Congress Revises, Approves AMLO’s Mining Law Reform

Photo: High Country News


Mexico’s Chamber of Deputies on the morning of Friday, April 21, approved the proposal by President Andrés Manuel López Obrador (AMLO) to reform the nation’s mining law, but not before revising several points, chief among them extending mining concessions from the original proposed 15 years with a single 15-year extension for a total of 30 years, to a lengthier 30-year concession with a single extension of 25 years for a total of 55 years.

On March 28 of this year, López Obrador presented to the Chamber of Deputies an initiative to amend several provisions of the Mexican Mining Law, which aims to significantly modify the mining concessions model.

Regardless of the modifications approved by the Chamber of Deputies, several economic and mining experts have warned that the reform — which has been turned over to the Senate for ratification — must still be analyzed, specifically the provision that grants monopoly of mining exploration to the government’s Mexican Geological Service (SGM), to the supposed detriment of private mining companies in the country.

However, Raúl García Reimbert, president of the College of Mining Engineers, Metallurgists and Geologists of Mexico (CIMMGM), expressed his approval of the reform that passed through Congress — the majority bloc of which is composed of members of López Obrador’s leftist ruling party, the National Regeneration Movement (Morena).

“Without going into deep analysis, the proposal of the Morena parliamentary group is a win-win for mining, for Mexico, for the government and for society. We have a more flexible initiative that is well received by the sector,” said Reimbert.

“The new proposal makes the water issue more flexible: Now a term of the water concession is set equal to the term of the mining concession, and not five years, as proposed by the federal executive. This is a substantial change because with the five years of water concession, a reduction in production of up to 30 percent was expected.”

AMLO’s original initiative that he presented to Congress in March proposed new requirements to obtain mining and water permits, established a new obligation to disclose mining impacts and required mining companies to give back at least 10 percent of their profits to local communities.

For many years now, Mexico has been a major mining country and is the world’s primary producer of silver, as well as a top-10 miner and producer of copper and gold.

For his part, Luis Humberto Vázquez, president of the Association of Mining Engineers, Metallurgists and Geologists of Mexico (AIMMGM), zeroed in on the contentious provision in the reform, which states that the SGM will now be solely responsible for exploration.

“This is where I see the problem, because the SGM does not have the economic resources to do it (exploration), and that would be a big deal-breaker,” said Vázquez. “Unquestionably, if this is approved, it would be a big blow to the mining industry. In the future and with the dialogue that we have requested, we will try to resolve these points that for now have remained stagnant.”

In a statement, the Mining Chamber of Mexico (Camimex), said that each year private mining companies invest a total of around 13.2 billion pesos just for exploration alone, a figure that Camimex said is 11 times more than the budget allocated by the government to the SGM.

Likewise, the Camimex warned in a statement in March — immediately after López Obrador presented his proposal to the Chamber of Deputies — that changes contemplated in the draft could provoke “strong repercussions” for the mining industry, stressing that it will continue to analyze the proposal until its approval in the Senate.

Not surprisingly, the private sector promptly requested a dialogue shortly after Friday’s approval in Congress of the reform and its subsequent turnover to the Senate for ratification.

The Confederation of Industrial Chambers of Mexico (Concamin) said that they are requesting a dialogue with legislators “to strengthen the mining reform proposal, without neglecting the impacts that this may have on the more than 70 productive private mining companies in Mexico, as an integral part of the strategy of the strengthening of value chains in the country.”

“A dialogue is essential for this reform to achieve its fundamental objective in balance with the principles of growth and development of the country. At Concamin, we respectfully warn of some critical risks for the operational continuity of the mining industry in Mexico that will have to be resolved in this legislative stage,” said the Concamin.

For its part, the Employers’ Confederation of the Mexican Republic (Coparmex) recognized that although the Chamber of Deputies revised some points in the original proposal by López Obrador, “the Senate should still be required to openly and transparently carry out a process to refine it.”

In a statement, the Coparmex said that the changes to the Mining Law must leave sufficient time for analysis, because despite the fact that there is greater flexibility on issues such as the National Water Law, work must still be done to give certainty to private investments.

“Other aspects that must be carefully analyzed are those related to the indigenous consultation as well as the granting of guaranteed concessions, which could leave private companies defenseless,” the Coparmex said. “We recognize the determination to guarantee safety in the mines, but we consider that there are aspects, which are equally important, that must be made clear.”

But according to a Monday, April 14, editorial by Mexican daily newspaper El Universal, although López Obrador’s Mining Law reform passed through the Chamber of Deputies — albeit with some revisions — it won’t be as smooth sailing in the Senate.

“After the expeditious approval of the reform to the Mining Law, which modifies the terms and rules for obtaining a concession, this initiative is already facing its next obstacle. Reliable sources have told El Universal that although in the Chamber of Deputies the reform passed without problems, in the Senate things will not be so easy, since the controversial law that has generated inconvenience in the industry is not well received by many senators either, including those of Morena,” said the El Universal editorial.

“The leader of the Morena bench in the Senate, Ricardo Monreal, has on several occasions opposed what was endorsed by his party’s deputies and has argued that, with regard to the reform of the Mining Law, the Senate has to act as an authentic reviewing chamber in order to moderate any excess.”

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