Mexico lawmaker drafts motion to nationalize mining

A legislator from Mexico’s ruling Morena party has drawn up plans to nationalize mining in a comprehensive legislative overhaul, which would see open pit mining banned and the State granted new powers to cancel concessions.

Senator Blanca Piña, who represents Michoacán state, penned a motion calling for mining to be deemed a matter of national security and brought under state control, claiming the current set-up has allowed private companies to plunder mineral resources while riding roughshod over the rights of communities, indigenous groups and workers.

The proposal, which includes changes to six articles of the current law, also calls for concessions terms to be slashed and for titles to be axed in the event of human and labor rights breaches, accidents and environmental damage.

While it is unclear whether the draft bill has the backing of the Morena executive, it aligns with many of the policy goals of President Andrés Manuel López Obrador (AMLO), which include tougher regulations or restrictions on mineral concessions and permits, an expanded role for the state and stronger protection for the environment and communities.

NATIONALIZATION PLANS

The proposal to nationalize mining follows along the lines of Mexico’s recent nationalization of lithium – which sparked fears among some industry experts that the move could be broadened to include other minerals.

The text calls for article 6 of the mining law to be amended to state that mining is in the public interest and a matter of national security, and as such no concessions, permits, contracts or authorizations will be granted.

“All minerals are assets of the nation and their exploration, exploitation, processing and utilization are reserved in favor of the Mexican people,” the proposal says.

As with lithium – mining of which will be managed by LitioMx – the draft bill calls for a new state company called Mineral de México, which will be dedicated to the exploitation and processing of minerals.

OPEN PIT BAN

Piña, who heads the senate committee on gender equality, also called for open pit mining to be banned in a change to article 20 of the mining law.

The amendment follows a pledge by environment ministry Semarnat – reaffirmed in May – not to grant new permits for open pit mining projects.

In addition, seabed mining and small-scale coal extraction via so-called pocitos would be outlawed under the proposal.

AMLO has promised to toughen up safety regulations in the coal mining industry after 10 miners were killed after being trapped underground in a flooding incident at the Pinabete mine in Coahuila state last month.

Authorities said Pinabete was operated illegally without adequate safety measures in place.

No seabed mines are in operation within Mexican waters. US-based Odyssey Marine Exploration is pursuing an arbitration claim against Mexico after an environmental permit application was rejected for its ExO (formerly Don Diego) phosphate sands seabed mining project off the Baja California Sur coast.

CONCESSIONS TERMS

The draft bill also includes proposals for changes to the concessions system.

These include cutting terms to 12 years for exploration and a further 12 years for exploitation, compared to 50 years currently, extendable for another 50 years.

A further amendment to article 6 states that concessions will be canceled where accidents have occurred, or where health and safety regulations are breached or human and labor rights infringed upon.

Concessions will also be canceled if they cause environmental impacts, according to a proposed change to article 55.

Concessions in areas with indigenous communities will also be nullified if those communities are not consulted in line with ILO Convention 169 protocols.

Plans by mining companies to conduct consultations with indigenous communities have been held back by the lack of legislation setting out the requirements of these processes.

“It is indispensable that there is a consultation law that gives certainty and clarity to the rules of the game,” mining chamber Camimex said in its annual report in August.

NO MINING ZONES

The proposal also calls for certain areas to be out of bounds for mining projects.

They include nature reserves and other places with important water resources or ecological value, archaeological sites and areas deemed sacred by indigenous communities.

POLITICAL LEGACY

The motion follows concerns that AMLO may seek controversial changes to mining legislation as a way of cementing his political legacy and reputation as a champion of Mexico’s poor, with just two years left of his administration.

“You could see more populist measures, especially because of the one-term limit. AMLO will want to secure some sort of legacy,” Matthew Wilson Eames, socio-political risk consultant at London-based consultancy Critical Resource, told BNamericas earlier this month. The comments do not necessarily reflect the views of Critical Resource or parent company ERM.

“His mode of government has been quite unpredictable so it’s difficult to foresee where those more populist decisions will be made but it’s fairly likely they’ll impact mining given his history and ideological position regarding the sector.”