Open-pit mining in Mexico is a major contributor to the Mexican economy. Industry experts attribute 2 million direct and indirect jobs to the industry and the collection of $8.8 billion in taxes annually into government coffers. The outgoing President of Mexico is attempting to ban the practice in his country and is expected to meet fierce opposition from incumbents. These AMLO mining reforms are part of a long list of actions to contain investors and businesses, particularly those operating in the northern provinces which AMLO considers his adversary.
Mexican President Andrés Manuel López Obrador ("AMLO") is seeking a series of reforms in his final days in office including the banning of open-pit mining. He would like to ban the granting of open-pit mining and activities related to exploration, and exploitation of metals using the open-pit method. Other proposed changes involve more difficulty in obtaining approvals to commence mining, strong financial bonding requirements, and reductions in tenures of mining concessions from 50 years to 30 years.
His primary justification is that open-pit mining damages the environment and uses large sums of water that would otherwise be supplied to water-scarce communities. His proposal states, "[i]t is clear that open-pit mining transgresses human rights by affecting the right to a healthy environment and good health... The most significant effects are evident in the communities and towns near project areas, placing them in a situation of vulnerability and inequality.”
Most open-pit mines are in the northern provinces which AMLO has an adversarial relationship with. In total, Mexico has 264 mines and nearly half are extracting surface minerals through open-pit techniques. Most of these mines are located in Chihuahua, Zacatecas, Sonora, and San Louis Potosi. The mines contribute 59% of the value of national mining production according to the CanCham and the AIMMGM who also stated:
"[O]pen pit mining has historically been a significant source of income, employment and wellbeing in the communities where it is developed … generating growth and economic stability with records of more than 2mn direct and indirect jobs, plus a contribution of 150 billion pesos (i.e., $8.8 billion) in annual federal taxes.”
Top mining companies such as Grupo Mexico's Buenavista del Cobre, Newmont, and Fresnillo are expected to fiercely oppose the reforms from the lame-duck president. AMLO has not granted any new mining concessions in his term.
The industry has warned that banning open-pit mining would have severe consequences for the industry in Mexico. AMLO accuses miners of destroying the environment but offers no proof, only platitudes pandering to his base. They say if there are infractions, first show them, then use the multitude of the laws on the books to punish the culprit and rectify the violations.
“The proposal to ban open pit mining is unfortunate and generates a reputational impact for the sector. That is because the reform is associated with the protection of the environment, implying, without solid bases, that mining isn't compatible with its care and with environmentally sustainable operations,” - Armando Ortega, president of the local branch of the Canadian Chamber of Commerce's (CanCham) mining committee
AMLO's term as President has been hostile to business and investment and full of rhetoric aimed at making his base in the south of Mexico pleased. The complete list of transgressions against the Mexican economy by AMLO are too great in number to list but a top 3, based on media attention received, could be the: (1) 2018 cancellation of the Mexico City Airport, (2) 2021 forced renegotiation of oil and gas contracts, and (3) constant use of the military in infrastructure projects granting control of many strategic assets to the military to control and profit from.
Comments