How Mexico's new mining legislation could hinder projects

New Mexican legislation for the mining sector that came into effect at the beginning of May could hinder the progress of projects.

The reforms were fast-tracked by the senate and published in the official gazette despite criticism from the opposition and the private sector. 

The maximum duration of concessions was reduced to 80 years from the previous 100, and geological service SGM or other federal entities were given exclusive exploration rights, among other provisions.

The new legislation stipulates that for the start of mining and construction works, a concession holder must obtain the authorizations, permits and necessary concessions before the corresponding federal, local and municipal authorities. 

The law is supposed to apply to the new concessions awarded via tenders after exploration carried out by SGM because it cannot be retroactive, a mining legal expert told BNamericas, asking not to be identified. 

However, as long as there is no regulation it could lead to confusion, the lawyer added.

The government must issue the corresponding reforms to the regulatory provisions within 180 days of the law taking effect in early May.

The new mining law also obliges concession holders to request authorization from the environment ministry – within one year of it taking effect – for their mine restoration, closure and post-closure program.

And the holders of national water concessions that carry out exploration or mining will have 90 days to request that water authority Conagua regularize their legal status.

However, applicants for a national concession for industrial water use in mining must first present authorization for the mine restoration, closure and post-closure program.

The new mining legislation also establishes the obligation to conduct social impact studies for each mining concession granted and present the environmental impact study and the waste management program.

A mining concession can also now be canceled when reports on possible damage or risks to the ecological balance are not presented.

PROJECT DELAYS

Companies facing permitting issues to advance their projects could see more setbacks due to the new regulations.

Canadian gold miner Minera Alamos completed in April the necessary documentation to formally proceed with the permitting process for its Cerro de Oro project in Zacatecas state six months later than expected and after meeting its initial thresholds for commercial production at the Santana project (pictured) in Sonora state at the end of 2022.

Minera Alamos said Wednesday that it agreed with lenders on a US$25mn funding package for the limited capital requirements associated with the planned construction of the Cerro de Oro gold mine that is currently anticipated to begin next year.   

Last September, Alamos president Doug Ramshaw said construction of Cerro de Oro should start in 2H23.

"Concurrent with the permitting, the company is planning additional drilling and metallurgical work that will inform the final operational plan for the proposed mine," the Toronto-based firm said in a report in early May.

And Vancouver-based Equinox Gold said in late February that it was working on strengthening relations with communities surrounding its Los Filos mine in Mexico after postponing a decision to build a carbon-in-leach (CIL) plant until at least 2024 due to the continued risk of blockades, among other reasons.

The 10,000t/d CIL plant has yet to be approved after a temporary community blockade in September at Los Filos. 

CEO Greg Smith said at the time that any decision to proceed with the US$318mn expansion would be made considering the operational stability in the region, market conditions and availability and cost of capital. 

To that end, the Canadian miner said in February that it had been strengthening its community relations team at Los Filos in the last few months.