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Natural Resources

Civil Society Seeks to Influence Mexican Mining Law Reform

MEXICO CITY, Mar 22 2013 (IPS) - Two separate bills to reform Mexico’s mining laws, one from the government and the other from academics and NGOs, agree on the urgent need for major changes in the rules governing the industry.

But the two proposals part company when it comes to the mechanisms and goals of the changes to the 1992 mining law. The government’s priority is to secure a greater share of the profits of the lucrative mining industry, while civil society’s aim is to protect the environment and local communities in mining areas.

The bill drawn up over the space of a year by social groups and independent experts proposes a ban on opencast mining, a scheme for royalty payments on minerals and metals, and environmental remediation measures. The present law, according to its critics, offers huge incentives to mining companies and no benefits at all to the state and local communities.

“The reform must prohibit opencast mining for extracting precious metals. Priority must be given to protecting human rights, the environment, and water resources,” Juan Carlos Ruiz, a researcher at the Colegio de San Luis, a public college, told IPS.

“The real cost of mineral extraction should be calculated, including the cost of water, site remediation and the economic development of the region,” said Ruiz, who was involved in drafting the civil society bill.

The reform bill put forward by the government is in the hands of economy minister Ildefonso Guajardo. So far it is a declaration of the government’s intentions for the new law, which the administration wants to see come into force in 2014.

Under the present legislation, Mexico has become a paradise for the mining industry, to the point that there are 25,693 concessions covering 51 million hectares, according to economy ministry statistics.

Spokespersons for the Mexican Chamber of Mines (Camimex), the industry association, told IPS that 285 companies are operating 853 mining projects in the country, generating more than 300,000 direct jobs and making a total of over seven billion dollars in investment in 2012.

In the period 2010-2012 alone, 15 new mines came into operation, while a further 22 are being built or are in the exploratory phase, the spokespersons said, adding that Camimex does not have “a public position” yet on the legal changes being discussed.

ProMéxico, the state agency for attracting foreign investment, said gross revenue from mining was 22 billion dollars in 2012, and forecast some 35 billion dollars in foreign direct investment would arrive over the next six years, mainly from Canada and the United States.

Mexico is the world’s top producer of silver, in third place for bismuth, fifth for molybdenum and lead and ninth for gold, according to ProMéxico and the Economic Commission for Latin America and the Caribbean (ECLAC).

But mining has created friction with local communities, because of deforestation, water pollution and the generation of hazardous liquid waste, and local opposition to the mines is strong.

The economy minister said in various presentations that his ministry wishes to review the current pattern of concessions, in particular the payment of fees on commodity production and benefits for local communities.

When it comes to taxes, Guajardo said he does not think the new scheme must necessarily be based on a royalty system, although this is the international standard and is advocated as the most beneficial scheme for mining countries.

Companies operating in Mexico currently pay between 36 cents of a dollar and eight dollars a year per hectare of their concessions for extracting precious metals and minerals. The only additional tax they pay is income tax.

Reforming the mining law was one of the clauses in the Pact for Mexico, a commitment signed by conservative President Enrique Peña Nieto with the political parties represented in Congress when he took office in December.

The pact includes the approval of a new mining law that is to “revise the concessions scheme and payment of federal fees linked to production.”

It also says “the resources arising from these fees will be used principally for the direct benefit of municipalities and communities where the mines are located.”

Guajardo explained that the pillars of the new law will be: a new tax formula for mining concessions, sustainability, respect for protected natural or cultural sites, benefits for local communities and legal security for investors.

The minister is now seeking consensus on these issues before presenting his bill to Congress, where the bill proposed by the social organisations has already been tabled and will be a reference point for the debate.

ECLAC says that in Latin America, a region of vast mining wealth, the windfall revenue from the soaring minerals prices should be efficiently invested, based on the principles of social and environmental sustainability.

It also calls for building a social consensus to invest that income effectively in human capacity building, technological innovation, infrastructure and programmes for mitigation of environmental impacts.

“We have a clear understanding of the importance of mining and what it represents as the first link in the production chains of metallic and non-metallic minerals. It would be absurd to eliminate it,” Ruiz, the academic, emphasised.

“But there should be effective mechanisms for society to call into question the granting of concessions, because no one ever asks the people living in an area if they agree to the concession of land,” he said.

According to the Observatory of Mining Conflicts in Latin America, there are 175 socio-environmental conflicts or clashes over natural resource use ongoing in the region, involving 183 mining projects and 246 communities. Twenty-one of these conflicts are in Mexico.

ECLAC indicates that the majority of the disputes are related to silver, gold and copper mining. Agriculture is the sector most harmed by mining activity.

Pueblos y Ciudadanía Organizada vs. la mina Esperanza Silver (People and Citizens Organised against the Esperanza Silver mine), an NGO, has collected more than 8,000 signatures on an on-line petition addressed to environment minister Juan Guerra, to put an immediate stop to the Esperanza gold mine, owned by Canada’s Esperanza Silver Corporation.

This opencast mine project covers 15,000 hectares in Tetlama, in Morelos state, adjacent to Mexico City.

Environmental organisations say there are at least 25 opencast mines in Mexico, and with new concessions this figure could rise to 200, including areas where there has been no mining previously.

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