Classification for Resources and proposes certain basic principles for the extractive sector with an approach that encompasses the economic, ecological and social sectors of the industry through government-civil society and intergovernmental collaboration. 

The requirements proposed by the UNRMS include, for example: conducting long-term cost-benefit analyses that consider the synergy between planet, people and prosperity; developing strategic environmental assessments that consider the potential environmental and water consequences of any project proposal to mitigate them at an early stage; optimizing all water intake systems; managing waste in an appropriate manner; creating a system of information and data availability to assist in decision making; and designing water, resource and product reuse systems to minimize waste and waste pollution. 

In addition to these general requirements, this guideline includes calls made directly to countries, such as supporting the implementation of sustainable resource management systems with regard to the 2030 Agenda, and adopting regulatory bodies in their local legislation for the same purpose.

Broad action frameworks such as the UNRMS find complementary recommendations in texts focused on more specific issues such as the Safety guidelines and good practices for Tailings Management Facilities, a document published by the United Nations Economic Commission for Europe to prevent pollution from tailings in extractive operations, which includes, among other precepts, good practices for the construction and monitoring of dams, recommendations for the reuse of water, and the call for constant inspections to prevent water pollution. 

In addition, we can also find supplementary material in treaties and other United Nations documents that, although they do not deal specifically with the mining sector, create broad recommendations or obligations on water issues that should also be considered. An example of this is the 1997 Convention on the Law of the Non-navigational Uses of International Watercourses (1), which obliges states to prevent, reduce, and control pollution of international waterways.  

2. Standards proposed by the Organization for Economic Co-operation and Development (OECD)     

   It is worth noting that, as of the date of publication, Mexico has neither signed nor ratified this convention. Nonetheless, its relevance remains significant insofar as it constitutes a codification of norms recognized under customary international law (1).

Another organization with a view to standardizing regulatory processes in this area is the OECD. This institution, of which Mexico has been a member since 1994, provides member states with a platform to compare and share information and experiences in order to identify best practices and find solutions to common problems among countries through the analysis of public policies. 

In terms of the water-mining relationship, we can find recommendations made by this organization in the OECD's Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractive Sector. This document states, for example, that the local operational context must be understood in order to carry out impact assessments of extractive projects with a view to gathering information on water quality, availability, sources and condition, among other factors. It is also noted that project stakeholders should ideally have access to information regarding the objectives and activities of the project company, including the amount of water used or to be used for operational purposes. 

3. Standards and recommendations proposed by other organizations

In addition to those already mentioned, there are other organizations that have proposed their own standards. Such is the case of the International Organization for Standardization (ISO), an institution with 167 member countries including Mexico, dedicated to the creation of international standards. ISO, through its standard number 14046, developed a method for calculating the "water footprint" of various operations in order to determine their environmental impact on water. This process has been widely adopted by the extractive industry. 

There are also organizations outside the governmental arena and focused on the business sector. One of the most representative in this field is the International Council on Mining and Metals (ICMM), which claims to have the participation of one third of the sector. With regard to water, the ICMM recommends the adoption of systems for transparency in the use of water by companies; efficient and effective water management in operations with a view to reducing water impact and stress; and collaboration between sectors and with civil society to promote responsible water use.

4. National standards

Beyond the involvement of international organizations, a growing number of countries are strengthening their domestic regulatory frameworks on water governance, particularly in the extractive sector. While the actions of a single country do not, by themselves, create binding international obligations, the repeated implementation of similar conduct by states, accompanied by the belief that such conduct is legally required (opinio juris), may contribute to the emergence of customary international norms. This dynamic is especially relevant to the global consolidation of best practices in responsible water management.

In the United States, the Environmental Protection Agency has implemented a mandatory National Pollutant Discharge Elimination System permit for all mining operations that produce wastewater. Meanwhile, in Canada, the government has elaborated an Environmental Code of Practice for Metal Mines with regulations very similar to those already reiterated by different international bodies. The same has happened in Victoria, Australia, where the local government has published its own Guidelines for the Management of Water in Mines and Quarries.

On the other hand, in Mexico, in addition to the aforementioned reform, the Mexican Institute of Water Technology has joined the call for the consolidation of a system of access to information, focusing on the updating of databases on groundwater availability in aquifers where there is mining activity and the development of a comprehensive information system to support planning and project management actions in the water and mining relationship.

How to Adapt to the New Regulatory Landscape

As can be observed, both states and mining companies currently operate in an environment that increasingly promotes the regulation and responsible management of water resources in the extractive sector. This context may create uncertainty among the various industry stakeholders, particularly regarding the available alternatives to reconcile the economic viability of mining projects with compliance with new water-related standards. However, such uncertainty can be mitigated through the understanding and proper implementation of both technical and legal solutions, aimed at ensuring sustainable operations in alignment with the applicable regulatory framework.

In the technical sphere, mining operations in jurisdictions that have adopted regulatory frameworks similar to those recently incorporated into Mexican legislation have turned to alternative sources of water supply. A representative case is Chile, where, as of 2022, water concessions are granted only in proportion to the available volume of the resource. In response to this new regime, various companies have opted to develop seawater desalination infrastructure, complemented by strategies focused on the reuse and recycling of wastewater, as well as the collection and use of rainwater.