The Year in Mining: Government Shift Brings Renewed Hope

In 2024, Mexico's mining sector underwent a transformative year, transitioning from López Obrador’s administration to Claudia Sheinbaum’s leadership. The new administration opened the door to renewed dialogue on critical issues, including the open-pit mining ban and concessions. Ongoing challenges, such as shrinking exploration budgets and increased taxes, persist but the sector continues to show resilience and optimism.

The year began positively, with Mexico reporting a record US$31.1 billion in foreign direct investment (FDI) for 1Q24, a 7% increase from 2023. The mining sector stood out as a key contributor, with US$900 million in new investments. Nevertheless, the sector's overall outlook remained cautious, with CAMIMEX projecting investments of US$5 billion for 2024, closely aligning with the US$4.96 billion recorded in 2023.

CAMIMEX highlighted the suspension of mining concessions since 2018 as a critical barrier to new investments, significantly curbing exploration activities. Investment in exploration was projected to continue its downward trajectory, falling from US$543 million in 2023 to an estimated US$500 million in 2024, with a further decline to US$400 million expected by 2025.

A key source of uncertainty for the sector were López Obrador’s proposals, such as the  open-pit mining ban, which was introduced in February 2024. While proponents argued it addressed environmental and community concerns, industry experts emphasized there is no evidence that open-pit mining is more harmful. The proposed ban affects 60% of Mexico's mineral production and places over MX$30 billion in tax contributions at risk.

López Obrador also advocated for restricting water concessions in regions with low water availability. Although mining represents only 0.27% of the nation’s total water consumption, the industry has faced heightened scrutiny. In response, the sector emphasized its commitment to sustainability, pointing out that 70% of the water it uses is sourced from treated and recirculated wastewater.

The political reforms in 2024 also had a significant impact on the mining industry, particularly with the approval of judicial reform, which transitions Mexico’s judiciary from appointed to elected officials. This shift raised concerns over its potential impact on mining disputes. “Concerns have been raised that judicial reforms could undermine the independence of judges, potentially making them more susceptible to influence from the executive branch of government. If judges are swayed or pressured by the government, it could lead to biased or unfair decisions during a legal proceeding. For example, this would cause issues in the case of a legal challenge to a company’s mining concession. It is vital to cultivate open dialog between the mining sector and government authorities,” said  Luis Chávez, Senior Vice President, Alamos Gold.

Legal disputes involving individual mining companies also escalated during López Obrador’s final year in office, reflecting growing tensions with government policies. Almaden Minerals initiated international arbitration against Mexico, citing violations of CPTPP obligations after the government blocked the Ixtaca project and retroactively terminated its concessions. Vulcan Materials filed a US$1.5 billion claim, alleging illegal expropriation of its assets. Similarly, China’s Ganfeng Lithium pursued arbitration over canceled concessions for the Sonora Lithium project.

A New Era for Mining: Claudia Sheinbaum Administration

The transition to Claudia Sheinbaum’s administration brought renewed optimism in the sector, however. Industry leaders welcomed the opportunity for constructive dialogue on the sector's challenges. While analysts anticipated Sheinbaum will maintain aspects of López Obrador’s policies, they also expected divergence on specific issues. “Nearly everyone I speak with in Mexico anticipates it will take six to nine months to understand her approach. The critical question is how much and how quickly she will diverge from López Obrador,” said Peter Megaw, former Chief Exploration Officer, MAG Silver.

Although Sheinbaum has yet to address mining concessions and permits directly, she has voiced her position on open-pit mining. She stated that her administration will review the proposal comprehensively, emphasizing the importance of this technique for extracting critical materials. “Open-pit mining requires a comprehensive review, as activities such as sand extraction for cement production and lithium mining—key to national development—are carried out using this method. It is crucial to evaluate the details of the constitutional reform’s provisions,” Sheinbaum asserted.

Rubén del Pozo, President, AIMMGM, noted that AIMMGM also anticipates revisions to the Mining Law in 2025. There is optimism regarding the law, especially following the October ruling by the Supreme Court, which declared a transitory article unconstitutional. This article had mandated the Ministry of Economy to reject new concession requests, violating the principle of non-retroactivity, as it impacted companies that had already submitted requests before the reform. “The Supreme Court's decision sets a positive precedent for the mining industry, as it upholds the favorable criteria previously established by a federal judge. This ruling will serve as a key reference for judges in resolving similar cases,” stated Joel Gonzalez, Senior Partner, ALN Abogados, to MBN.

