New Mexican president avoids open-pit ban

Mexico’s President Claudia Sheinbaum, who started this month after winning an election in June to succeed Andrés Manuel López Obrador, so far hasn’t declared she’ll act on her predecessor’s wish to ban open-pit mining.

Mining wasn’t mentioned at all, at least directly, in Sheinbaum’s Oct. 1 list of 100 pledges for her government to accomplish. The new president has cited her predecessor as a mentor, but she has too many other issues to handle without confronting mining companies, S&P Global Markets said on Monday. It cited analysts at the data firm and from the industry in Mexico.

It will take six to nine months for the new president’s approach to the mining industry to become clearer, according to Peter Megaw, a 40-plus-year veteran of exploring in Mexico and co-founder of MAG Silver (TSX: MAG; NYSE-A: MAG). He told S&P the chief concern is how closely she follows López Obrador, who’s also known by his initials, AMLO.

AMLO envisioned a ban would apply to new projects. The country is a major gold and silver producer – 4.2 million oz. gold last year, nearly a quarter of global silver output – and has about a dozen copper mines, plus plans to enter the lithium space.

Open pits

The country’s top open-pit mines include Grupo Mexico’s Buenavista del Cobre, Newmont’s (TSX: NGT; NYSE: NEM) Peñasquito, two of Fresnillo’s (LSE: FRES) gold-silver mines, and several others owned by Industrias Peñoles. Some projects, such the San Nicolas partnership between Teck Resources (TSX: TECK.A, TECK.B; NYSE: TECK) and Agnico Eagle Mines, depend on open-pit plans for viability.

Sheinbaum’s pledges contained a section on protecting the environment and natural resources, but it targeted cleaning up river and air pollution, building recycling plants and planting trees.

However, she mentioned a program to regulate water concessions. That could see water permits rescinded for operations in states with water scarcity, such as Zacatecas and Sonora, an S&P analyst said.

It remains to be seen how the country’s change to elected from appointed judges, approved last month, will impact the mining sector, the analysts said. It may make them more independent of the government, or they could be concerned about re-election, they said.