What to Expect From the New Mining Law Regulations

On May 8, 2023, the federal government published in the Official Gazette of the Federation the decree reforming the Mining Law, the National Water Law, the General Law of Ecological Balance and Environmental Protection, and the General Law for the Prevention and Comprehensive Management of Waste. This set of modifications, which for practical purposes we will refer to as the “2023 reform” included several changes of relevance to the industry, ranging from adjustments to the procedures for obtaining and maintaining concessions to new substantive provisions regarding environmental matters and indigenous communities.

However, from then on, a relevant administrative task remained: the preparation and issuance of the corresponding regulations, in particular the Regulations of the Mining Law.

Generally speaking, Mexican laws are accompanied by regulations that develop and clarify their content to facilitate their application. Such was the case with the Mining Law, which had regulations detailing the procedures necessary to ensure its proper implementation.

Once the “Ley Minera” was transformed into the “Ley de Minería” (hereinafter “the Mining Law” or “the new Mining Law”) through the 2023 reform, Congress tasked the executive branch with drafting its corresponding regulations, which would detail the new and diverse provisions introduced by the reform. A period of 180 days was granted for this purpose, with the stipulation that until the regulations were published, the provisions of the previous regulations would continue to apply.

However, since the deadline for its issuance has passed, the regulations for the new provisions have not yet been published. Consequently, various procedures in the industry continue to operate under the framework in place prior to the 2022 reform. Nevertheless, the publication of the regulations is expected, so it is advisable to anticipate and be prepared for the adjustments they introduce.

Based on the above, the following points outline several aspects regarding which the new Mining Law refers to its still pending regulations, as well as the implications that could arise from its future issuance.

Reconfiguration of the Concessionaire's Obligation Regime

Among the modifications introduced are new obligations applicable to concession holders. Some of these are currently in effect, while others require the issuance of regulations to become operational.

Among the obligations that depend on regulatory development are those related to the studies and reports that concession holders must submit. For example, Article 6 establishes that the party awarded the concession must conduct a social impact study, obtain authorization for the environmental impact statement, and implement prevention, mitigation, and compensation measures. However, several key aspects of this obligation, such as the technical content of the studies, submission deadlines, the competent authorities, and the required formats, are subject to the provisions of the regulations.

Similarly, Article 6 BIS introduces the concept of a social impact assessment, which must identify and evaluate the social impacts of mining activity and establish a social management program. This assessment must also be consistent with other assessments issued by various authorities. However, the required level of detail, the evaluation methodology, and the associated administrative procedure depend entirely on the regulations.

Another important point concerns the periodic reports that concession holders must submit. Article 27 mandates the submission of, among other things, a report on the execution and verification of works and tasks performed (section VII), as well as a geological-mining report at the end of the concession (section IX). Both documents must include accounting, financial, technical, and statistical aspects, but the regulations will define their structure, scope, and frequency more clearly.

Similarly, Article 37 mandates the submission of an annual report on works and projects, again including technical, financial, and statistical aspects. As in the previous cases, the regulations must establish specific guidelines for compliance, including possible digital formats, deadlines, and verification mechanisms.

In the case of the social impact assessment, although it is a relatively recent addition to the mining sector, methodologies used in other regulated sectors, such as energy, could be considered as a reference. In this regard, the regulations may include stages such as community consultations, identification and analysis of social impacts, as well as monitoring and verification mechanisms following the issuance of the assessment.

In the area of obligations, the 2023 reform also introduced the concept of a financial vehicle. Section XV of Article 27 establishes that, prior to granting the concession title, a guarantee for compliance with the measures derived from the social impact assessment must be presented through a financial vehicle. Here, too, the regulations will play a crucial role, as they must define the acceptable mechanisms, minimum amounts, and procedures for enforcement or redemption in case of non-compliance.

This figure already exists in various legal systems, such as those of Peru and Chile, where its calculation is based on certain risk factors established by their own regulations. However, we still do not know precisely the parameters that the Mexican government will use to calculate this value.

Reforms to the System for Granting, Transferring Concessions

Another important change we can expect is one that impacts the process before becoming a concession holder. The procedure for obtaining mining concessions also saw a major paradigm shift within the 2023 reform.

First, the concession allocation system was modified through the reform of Article 13, shifting from a model based on temporal priority of application for available land to one based on public bidding processes. That is, while previously it was possible to obtain a concession through a claim followed by a declaration of land availability, with bidding reserved only for exceptional cases, now all allocations and concessions, regardless of their nature, must be subject to a competitive bidding process in order to guarantee "the best economic conditions and benefits for the population," as well as respect for the environment.

However, the also-amended Article 13 BIS leaves it to the regulations to establish the basis for the clauses of contracts subject to bidding, thus rendering this mechanism inoperative. While the granting of new concessions has been suspended since the previous administration due to circumstances partly unrelated to the reform, the absence of regulations has prolonged this situation and limited the possibility of reactivating the mining concession granting process. Consequently, beyond the political context, there is a legal impossibility of granting new concessions, since there is no regulated procedure for conducting the bidding processes. Therefore, the issuance of new regulations is essential to allow, at least from a legal standpoint, the reactivation of this process.

Regarding the transfer of concessions between private parties, significant modifications were also introduced. Article 23 now stipulates that such transfers may only be carried out with prior authorization from the Ministry of Economy. However, as with other provisions discussed, this power is not yet fully operational, as the applicable procedure depends on the regulations, which are currently pending issuance.

Final Considerations

The future issuance of the regulations should not be negative for concession holders, provided they have adequate legal advice and a clear understanding of the changes introduced by the 2023 reform. In this regard, it is important that stakeholders in the mining sector remain informed and attentive to regulatory developments. Conducting due diligence processes and having detailed knowledge of one's own operations will be key elements in facilitating an orderly transition to the new regulatory framework.

Attention should not be focused solely on concessionaires. The regulations will most likely also develop and expand new powers and obligations for certain government agencies. This means that not only individuals, but also experts, authorities, and other stakeholders in the sector must stay informed and prepared for the upcoming regulatory adjustments.