With two constitutional challenges to the 2023 Mining Law still pending, Del Pozo stated that potential for a new mining law remains viable. “We have been told that there is full willingness to make all possible adjustments. For now, we are pleased with the openness to changes, which we see as a win. It would be extraordinary if we could collaboratively design a new law, but we will have to wait and see,” del Pozo concluded.

The sector is also hopeful regarding progress in the approval of permits and potentially new concessions. Del Pozo highlighted recent meetings with government officials, during which a working group was established to address approximately 70 unresolved issues. "A month ago, we met with Fernando José Aboitiz Saro, Coordinator of Extractive Activities, who assured us that his team would be available to address our concerns. We see clear willingness to resolve these matters, which is an encouraging sign," said del Pozo.

While the outlook appears to be improving, experts caution that exploration activities will likely continue to face challenges due to a projected budget reduction for the Mexican Geological Service (SGM) in 2025. According to the 2025 Federation Expenditure Budget Proposal, the SGM is projected to receive MX$3.5 billion representing a 9.2% decrease compared to the previous year. Furthermore, the budget allocated for generating geological data on the national territory will be reduced by 11.1%, from MX$240.1 million in 2024 to MX$213.5 million in 2025. “The reduction in funding will inevitably hinder the issuance of future mining concessions. Many existing concessions are still in the exploration phase and rely on the discovery of new deposits,” warned Mario Hernández, Leader Partner of the IMMEX Segment, KPMG Mexico.

Conversely, the 2025 Economic Package allocates MX$12.9 million to LitioMX, a 31.6% increase from 2024, reflecting the administration's prioritization of lithium. While funding has risen, experts argue that the allocation remains insufficient for an initiative requiring significant investment. However, Sheinbaum remains optimistic about advancing lithium production during her term. “We will make Mexico a scientific and innovation powerhouse. By prioritizing local technological development and investing in research, Mexico has the opportunity to effectively harness its rich lithium resources.”

In November, the Finance and Public Credit Committee of the Chamber of Deputies  approved revisions to the Federal Rights Law, raising mining duties from 7.5% to 8.5% and extraordinary duties from 0.5% to 1%, starting in 2025. While the government claims this aligns with global trends, CAMIMEX warned that the increase jeopardizes US$6.9 billion in projected investments over the next two years. “The sector, already affected by the lack of new concessions, overregulation, and threats of legal regime changes, is at risk. This additional increase would further erode incentives for exploration, which has already contracted by 50% since the 2014 Tax Reform, while deepening legal uncertainty and diminishing Mexico’s attractiveness as an investment destination,” CAMIMEX stated.

The industry also contends with external taxes challenges, including Donald Trump's proposal to impose 25% tariffs on goods from Canada and Mexico in 2025. Colin Hamilton, Research Director, BMO, observed that such measures would likely dampen North American metals demand projections through 2025. Jeff Killen, Director of Policy and Programs, Prospectors and Developers Association of Canada (PDAC), criticized the proposed tariffs as destabilizing. “Canada’s mineral exploration and mining sector relies heavily on strong trade relationships, particularly with key partners. Tariffs of this scale would disrupt cross-border supply chains, hinder efforts to reshore industrial capacity, and weaken North America’s strategy to reduce reliance on foreign mineral sources.”

Although the sector continues to face substantial challenges, 2025 brings also optimism with the launch of several key projects. The most significant is Torex Gold’s Media Luna project in Guerrero, which aims to produce up to 170,000oz of gold annually, starting in early 1Q25. Luca Mining’s Tahuehueto mine is expected to begin commissioning in early January. According to the pre-feasibility study, the mine is projected to produce 25,987oz of gold, 453,952oz of silver, 827t of copper, 3,155t of lead, and 6.1 million pounds of zinc annually, with a mine life of 10.9 years.

GoGold Silver Gold’s Los Ricos Sur project in Jalisco is expected to begin operations by the end of 1Q25, with an estimated annual production of 4.8Moz of silver. Endeavour Silver’s Terronera project, also in Jalisco, is slated to begin commissioning in 1Q25, with projected annual production of over 4Moz of silver and 38,000oz of gold over a 10-year mine life.