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A New Era for Mining

By Rubén Cano - CR Legal Partners Mexico
Founding Partner


By Ruben Cano | Partner - Wed, 07/12/2023 - 16:00

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Mining is a significant contributor to Mexico's economy. The industry has undoubtedly shaped the life and history of our country and has flourished and survived the local and global challenges of the evolution of ideas, political trends, and economic ups and downs. 

There is a good reason for this. Mining is a long-term business, and despite the simplistic and inaccurate idea that mining could be very old-fashioned and static, on the contrary, responsible mining is among the most innovative, adaptive, and creative economic activities, while at the same time the sector is always acutely aware of its social, corporate and environmental responsibilities. To set a very simple example, any new equipment or any innovative process, before being implemented inside the operations of a responsible mine, must have achieved a certain degree of maturity and high effectiveness, a demonstrable ability to perform reliably, ensure the safety and health of  people, protect the environment, and add economic value over time frames measured in many years, if not decades. 

However, as with any other economic activity, mining is also impacted by the geopolitical forces that shape its legal framework and the latest mining reforms in Mexico are a good example of this,  since they represent the most radical and profound legal change for the sector in the last three decades. This is not only because of the number of articles of the Mining Law reformed (45 out of 59), but also because of the meaning and purpose of the amendments, which also included the reform to the national water and environmental laws, which broadly, but not limited to, seek to set new rules for the granting of mining concessions; impose the obligation to determine the social impacts and to perform prior consultation with Indigenous and Afro-Mexican peoples; reduce the duration (from 50 to 30 years) and extension of mining concessions (once for up to 25 years), and a final extension of 25 additional years through contest; condition the mining concession granting to water availability and the obtaining of a water concession for industrial use for mining; modify the scope and powers of the SGM (Mexican Geological Service) and the exploration activities regime; increase the regulation for the transfer of mining concession titles rights and add new causes for cancellation of the titles; and to incorporate a chapter on crimes with sanctions that include criminal sanctions of five to 15 years, and up to 5% of the yearly income for omissions or "criminal conduct" in mining matters.

After the reforms were published on May 8, 2023, in the Official Gazette of the Federation, without a doubt, the mining industry in Mexico is facing a new era. 

The industry is still waiting for the scope and content of the regulations that shall be published by or before the first week of November this year and that will shape the reform; but this industry is waiting passively; it is looking to proactively collaborate with the federal government in the drafting and design of these secondary laws while at the same time the sector has already been united and organized to legally challenge through “amparo trials” the current reforms, to temporarily suspend their effects while awaiting the ruling of the Federal Judiciary pon the constitutionality of the reform as a whole.  

There were clearly several omissions in the legislative process for the amendment of the laws — even the political opposition parties filed last June 7 before the Supreme Court of Justice of Mexico an “action of unconstitutionality” against the Mining Law reform, due to violations of the legislative procedures established by the Constitution, and the laws and the regulations of the Chamber of Deputies. 

And there are certainly several impacts on different gained rights protected by the Mexican Constitution and international treaties signed and ratified by the Mexican state by the content and lack of clarity of the wording of the reform, including several obligations that are impossible to fulfill and that have already been challenged by many mining companies in the courts. There is no doubt that even if the federal courts maintain the validity of the new wording of the legal framework for mining, the implementation of the Mining Law reforms may encounter many legal and administrative challenges, and the capacity of regulatory bodies to effectively enforce regulations, monitor compliance, and address disputes between stakeholders is critical. Insufficient resources, lack of expertise, and bureaucracy within regulatory institutions can undermine the intended benefits of the reform and impede its successful implementation.

There is one indisputable truth, once again in its centuries-long history in our country: the mining industry needs to adapt, be creative and innovate. 

The responsible mining companies have worked together before with different authorities to draft and construct together the legal framework for mining. Together, the public and private sectors have successfully constructed different regulations and norms that have set world-class standards for different mining procedures and operations, such as the official norms: NOM-141-SEMARNAT (which establishes procedures for tailings management and identification) and the NOM-157-SEMARNAT (which establishes the elements and procedures to implement waste management plans); or the guidelines for the certification of several skills including safety and health best practices, operation of equipment and strict training for the mining workforce; and the outstanding and broad work of the mining companies, universities and associations in this manner are solid.

The drafting of the regulations for the new Mining Law and legal framework should not be the exception. A deep and strong collaboration between mining sector shareholders and the authorities is required to ensure any intended reform is real, effective, and achievable. But in addition to the legal compliance to which the responsible mining industry is completely used to, a deeper reform is needed within the industry. Mining faces a wonderful and at the same time challenging opportunity to redefine itself and prove internally and externally its innovation, creativity, and capacity to adapt. 

More significant steps toward changing the narrative around responsible mining are required. By emphasizing environmental responsibility, social development, transparency, and accountability, the mining industry needs to creatively innovate and demonstrate the possible balance between economic growth and social and environmental protection considerations that are global trends and concerns; the industry should prove to and convince the young and new generations of the potential of the mining sector and its capability to flourish while safeguarding the natural resources and cultural heritage of the communities in which its operate. 

The law might or might not change again in the short or midterm, but again, mining is a long-term business, and now, more than ever, the mining industry requires a consensus, team-work and unity among its shareholders and members to be able to work with excellence and demonstrate in the long run, its necessity, its sustainability and its fundamental role in ensuring a better life and more fair world.

Photo by:   Rubén Cano

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