President of Mexico says ‘no new mining concessions’

Global mining companies operating in Mexico are working with the country’s mining chamber, Camimex, to determine the impact of Mexico’s President Andres Manuel Lopez Obrador’s statement earlier this month that no new mining concessions will be handed out in the country.

President Lopez Obrador said that his government will “keep the current concessions and not hand out new concessions, because they aren’t needed,” according to Reuters on Aug 12.

In an email to The Northern Miner, in response to questions about the president’s statement, a Camimex spokesperson said: “Even [though] the announcement is not official, we are evaluating its potential impact.”

The statement has mining proponents concerned about the impact on spending and jobs in the country, which is already struggling with mining investment. Data released in May from Camimex shows mining investment in Mexico hit a 12-year low in 2018.

Mexico is known as the world’s top silver producer and one of the largest producers of copper and gold, and attracts a huge amount of global exploration spending. Only a quarter of the country has been explored for minerals and oil to date, according to media and industry reports.

President Lopez Obrador’s left-wing government, which took power on Dec. 1, has vowed to heighten scrutiny of the environmental impact of mining companies and their treatment of Indigenous peoples, as well as give communities the right to decide whether to allow mining projects to go ahead.

Francisco Quiroga, Mexico’s undersecretary of mining, told S&P Global Market Intelligence on Aug. 19 that the government would take a number of steps before considering reversing the proposed policy to stop issuing new mining concessions. Some of those steps include ensuring existing concessions are actively operated, as well as reviewing a backlog of claim applications and putting in place policies on Indigenous consultation, according to the interview. Quiroga also said miners and explorers that are active on their claims “have nothing to worry about.”

Looking over a map at the Alamos project in Mexico, from left: Minaurum Gold president and CEO Darrll Rader; VP of exploration Stephen Maynard; and director David Jones. Photo by Richard Quarisa.

Mexican entrepreneurs and legislators have called on President Lopez Obrador to stop hitting the local mining sector, BNamericas reported Aug. 14. Their concerns are that mining investment — and in turn, jobs — will suffer if the country stops granting new concessions.

The Northern Miner contacted a number of other mining companies for comment, most of which either declined to comment or said they were unavailable.

Workers at a drill pad at Agnico Eagle Mines’ El Barqueno gold-silver property in Jalisco, Mexico. Credit: Agnico Eagle Mines.

Agnico Eagle Mines (TSX: AEM; NYSE: AEM) spokesperson Dale Coffin confirmed his company is among those working through Camimex “on gaining a better understanding and clarification from senior government officials on exactly what this all means.” Coffin added that “for now, our operations and exploration projects in Mexico have not been impacted. It’s business as usual.”

Paradigm Capital analyst David Davidson says the fact that existing concessions aren’t likely to be affected is positive, which could be why mining companies operating in the country have been largely quiet on the issue.

“As for Mexico, the changes contemplated are not by themselves drastic, and somewhat overdue,” Davidson said in an email. “Acquiring ground and holding it in near perpetuity without progressing its prospects is tying up considerable wealth, [and] is probably due for revision.”

Davidson says he has no objections to potential stricter environmental standards, but says they may provide another platform for non-governmental organizations and community objections to mining in general. He also says higher wages and better human-resources practices for mine employees “may give rise to much higher labour expectations.”

However, Davidson said Mexico’s proposals are “minor, compared to what’s happening in other parts of the world.”

A drill at McEwen Mining’s El Gallo gold-silver mine in Sinaloa state, Mexico. Credit: McEwen Mining.

Juan Jose Gomez Camacho, the Mexican ambassador to Canada, told the Globe and Mail earlier this year that Canadian mining companies operating in Mexico will face increased scrutiny on environmental practices and treatment of Indigenous people. “Canadian mining companies are large investors in Mexico — but we expect them to operate in this country with exactly the same standards as they do in Canada,” he told the Globe. About 70% of foreign-owned mining companies operating in Mexico are based in Canada, according to Global Affairs Canada.

The mining sector contributes 4% of Mexico’s gross domestic product, Reuters says. Camimex’s latest report shows local and foreign mining companies invested US$383 million in Mexico in 2018, down 37% from $612 million in 2017, and a drop of 67% from a record $1.1 billion in 2012.