Mining firms hit by Mexico permitting delays

Mining companies are being hit by permitting delays in Mexico, with COVID-19, austerity and a stricter approach by authorities resulting in a backlog of projects awaiting processing.

President Andrés Manuel López Obrador’s (AMLO) Morena administration is taking a tougher line on permitting in the sector, in part due to concerns over potential impacts of open pit mines, with around 500 projects reportedly stalled pending decisions by environment ministry Semarnat.

“Permitting delays have become a more pronounced challenge in Mexico, whether that’s for a new operation or even for some of the daily operational permits, things have gotten slower and more challenging,” Mitch Krebs, CEO of Coeur Mining, told BNamericas.

“I would not want to try and permit and build a new operation right now in Mexico.”

TAILINGS BID

While Coeur’s Palmarejo silver-gold mine in Mexico’s Chihuahua state is an established operation, with approvals in place, the US company is seeking to permit a new tailings facility, with the current dam nearing capacity.

The plan is to build the facility on the historical open pit, created in the early years of mining at Palmarejo, a cost-effective approach which also offers environmental benefits, Krebs said.

“But that [proposal] obviously has a whole permitting element to it.

“Those are an example of the kinds of things that in the time that we are in, in Mexico, in terms of this administration, making sure we move that process ahead in a timely basis and get the required approvals so that we can pursue things like that, that is requiring more time and effort than in the past.”

STRICTER APPROACH

Government officials have defended the slowdown, saying this in part reflects a stricter approach to permitting.

“We need to have strict environmental evaluations,” Semarnat deputy environment minister Tonatiuh Herrera told Reuters earlier this month, accusing previous administrations of being too light on permitting.

Open pit mines, for example, can have enormous impacts on communities and water resources, Herrera said, but he confirmed applications for open pit operations are being processed on a case-by-case basis.

This contradicts comments by Semarnat minister María Luisa Albores in May, who stated that new open pit operations have been banned on AMLO’s orders.

At least four open pit gold projects have been blocked at the environmental permitting stage under the leftist Morena government, according to BNamericas research, including Argonaut Gold’s San Antonio and Cerro del Gallo assets and Almaden Minerals’ Ixtaca project.

Dozens of environmental submissions, or MIAs, are under evaluation as Semarnat advances a push to digitize the permitting process, Herrera said, a move which was started by former mining undersecretary Francisco Quiroga.

PANDEMIC, AUSTERITY FALLOUT

COVID-19 suspensions have also impacted permitting speeds, according to Herrera, while job cuts in Semarnat have also been highlighted as an additional factor at play.

But decisions continue to be made based on the merits of individual applications, said Jody Kuzenko, CEO of Torex Gold, whose El Limón-Guajes (ELG) gold mine is one of Mexico’s biggest.

“Lots of people have different views on this, but my view is that permitting is always on a case-by-case basis,” she told BNamericas.

“It depends on the quality of the application, the size and scale of the project and the overall reputation of the company.

“Those things are very highly correlated with speed and efficiency of permit granting.

“It is true that Semarnat has been downsized under the Morena administration, so you get a bit of downsizing and COVID-19 relating delays, so that’s never good for permitting speed and efficiency, but it depends on a case-by-case basis, the speed with which it will be processed.”

Toronto-based Torex did experience a two-month delay in an application to modify an existing MIA, which allowed the company to begin construction on the south side of the river Balsas, where it’s US$496mn Media Luna project is located, on the same Morelos property as ELG in Guerrero state.

Because of this, the company is allowing extra time for an application for a broader ‘MIA integral’ permit, covering environmental aspects of its plans on both the south and north sides of the river, including ELG and Media Luna.

“We have given ourselves nine months here to work with the regulators,” Kuzenko said.

The application was submitted in July, with Torex hoping for a decision by the time a feasibility study on Media Luna, due in 1Q22, is completed. 

Orla Mining also experienced some delays on an MIA for the US$134mn Camino Rojo oxide gold project last year, but this was in the middle of the pandemic, CEO Jason Simpson told BNamericas in July.

“You can get projects permitted if you do your homework and submit the documentation appropriately, that answers the questions for both the regulatory agencies and communities around you, how you are going to impact the environment and what are you doing to mitigate that,” he added.

“If you answer that responsibly you can expect approval.”