Industrial minerals focus of conference (November 11, 1991)

If metals create the skeleton of an industrialized society, then non-metallic minerals form the flesh.

Commonplace as they seem, industrial minerals enter practically every phase of life. They are the feedstock of the chemical industry which synthesizes fertilizers, they are the building blocks of the cities and they can be found on the surface of the paper on which we write.

Protection of the environment is a principal feature of the new legislation and there is every opportunity for the concerned citizen to become involved. The permitting process addresses the concerns of all, and while it deals fairly with numerous different parties, it creates an admittedly lengthy process for the developer.

Neatly counterpointing Ontario’s disposition toward the mining industry was an exposition of Mexico’s new mining legislation presented by Armando Alatorre, a senior geologist with Minerales para la Industria SA de CV. In common with many Latin American countries, Mexico is opening the door to outside investors. Restrictive legislation has been repealed, ownership of resources by foreign entities has been eased and general procedures have been updated and streamlined. According to Alatorre, “red tape is being eliminated and the impediment of government bureaucracy removed.”

While the 51-49% ownership split between Mexican and foreign interests is still on the books (the “Mexicanization” formula of the 1960s), the new 1990 regulations permit pyramiding and, in certain cases, 100% foreign ownership. Pyramiding is carried out by holding the 51% Mexican equity in a second Mexican corporation which itself is split 51-49%. The foreign investor’s interest would therefore increase from 51% to 73.99%. If a second holding company is formed, the interest would rise to 86.74%.

In certain instances, the 51% Mexican equity can be held by a bank or stock exchange trust giving the foreign investor 100% ownership. The trusts have a 12-year life but there is some expectation that the lifespan will be increased.

Mexico is now benefiting from its new mining act. Committed and planned investment for the 1991-1994 period is US$2.1 billion, a 100% increase over the previous five years. This amount includes both metallic and non-metallic minerals.