MINING IN MEXICO — New governmment measures — Mexico opens

Mining has been a major activity in Mexico since prior to the discovery of America. In the past, many of the country’s cities grew and flourished because of mining booms.

The industry’s importance is rooted in its abundant mineral resources of which only 20% have been explored and much less mined. With Mexico’s long entrepreneurial tradition, skilled human resources and its basic infrastructure, the outlook is for broad development of mining in the future. President Carlos Salinas de Gortari’s policy of opening up the economy, putting public finances on a sound footing, modernizing the economy and society, and encouraging domestic and foreign investment has had a notable impact on mining. Mining, the president has pointed out, is a priority of the government.

To carry this activity to the forefront of the country’s economic life, it has been necessary to undertake a vigorous process of change to overcome obstacles that had been in place for several decades and which accounted for a low level of domestic and foreign investment in the sector. Weakness in the mining industry was exacerbated by the persistent decline in world markets of some of the metals that Mexico has traditionally produced. Included among the most important policy measures taken:

— the adaptation of the tax structure to bring it in line with that of other countries and other industries in Mexico

— the modernization of the mining authority, making it possible to reduce delays in issuing concessions and reducing the processing period from five years to an average of five months:

— divestiture of more than three million hectares of national mining reserves, making them available to investors

— adoption of new mining regulations to support rationalization measures in administering the activity.

Unquestionably, a central element in that process of change has been President Salinas’ support of new mining legislation aimed at encouraging domestic and foreign private investment and modernizing the productive apparatus. This new law, in effect as of Sept. 24, 1992, is a giant step forward in promoting mining.

The central features of the new legislation are:

— greater legal assurances for investors because the minerals and substances to be regulated are listed and the powers of the government to determine the mining concessions are clearly defined

— investment is encouraged as new mechanisms of economic rationality are established enabling investors to raise productivity

— the field of action of the private sector is expanded as private concerns are permitted to mine sulphur, phosphorus, potassium, iron and coal, all formerly reserved to the government under the old legislation — the geographic area subject to mining is extended to include marine subsoils

— administrative procedures are dramatically simplified

— the effectiveness of mining concessions is increased from 3 to 6 years for exploration and 25 to 50 years for mining, and the limits of the area subject to concession are eliminated

— environmental protection is provided for

— foreign investment is encouraged by lifting the restrictions contained in the old mining legislation.

The new Mining Law is a product of the policy of dialogue and negotiation of all the sectors participating and interested in the mining development of the country.

Because of this process, during the almost four years of the current administration investment has increased from an average of US$200 million annually to US$500 million in 1991.

Important new mining projects already under development are proof of this progress: Santa Gertrudis for gold production in Sonora; Tizapa for production of gold, silunder development are proof of this progress: Santa Gertrudis for gold ess: Santa Gertrudis for gold ertrudis for gold production in Sonora; Tizapa for production of gold, silge of US$2all are joint ventures involving Mexican and foreign companies.

It should be noted that projects of this size had not been undertaken in Mexico for 18 years. Thus, it can be asserted that mining in Mexico is both traditional and modern, belonging to the country’s past as well as its future. — Omar Lazcano serves as adviser to Mexico’s Secretary of Energy, Mines and Para-state Industry.